Fresh evidence of China slowdown ©Bloomberg Feeling the weight: the heavy machinery maker said the cuts were 'normal turnover' China revealed fresh evidence on Sunday of slowing activity in the world's second-largest economy, with sliding factory output and investment prompting fresh calls for Beijing to do more to prop up flagging growth. According to official figures released by China's statistics bureau, value-added industrial output rose 8.9 per cent in August from a year earlier, down from 9.2 per cent in July and the slowest growth since May 2009. Investment in fixed assets increased 18.8 per cent from a year earlier last month, down from 20.4 per cent growth in July. The data for August provided the latest proof that China is in the midst of a protracted, although not yet severe, slowdown. "We can't help but wonder whether the government has dropped the ball," said Alistair Thornton, an economist at IHS. Despite a series of fairly significant measures over the past nine months - ranging from rate and reserve ratio cuts, to fiscal tweaks and loan rollovers - growth has not revived. In an apparent response to further economic weakness in August, Beijing approved a number of new infrastructure projects across the country last week and on Saturday Hu Jintao, China's president, called on other governments throughout the Asia-Pacific region to follow Beijing's lead. "To strengthen infrastructure development is key to promoting recovery and achieving sustained and stable growth," Mr Hu told an Asia-Pacific Economic Co-operation meeting in Vladivostok, Russia. Governments should play an important role in infrastructure building and step up financial support for infrastructure development. China's economic planning agency, the National Development and Reform Commission, said last week it had approved 25 new subway systems, 13 new highways, five ports and two waterways. Economists estimated combined investment for these projects, along with newly announced airports and power projects, would come to about Rmb1tn ($157bn) over the next four years. But they also acknowledged that many of these projects would probably have been built anyway and so could not all be counted as a new economic stimulus. Another constraint on the Chinese government's ability to introduce significant stimulus in the economy is coming from a rebound in the residential real estate sector, which Beijing has been trying to rein in for nearly three years. Direct real estate investment accounted for 13.7 per cent of GDP in the first half of the year in China and a rebound is likely to help cushion the current slowdown. But the government is very wary of allowing a fresh bubble to inflate that would put home ownership even further out of reach for the average citizen than it already is. The amount of new residential real estate floor space under construction increased 5 per cent in August from the same month a year earlier and sales of residential real estate jumped 13.4 per cent from a year earlier. Both new construction starts and overall sales of residential property are still down 11.1 per cent and 4.8 per cent respectively in the first eight months of the year compared with the same period last year. China's economy is on track to grow at its slowest annual rate in 13 years after six consecutive quarters of declining quarterly gross domestic product growth saw the overall economy expand 7.6 per cent in the three months to the end of June from the same period a year earlier. Because the slowdown has been gradual, Beijing has been loathe to launch a big stimulus package such as the one it unveiled in late 2008 in the midst of the global financial crisis. There is a general recognition that the flood of credit and investment launched at that time, while successful in pulling the economy out of a steep downturn, also led to serious credit and real estate bubbles, increased the economy's over-reliance on investment and created a large crop of potential bad loans in the banking system. Inflation figures that were also released on Sunday showed a rise in consumer inflation in August to 2 per cent, from 1.8 per cent in July. Most analysts believe inflation has already bottomed out and will now start to rise again, limiting the government's ability to boost growth with cheaper credit and more stimulus in the coming months.