China's economy grew 6.8 percent percent on-year in the third quarter, compared with 7 percent in the previous three months, official data showed on Monday.

Analysts polled by Reuters had forecast gross domestic product (GDP) in the world's second-largest economy would grow 6.8 percent in July-September period from a year earlier. The government has set its annual economic growth target at "around 7 percent" for 2015.

At the weekend, Chinese Premier Li Keqiang said that with the global economic recovery losing steam, achieving domestic growth of around 7 percent was "not easy."

Ahead of the data, Alastair Chan, economist at Moody's Analytics said China's economy had continued to decelerate.

"Overcapacity across heavy industry, rising bad loans among corporates and local governments, and the weak export environment are crimping investment and production. Stimulus measures did not make a measurable difference," he said.

"Moreover, second quarter growth was boosted by high financial market activity, deriving from the volatile stock market, and this likely did not carry over into the third quarter."

China's stock market went into meltdown between June and August, triggered by a host of factors, including an unwinding of margin trades and concerns over lofty valuations. This, analysts said, would likely have reduced the financial sector's contribution to third-quarter growth.

Aside from financial sector woes, a sluggish real estate market continues to weigh on the economy. Real estate is linked to dozens of other key sectors, including steel and cement, that are already grappling with oversupply.

While property sales and prices have been on the rise in response to increasingly accommodative housing policy, housing construction is still in the doldrums.

Given the large inventory of unsold housing, strong housing sales momentum for a sustained period was needed before housing construction could recover meaningfully, according to Oxford Economics.

On the bright side, consumption was holding up on the back of robust wage growth, helping to cushion the blow from weakness elsewhere in the economy, economists said.

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First Published:Oct 19, 2015 7:49 AM IST