China's surging economy slowed slightly in July as state-controlled banks heeded Beijing's instructions to rein in excessive lending, with the volume of new loans falling 77 per cent from a month earlier.

Most economic indicators, however, suggested a continuing strong recovery, largely as a result of government investment and state-directed lending that saw new loans nearly triple in the first seven months from the same period last year.

Industrial output expanded 10.8 per cent in July from a year before, less than most economists had predicted. Fixed asset investment growth rose 32.9 per cent from a year earlier for the first seven months of the year, indicating some slowing in July as half-year growth had been 0.7 percentage points higher.