China's economic growth slowed in the second quarter, official data showed Thursday, with consumers still hesitant to splurge and firms grappling with the increased cost of raw materials.

The world's second-largest economy has staged a rapid recovery from last year's slump caused by the coronavirus pandemic, but its pace is losing steam with manufacturing slowing and consumer demand not picking up as quickly as expected.

China's growth in gross domestic product came in at 7.9 percent on-year in the April to June period, said the National Bureau of Statistics -- a significant drop from the 18.3 percent surge in the first three months.

An AFP poll of analysts had tipped GDP growth at 7.7 percent, with economists noting that China's economy has been expanding more slowly since the start of the year as the pandemic drags on globally.

The Chinese economy continued to "recover steadily" in the first half of 2021, the bureau said, but it cautioned that "there are many external uncertainties, and domestic economic recovery is uneven".

"Efforts are still needed to consolidate the foundation for stable recovery and development," it added.

Surging raw material costs and shipping disruptions are weighing on manufacturers, with factory activity also bogged down recently by supply shortages of semiconductors -- used to make a range of goods from electronics to vehicles.

In June, industrial output rose 8.3 percent and retail sales grew 12.1 percent, both edging down from the month before.

The urban unemployment rate was 5 percent, unchanged from in May, authorities said.

There are fears the real unemployment rate might be much higher due to large numbers of people working in the informal economy.

China was the only major economy to expand in all of 2020, but it is expected to enter a new phase of post-pandemic recovery.

It has largely controlled its domestic coronavirus outbreaks with a mix of strict border controls, rapid lockdowns when cases are detected, and contact tracing.

Premier Li Keqiang warned this week that medium and small firms are facing difficulties due to higher costs caused by rising prices of bulk commodities, state media reported.

The government should look to supporting smaller companies, although not taking on flood-like stimulus policies, he said.

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