China’s economy hit a mid-year rough patch as efforts to curb risky lending and excessive debt collided with a deepening trade war with the U.S.

• Industrial output rose 6 percent in July from a year ago.
• Retail sales expanded 8.8 percent from a year earlier.
• Fixed-asset investment rose 5.5 percent year-on-year in the first seven months. That was the slowest in data back to 1999.
• The three indicators were slower than forecast in a Bloomberg survey.
• Surveyed jobless rate in urban areas rose to 5.1 percent from 4.8 percent in June.

The economy is losing momentum just as China braces for a protracted trade conflict with the U.S. Officials have vowed to boost lending to smaller companies and support for infrastructure investment but it will take time for those measures to start having an effect. Today’s data and the slowdown in credit creation will increase pressure on the government and central bank to act to support growth.

“The economy is slowing down as the result of the relatively tight policies in the past six quarters,” said Gene Ma, chief China economist at the Institute of International Finance in Washington, who expects fiscal policy to be more supportive in the second half of 2018. “Tighter policies on shadow credit inevitably hurt small and private businesses. Rising trade tension started to hurt confidence, but not yet the real growth as exporters moved up their exports.”

“There was too much tightening” and there were policy errors made in the first half that ought to be corrected, Liang Hong, chief economist at China International Capital Corporation Ltd. in Beijing, said in an interview with Bloomberg TV. “Some of the policy adjustments just happened in July, so people are expecting in the third quarter we should see more stabilization.”