Chinese leader in economy warning

China's economic woes that have brought growth to a three-year low will continue for some time, but the slower expansion remains within expectations, premier Wen Jiabao says.

Speaking during a tour of the south-western city of Chengdu, Mr Wen said the Chinese need to recognise the seriousness and complexity of the challenges the country faces. But he added that China's economic fundamentals remain favourable.

"At present, our country's economic growth rate remains within the target range set earlier this year and we are seeing the effectiveness of stabilisation policies," Mr Wen said in remarks posted on the central government's official website.

The government will prioritise job creation and provide financial aid and tax breaks to companies suffering from slowing exports due to sinking overseas demand, Mr Wen said. Private investment will be encouraged and the government will promote industrial upgrading and urbanisation to spur consumption, he said.

"All regions and departments need to proceed with even greater determination and courage," Mr Wen said.

His comments follow the government's announcement on Friday that the world's second-largest economy grew by 7.6% in the three months ending in June over a year earlier. That was the lowest since the first quarter of 2009 during the depths of the global financial crisis.

Growth was down from the previous quarter's 8.1%, dampening hopes that China can make up for US and European weakness, but in line with the government's official target of 7.5% for the year

Private-sector forecasters say the economy may have bottomed out during the first two quarters and China still is likely to achieve its target for the year.

Export growth has fallen and consumer spending weakened despite stimulus measures including two interest rate cuts since the start of June. The government is also pumping money into the economy through higher investment by state-owned industry and more spending on low-cost housing and other public works.

However, Beijing is moving cautiously after its 2008 stimulus pushed up inflation and spurred a wasteful building boom. Authorities have said curbs imposed on building and home sales to cool surging housing prices will remain in place.