According to data on the Chinese economy, growth in the second quarter declined to 7.5% from 7.7% in the quarter leading up to March.

"As of now, China's gross domestic product has been staying under 8% for five straight quarters, a clear sign of distress," BBC News quoted IHS Global Insight
economist Ren Xianfang as saying.

He added, "The rather sharp growth deceleration and the recent financial market turmoil indicate that risks have been building on both the financial and real goods sector."

The Chinese government eyes economic growth at 7.5%, the lowest in twenty years. China's economy has been growing at astonishing speeds of ten percent with contributions from mining, food exports and influx of business from hosting the Olympic games.

However, the mainland has been hit hard by tainted food and toy products, calling for a crackdwn on safety of products made in China. Importers of Chinese seafood like the U.S. have sent shipments back after finding salmonella in exported food products.

Claims of fraud and corruption in factories and manufacturing units have caused a dent in the Chinese economy. The alarming rate of production in previous years has contributed to China's massive pollution and ensuing environmental degradation.

A primary factor in China's lower GDP is the tightening of bank lending and poor trade activity, Agence France Presse reported.

China is one of Australia's biggest importers of natural resources. Analysts say that demand for Australian resources is still high in China and is unlikely to fall.

The Australian dollar added gains, climbing to 91 U.S. cents on the news, reports ABC news.