1 August 2010 Last updated at 05:58 ET

Chinese manufacturing output slows to 17-month low

The Chinese government is continuing to try to slow economic growth

Chinese manufacturing output grew at its slowest rate for 17 months in July, as the government continues efforts to rein in rapid economic growth.

The official purchasing managers' index of manufacturing output fell to 51.2 in July from 52.1 in June, said the China Federation of Logistics and Purchasing.

Analysts said the slowdown came as banks continue to make it harder for firms to borrow money.

Beijing has long been concerned the economy could be overheating.

Analysts said continuing efforts to cool property prices were also having a knock-on effect, as this was further limiting bank credit.

Meanwhile, the government has been reducing stimulus spending on construction projects, and putting controls on investment in high energy consuming and polluting factories.

"We know Chinese growth is slowing and this number provides confirmation of this," said Brian Jackson, a strategist with Royal Bank of Canada in Hong Kong.

He added that China was now likely to be watching the state of the US and European economies.

Mr Jackson said that if Chinese exports remain strong, the government would stick to its slowdown policy, but that if exports fall, "Beijing will likely face pressure to deliver a renewed surge in investment spending".

The most recent official figures showed that the overall Chinese economy grew by 10.3% in the three months to June, down from 11.9% in January-March, but still well above the government's 8% target.

A figure of 50 or above in the purchasing managers' index represents growth.