China's Premier Wen Jiabao reassured the world that China could roll out extra stimulus measures if needed to deliver on its promise of solid growth in 2009, but said it would be a challenging year.
Wen also said he was closely monitoring the U.S. economy and was a bit concerned about the safety of Chinese assets there, which he called on Washington to protect.
In an annual news conference on the sidelines of the National People's Congress, China's largely ceremonial parliament, Wen said that the country was preparing for a long, difficult time during the financial crisis but he was convinced a recovery was within sight.
I expect that next year both China and the world will be better off, he said, reflecting the mix of caution and optimism which has characterized Beijing's approach to the threat of the global financial crisis.
At any time we can propose new economic stimulus policies, he said, adding that even after rolling out a 4 trillion yuan ($585 billion) spending plan the government had reserved some ammunition in case the crisis escalates.
China's ruling Communist Party has staked its claim to legitimacy on providing years of continuous economic expansion, so keeping growth at a minimum 8 percent now tops its agenda.
Eight percent expansion is widely thought to be the minimum needed to hold down the jobless rate at manageable levels -- although the country is already struggling to find jobs for at least 20 million newly unemployed migrant workers.
Officials fear social unrest could flare if they remain out of work for long, or many more men and women join their ranks.
A collapse in exports and a slump in factory output growth in February surprised investors who had taken recent manufacturing surveys and electricity output data as signs that China's economy, the world's third largest, had already bottomed out.
But a sustained surge in bank lending since late last year has fueled hope that ample financing is in place for the government's stimulus package to gain traction.
With 10 months to go in 2009, China is already more than halfway toward reaching its goal of at least 5 trillion yuan in new bank lending.
Retail sales also slowed in the first two months, though only slightly, suggesting that Chinese consumers, like the broader economy itself, remain in better shape than their counterparts in the rest of the world.
(Writing by Emma Graham-Harrison and Simon Rabinovitch; Editing by Nick Macfie)