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China will use its power to quell Hong Kong protests if the situation deteriorates further after some protesters have shown signs of terrorism, China's ambassador to London said on Thursday.

"Should the situation in Hong Kong deteriorate further ... the central government will not sit on its hands and watch," ambassador Liu Xiaoming told reporters.

"We have enough solutions and enough power within the limits of (the) Basic Law to quell any unrest swiftly," Liu said. "Their moves are severe and violent offences, and already show signs of terrorism."

He added: "the central government of China will never allow a few violent offenders to drag Hong Kong down a dangerous road, down a dangerous abyss."

Ten weeks of confrontations between police and protesters have plunged Hong Kong into its worst crisis since it reverted from British to Chinese rule in 1997 after being governed by Britain since 1842.

They have also presented the biggest popular challenge to Chinese leader Xi Jinping in his seven years in power.

China's ambassador accused unidentified foreign forces of fomenting violent protests in Hong Kong, warning them that their "conniving" efforts had been noticed and that they would end up damaging themselves.

"Foreign forces must stop interfering in Hong Kong affairs," he said. "Stop conniving in violent offences - they should not misjudge the situation and go down the wrong path otherwise they will lift the stone only to drop it on their own feet."

He added: "evidence shows the situation would not have deteriorated so much had it not been for the interference and incitement of foreign forces. Hong Kong is part of China. No foreign country should interfere in Hong Kong’s internal affairs."

Liu also accused Western media of being unbalanced in their reporting and of confusing right and wrong.

China reported a raft of unexpectedly weak July data on Wednesday, including a slump in industrial output to more than 17-year lows, pointing to further slowing in the economy as the US trade war takes a heavier toll on businesses and consumers.

Activity in China has continued to cool despite a flurry of growth measures over the past year, raising questions over whether more forceful stimulus may be needed, even at the risk of racking up more debt.

After a flicker of improvement in June, analysts said the latest data was evidence that demand faltered across the board last month, from industrial output and investment to retail sales.

That followed weaker-than-expected bank lending and gloomy factory surveys, reinforcing expectations that more policy support is needed soon.

"China's economy needs more stimulus because the headwinds are pretty strong and today's data is much weaker than consensus," said Larry Hu, head of Greater China economics at Macquarie Group in Hong Kong.

"The economy is going to continue to slow down. At a certain point, policymakers will have to step up stimulus to support infrastructure and property. I think it could happen by the end of this year."

Industrial output growth slowed markedly to 4.8% in July from a year earlier, data from the National Bureau of Statistics showed, lower than the most bearish forecast in a Reuters poll and the weakest pace since February 2002.

Analysts had forecast it would slow to 5.8%, from June's 6.3%. Washington had sharply raised some tariffs in May.

Infrastructure investment, which Beijing has been counting on to stabilise the economy, also dropped back, as did property investment, which has been a rare bright spot despite worries of potential housing bubbles.

Crude steel output fell for a second straight month in July, while production of motor vehicles continued to fall by double digits.

The industry ministry said last month that the country would need "arduous efforts" to achieve the 2019 industrial growth target of 5.5% to 6.0%, citing trade protectionism.

INVESTMENT, RETAIL SALES GROWTH COOLS

China's economic growth cooled to a near 30-year low of 6.2% in the second quarter, and business confidence has remained shaky, weighing on investment.

While officials have cautioned it would take time for higher infrastructure spending to kick in, construction growth has been more muted than expected.

Fixed-asset investment rose 5.7% in January-July from the same period last year, lagging expectations of a 5.8% gain, the same as January-June.

But readings by sector showed a more marked loss of momentum in critical areas at the start of the third quarter.

Infrastructure investment - a powerful growth driver - rose 3.8% in the first seven months from a year earlier, slowing from 4.1% in the first half despite massive local government bond issuance, mainly to fund road and rail projects and other civic works.

Data from Japanese construction equipment maker Komatsu Ltd. showed activity remained weak in China in July, with operating hours for its machines falling for a fourth straight month.

In a sign the housing market's resilience may be waning as Beijing cracks down on speculation, property investment slowed to its weakest this year. It rose 8.5% on-year in July, from June's 10.1%. Though home sales inched back to growth, new construction starts cooled.

Retail sales are also pointing to growing consumer caution, most evident in falling auto sales but also in property-related spending on items such as home appliances and furniture.

Retail sales rose 7.6% in July, well off consensus of 8.6% and weaker than the most pessimistic forecast. Sales had jumped 9.8% in June, which many analysts had predicted would be temporary.

Job security worries may also be a factor. Nationwide survey-based unemployment edged up to 5.3% from 5.1% in June, though many market watchers believe it could be much higher.

"We maintain our view that (economic) growth has yet to bottom out and expect Beijing to maintain its easing policy stance," economists at Nomura said in a note.

Nomura expects growth will slow to 6.0% in the third and fourth quarters -- the bottom end of the government's target range.

Authorities have already announced hundreds of billions of dollars in infrastructure spending and corporate tax cuts over the last year, and repeatedly cut bank's reserve requirements (RRR) to free up more funds for lending and reduce borrowing costs.

But credit demand has been tepid, with companies in no mood to make investments given the cloudy business outlook and banks wary of rising bad loans.

Sources told Reuters recently that more aggressive action such as interest rate cuts are a last resort, as it could fuel a rapid build-up in debt and financial risks.

ESCALATING TRADE WAR

Recent months have been marked by a sudden escalation in the US-China trade war that has raised pressure on both economies and sparked fears of a global recession.

A brief ceasefire was shattered earlier this month after U.S President Donald Trump vowed to impose a 10% tariff on $300 billion of Chinese imports from Sept. 1.

China let its yuan currency slide to an 11-year low days later, prompting the US Treasury Department to label Beijing a currency manipulator and triggering heavy selling in financial markets.

Some much-needed relief came on Tuesday, however, after Trump said he would delay duties on some Chinese imports including cellphones and other consumer goods, in an apparent effort to blunt tariffs' impact on US holiday sales.

Still, new tariffs will go into effect next month on about half of Washington's $300 billion target list of Chinese goods, and analysts say the chance of any long-term trade deal after the recent escalations has sharply diminished.