After posting record GDP growth in the last quarter, China's economy is now showing signs of slowing down.
The world's second-largest economy expanded 7.9 % in the April-June quarter from a year earlier, according to official data released Thursday, falling short of analyst expectations.
China was the world's only major economy to expand last year, thanks to solid export demands and strong policy support.
But new challenges to that momentum have emerged.
Spokesperson Liu Aihua said Thursday the second-quarter numbers indicate that domestic recovery is uneven.
"In general, the national economy continued to recover steadily in the first half of 2021, stabilizing, strengthening, and improving. However... the domestic economic recovery is uneven, and efforts are still needed to consolidate stable recovery."
Higher raw material costs, supply shortages and pollution controls are weighing on industrial activity, while small flareups of the health crisis around the world have restrained consumer spending.
Further challenges are expected in the second half of the year, as policymakers are considering whether to roll back stimulus money.
One China economist noted that China's export boom appears to have peaked and will gradually unwind as many parts of the world begin to reopen.
A customs official said this week overall trade growth may also begin to slow.
Meanwhile, economists in a Reuters poll expected an 8.6% GDP expansion in 2021, which would be the highest annual growth in a decade, exceeding china's own official target at 6 percent.