Chinese Premier warns of tough economic challenge ahead

China's Premier Wen Jiabao has warned that the country faces tough challenges in balancing economic growth and tightening policies, he said on Saturday on his trip to the northern port city of Tianjin.

He said that China needs to avoid piling on adjustment policies as it carries risks of "negative consequences", in the midsts of a difficult domestic and international situation.

"At present, the national economy continues to improve, but domestic and external conditions remain extremely complex, and macro adjustment faces many dilemmas," he said.

Global uncertain following the crisis in Greece is a cause of concern for China, which depends heavily on exports, despite the country's effort to make domestic demand the top driving force for growth.

According to analysts, his remarks confirms the complicated situation making policymakers resort to tough decisions like containing rising inflation with signs of economic activity slowing.

China's foreign direct investment (FDI) in April rose by 25 per cent year-on-year compared with March's 12.08 per cent, which is a healthy growth with high demand for goods enticing foreign investments in China. (See: China's April foreign direct investments soar 25 per cent)