A slew of readings on China's economy in July came in slightly below expectations, offering further evidence of a slowdown in the mainland's economy.
China's industrial production grew 6.0 percent on-year in July, compared with expectations for 6.1 percent growth, according to a Reuters poll of 39 analysts, with forecasts ranging from 6.0-6.7 percent. In June, industrial production grew 6.2 percent, according to Reuters.
Retail sales and fixed asset investment also missed expectations slightly.
July retail sales grew a respectable 10.2 percent on year, but that was slightly below expectations of a 10.5 percent increase in a Reuters poll.
Fixed asset investment (FAI) for the January-to-July period rose 8.1 percent, missing a Reuters forecast for 8.8 percent and marking the slowest growth since 1999, according to Reuters. Private sector FAI growth just 2.1 percent on-year in the January-to-July period, down from 2.8 percent growth in the first half of the year.
After the data's release, the Australian dollar dropped, falling from around $0.7697 to as low as $0.7667. Australia's economy has long been dependent on China's appetite to import its commodities.
Julian Evans-Pritchard, China economist at Capital Economics, said the slowing investment growth was of more concern than industrial production.
While he saw some signs of strength in industrial production when drilling down to hard data, such as electricity and steel output, the drop in investment growth could portend a sharper slowdown.
"In the long-run, it's pretty concerning to us. The private [investors] are pretty downbeat on prospects," Evans-Pritchard said, noting that state borrowers may be crowding private investors out of affordable credit.
"Policy makers will have to do more if they want to reverse this trend," he added, noting that he expects more fiscal easing as the impact of previous rounds of monetary easing appeared a "bit underwhelming."
While he noted that floods in China last month, which killed as many as 150 people, may have disrupted investment, he "wasn't hopeful" it would explain all of the weakness in investment as industrial production data hadn't seen a similar impact.
China's statistics bureau said on Friday that the economy remained under downward pressure amid a period of adjustment, according to Reuters. The mainland has been working to transition its economy toward domestic consumption and away from reliance on investment- and manufacturing-led growth.
The agency added that the slowdown in private investment growth was related to funding and policy-implementation challenges as well as a lack of access to services, Reuters reported.
Evans-Pritchard wasn't alone in expecting policy makers would need to turn on the taps.
"Fiscal policy will take the lead in boosting growth in the second half of 2016 as private investment slumps," analysts at ANZ said in a note Friday. With authorities still concerned about the potential for overheating property prices, monetary easing will likely be limited in the second half, they said.
"On the other hand, fiscal policy will need to accelerate in the coming months for China to achieve a growth rate of 6.5-7.0 percent this year," ANZ said.
Some analysts were more sanguine on the readings.
"In once again printing not far from forecasts and still at levels many other economies can only hope for, disruption to markets was almost non-existent," said Patrick Bennett, a strategist at CIBC said in a note.
The decline in fixed asset investment also wasn't a surprise, Bennett said.
"All will be aware that China brought forward investment plans to counter the slowdown from the global financial crisis. In doing so, they created massive over-capacity that has in turn been met by soft to outright weak global demand," he said.
Earlier this week, China's trade data disappointed, suggesting that the mainland can't expect much of a boost from external demand.
China's exports and imports fell more-than-expected in dollar-denominated terms in July, with exports down 4.4 percent on-year and imports off 12.5 percent in U.S. dollar terms, according to Reuters data. Analysts polled by Reuters had forecast declines of 3.0 percent and 7.0 percent, respectively.
Last year, China's economic growth decelerated to a 25-year low, as improvements in consumption failed to offset a marked slowdown in traditional economic drivers.
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—By CNBC.Com's Leslie Shaffer; Follow her on Twitter @LeslieShaffer1