China's economy drew strong support from new growth drivers in August, with double-digit growth in high-tech manufacturing and solid external demand underpinning fast industrial growth, officials and experts said on Tuesday.

However, the transition from old to new growth drivers remains marked by structural divergence, they cautioned, adding that a more proactive policy response is needed to revive domestic demand after a second straight month of slower retail sales growth and a deepening contraction in fixed-asset investment.

Their remarks came on the heels of fresh data released by the National Bureau of Statistics on Tuesday showing that the country's industrial output rose 5.2 percent year-on-year in August, accelerating from a 4.5 percent increase in July.

According to Fu Linghui, the bureau's spokesman and chief economist, the strong performance was underpinned mainly by new growth drivers, which accounted for over 60 percent of industrial output growth. High-tech and digital product manufacturing, for example, grew 16.7 percent and 15.7 percent year-on-year, respectively.

"The bright spot remains industrial activity," said Lynn Song, chief economist for China at Dutch bank ING, pointing to resilient external demand and China's continued technological and industrial upgrading.

That upgrading is taking China beyond its traditional strengths in low-cost, large-scale manufacturing toward "ecosystem and innovation leadership", US investment bank Morgan Stanley said in a recent report.

The report projected that the transition could raise the country's potential GDP level by about 3.5 percent by 2035 and lift its share of global manufacturing value-add from around 28 percent to 30 percent.

The growing role of new growth drivers was also evident in investment, with spending in high-tech industries rising 5.2 percent year-on-year in the first eight months.

"The investment mix in manufacturing is improving," said Wang Qing, chief macroeconomic analyst at Orient Golden Credit Rating International.

Also, the services sector is shifting toward more technology-intensive activities, with information transmission, software and information technology services contributing more than one-fifth of overall growth in services production in August, the NBS said.

In contrast to the strong performance of emerging sectors, weak domestic demand continued to weigh on the broader economy, with consumption growth moderating and the contraction in investment deepening, analysts said.

Retail sales, a key gauge of consumption, rose 0.4 percent year-on-year in August, slowing from 0.6 percent in July, while fixed-asset investment fell 7.2 percent year-on-year in the first eight months, compared with a 6.7 percent decline in the January-July period, the NBS said.

"New growth drivers have yet to fully offset the weakening of traditional ones," said Luo Zhiheng, chief economist and head of the research institute at Yuekai Securities, calling for quicker issuance of special-purpose bonds and accelerated fiscal spending.

Experts said ample policy room is still available, additional measures — including interest rate and reserve requirement ratio cuts, and further issuance of government bonds — are expected to help strengthen growth momentum toward the year-end.

Wen Bin, chief economist at China Minsheng Bank, said policy support is strengthening and implementation is accelerating, noting the recent recapitalization plans totaling up to 360 billion yuan ($53.6 billion) for State-owned financial institutions.

New policy-based financial instruments totaling 800 billion yuan began rolling out in early September, with funding expected to be deployed mainly in September and October, Wen added.

Echoing that view, Sheana Yue, a senior economist at British think tank Oxford Economics, said: "Accelerated bond issuance and policy-bank financing are likely to eventually boost government investment."

On the monetary front, Wang of Orient Golden Credit Rating International said the central bank could cut interest rates by 10 basis points and the reserve requirement ratio by 0.5 percentage point around the end of the third quarter. Such easing would help boost consumption, stabilize investment and support the property market, he said.