China's Premier Wen Jiabao said the country's steel industry was on the road to recovery thanks in part to the government's stimulus policies, state media reported on Tuesday. His comments underscored official optimism that China is in a strong position to ride out the global financial storm and that companies should use the challenging environment to push ahead with major reforms.

 

There have been tentative signs of a slight upturn in China's steel industry, with some steel mills increasing spot purchases of iron ore from abroad, spurring speculation that the government's economic stimulus is having an impact.

 

'Signs that the steel industry is turning better are related to national policies for promoting car and electronics sales in rural areas,' Wen was quoted as saying on the government website (gov.cn).

 

Figures for January steel production will not be published until March, when China's statistics bureau will release January and February figures together.

 

He called on steel companies to expand their domestic market and stabilise their external market; to upgrade their technology and increase their efficiency; and to improve their internal management.

 

In a visit to a textile firm in Tianjin, a port city near Beijing, he also urged the textile industry to improve its competitiveness and adjust its product structure in the face of slumping demand.