China's investment growth slows to near 18-year low

China on Sept. 14 posted its slowest growth in fixed-asset investment in nearly 18 years along with weaker-than-expected industrial output and retail sales, suggesting the economy may be starting to lose steam as lending costs rise.

Fixed-asset investment, a key growth driver for the world's second-largest economy, grew 7.8 percent in the first eight months of the year, the weakest pace since December 1999 and cooling from 8.3 percent in January-July.

Analysts had expected growth of 8.2 percent.

Factory output also disappointed, rising 6.0 percent in August from a year earlier, the weakest pace in nine months, statistics bureau data showed.

Analysts polled by Reuters had predicted factory output would grow 6.6 percent in August, up from 6.4 percent in the previous month.

"In particular, infrastructure spending has now begun to cool as the front-loading of fiscal spending this year means that local governments are now having to pair back their outlays," Capital Economics said in a note.

"With tighter monetary conditions still weighing on credit growth, we expect a further slowdown in economic activity in coming quarters."

The statistics bureau said hot weather and "structural adjustments" weighed on industrial output last month, and added the economy remained on a steady, improving trend. On a monthly basis, output rose nearly half a percent.

Retail sales also confounded market expectations, rising  10.1 percent in August from a year earlier, the softest in six months and cooling from 10.4 percent in July. Analysts had expected a slight pick-up in demand.

Again, however, retail sales rose at a decent clip from a month earlier.

China had posted a raft of better-than-expected data...