A lower growth rate is due to two factors: Europe’s sovereign debt crisis, which slowed down the growth of Chinese exports, and the government’s measures against real estate speculation, which cut new sales and constructions.

Chinese leaders are especially concerned about Europe’s sluggish economy, which is putting a damper on China’s expansion. The European Union is Beijing’s main trade partner.

Prime Minister Wen Jiabao said yesterday in Tokyo that the world must guard against another economic downturn. He called any talk that the world crisis was over “premature”, especially in light of high unemployment in the United States and excessive sovereign debt risks by countries like Greece.

"The world economy is stable and beginning to revive,” he noted, “but this revival is slow and there are many uncertainties and destabilising factors." To restore China’s external trade to pre-financial crisis levels was a “difficult process”, he added.

Manufacturing activity in fact has cooled around the worked, with lower growth in Australia and the United States, whilst activity in Europe was unchanged.

Chinese analysts are cautious in reading the situation. For Zhang Liqun, a researcher at the State Council’s Development and Research Centre, “The economy may continue to maintain relatively fast growth, but the growth rate may slow.”

Beijing is betting on growth in response to domestic demand and exports to the rest of Asia.

Other experts note that the effects of China’s stimulus package are starting to fade so that growth should continue to slow down.

Inflation and the risk of a real estate bubble are Beijing’s other main headaches, especially after urban property prices jumped a record 12.8 per cent in April from a year earlier.

Chinese authorities also appear unwilling to revalue the yuan, still pegged against the US dollar at a rate set in July 2008.

Last month, the Shanghai Composite Index fell 9.7 per cent, the biggest monthly decline since August, on concern that the European debt crisis is worsening