Expectations are running high that China's decelerating growth will reverse course in the second half of the year, but economic figures - which some analysts say are suspect - suggest more policy easing may be needed to nudge the economy along.

"In the medium term, there are tail risks of a hard landing in China, where investment spending could slow more sharply, given overcapacity in a number of sectors," the International Monetary Fund said in its World Economic Outlook Update issued on July 16.

The IMF said growth in emerging markets could be lower than expected, making a smaller contribution to global expansion.

The thinking is that China is unlikely to continue to be the "white knight" that can rescue the world economy single-handedly.

Worse, the country could become a drag on growth. The IMF report cited certain risks to China's financial stability after years of rapid credit growth and saw strains in the domestic economy.

Alaistair Chan, an economist at Moody's Analytics, predicts China may stage a rebound in the third quarter, which would keep expansion close to the target rate of 8 percent for this year.

"There are, however, some near-term downside risks to our baseline forecast," Chan said. "If Greece leaves the eurozone in a disorderly fashion, the financial contagion could lower China's growth to 5 percent before it slowly recovers."

Adding insult to injury, a recent article in the New York Times said there was new evidence Chinese officials were falsifying economic statistics to disguise the true depth of the nation's troubles.

Inaccurate statistics

"Local and provincial government officials have forced plant managers not to report to Beijing the full extent of the slowdown," the New York Times wrote, citing power sector executives.

"Officials are also overstating economic output, corporate revenue, corporate profits and tax receipts," the newspaper reported. It said executives and economists roughly estimate the inaccurate statistics inflate a variety of economic indicators by 1 or 2 percentage points.

For the second quarter, China reported that its gross domestic product grew 7.6 percent, its slowest pace in three years.

Those who doubt the reliability of data released by the government look for alternative measures to gauge the country's economic status.

Stephen Green, a China economist at Standard Chartered Research, tried to use the consumption of cement, steel and bank loans as substitutes for electricity, a traditional barometer of strength in industrial activities.

"There are some signs of stabilization, particularly in the critical area of infrastructure," Green said in a recent report, emphasizing he was not just relying on official numbers to make that case.

In June, growth in cement production rose to an annual rate of 6.5 percent from 4.3 percent in May, and steel products to 6.7 percent from 6.3 percent.

Funding for investment from the state budget rose 32 percent in June, and bank loans were up 12 percent.

"Both look like they may be bottoming out in year-on-year terms," Green said. "In absolute terms, there was a mild month-on-month pick-up in long-term loan demand, which is a sign of returning investment appetite."

Indeed, China seems to be betting again on investment to save the economy from the current downturn.

Premier Wen Jiabao said during an inspection tour in Jiangsu Province last month that "maintaining reasonable investment growth is crucial to boosting domestic demand" - a significant shift in policy tone from previous emphasis on domestic consumption as the engine of growth.

"We think that investment will again come to rescue China's economy," said Zhou Hao, an economist at Australia & New Zealand Bank. "Local government will be able to accelerate infrastructure investment in the second half."