China's weakening economy has again turned in a disappointing performance with industrial production, retail sales and credit growth coming in below expectations.

A deluge of data from China's National Bureau of Statistics (NBS) showed industrial production over January and February — combined to flatten the effects of the Lunar New Year — rose by 5.4 per cent throughout the year.

It is the slowest growth rate in industrial production in seven years, down on the forecast growth of 5.6 per cent and a significant cooling from the 5.9 per cent annualised growth recorded in December.

Crude steel production fell by 5.7 per cent, cement production was down by 8.2 per cent and coal also continued its decline, down another 6.4 per cent.

However, there was a noticeable pick-up in the chemical, communications and car making sectors.

Retail sales surprisingly weakens

Retail sales, which had been a beacon of strength in China's economy, were up 10.2 per cent over the year, well below both the forecast 10.8 per cent and the December growth rate of 11.1 per cent.

Credit expansion also missed the target, although the Lunar New Year probably affected this.

On a positive note, there was evidence of a transition in the type of loans being taken out, with promising expansion in longer-term credit.

Fixed asset investment propped up by government spending

Fixed asset investment (FAI), a proxy for infrastructure and property spending, was one of the few pieces of data to have a positive surprise.

FAI grew at 10.2 per cent in the first two months of the year, edging above the 10 per cent growth reported over 2015.

But it was largely driven by the public sector, as FAI in the private sector grew by only 6.9 per cent year-on-year.

Real estate investment was noticeably stronger, reaching a five-month high.

Central Bank says growth targets not out of reach

Prior to the release of the data, the head of China's central bank Zhou Xiaochuan, and a number other leading financial regulators, held a media conference to calm concerns that the new growth target of 6.5 per cent over the next five years was not a stretch.

Mr Zhou said excessive stimulus was not needed to meet the target, and flexible and adjustable monetary policy could do the job.

However, China's ability to hit its target is to a large extent out of its control.

As the NBS pointed out, softer export demand was a key factor constraining production growth.

Mr Zhou will be hoping the stimulatory efforts by his central banking colleagues in Europe and Japan, as well as a continued recovery in the US, will make his job easier.

He also indicated officials were looking at ways deal with a disturbing build up of bad corporate debt in China.

While short on detail, the tentative proposal would allow banks to convert bad loans in debtor companies into equity holdings.

It was an approach used successfully to tidy-up excesses in the 1990s, but Mr Zhou stressed every effort would be made to prevent it creating the kind of toxic products that led to the global financial crisis in 2008.

Mr Zhou emphasised it would not be a very big market and retail investors would not be involved.