Last month's growth accelerated from the 3.8-percent rise in January and February as domestic demand continued to improve, Wen said, according to the China Securities Journal.

Fixed asset investment and retail sales, which measure spending on infrastructure and consumption respectively, also increased quickly in the first quarter, he said in an interview while in Thailand for the ASEAN summit at the weekend.

All this showed the economy was performing "better than expected" thanks to Beijing's measures to tackle the international financial crisis, he said.

China in November unveiled an unprecedented four-trillion-yuan (580-billion-dollar) stimulus package to ward off the worst effects of the global crisis.

However, Wen said the nation's export-dependent economy was still facing major difficulties due to a sharp contraction in foreign demand, which has placed increasing pressure on employment.

"The international financial crisis has not yet hit the bottom. It's hard to say that China alone has steered away from the crisis," he said. "We should never overlook (the risks)."

State media reported Monday that China is drawing up a fresh stimulus package aimed this time at boosting domestic consumption as the effects of the export downturn continue to bite. However, the China Securities Journal report did not say how much the scheme would amount to.

Wen's comments came just days before the National Statistics Bureau is slated to release first quarter data on the Chinese economy on Thursday.

Tai Hui, an economist with Standard Chartered in Singapore, said the March growth in industrial output was boosted partly by companies filling their inventories after depleting them in recent months.

However, the level of growth remains modest compared with before the crisis, and the overall economy is still weak, he said.

"The economic environment, although it has improved, remains relatively weak due to the global financial turmoil," he said.

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Beijing (AFP) May 1, 2009
China's manufacturing activity expanded in April to its highest level for a year, according to data released Friday, in an indication that the nation's economy might be showing signs of recovery.