HANGZHOU - Premier Wen Jiabao has said China is capable of meeting its economic and social development goals for the year despite domestic and external challenges.

During an inspection tour of eastern China's Zhejiang province on Tuesday and Wednesday, Wen pointed to positive changes emerging in some sectors, and favorable conditions to maintain steady and relatively fast growth.

"We have the conditions and capabilities, and will be sure to fulfil this year's economic and social development targets," he said.

The economy's fundamentals remain sound, the premier said, but he warned that the foundation for economic stabilization is still unstable, and that economic hardships may continue for some time.

The government pared its gross domestic product (GDP) growth target for 2012 to 7.5 percent from the previous 8 percent in March in the wake of a persistent slump in the United States and spreading debt woes in the eurozone.

Dragged down by a lackluster external market and government efforts to cool inflation, the country's GDP growth hit a three-year low of 7.6 percent in the second quarter of 2012.

Government leaders, enterprises and the whole society should have confidence, especially in times of difficulty, Wen said, calling for government authorities to carry out work in line with new conditions and local realities.

During meetings with local entrepreneurs, Wen said the economy has shown positive changes over recent months, especially since July, as both investment and consumption have grown steadily.

Wen said industrial production in eastern regions is picking up slowly, with July's industrial output growth in Guangdong, Zhejiang and Jiangsu up by 1.4, 1.9 and 0.7 percentage points, respectively, from those recorded in the first half.

Wen also cited a stable job market, which saw 8.12 million new urban jobs created in the first seven months, up 390,000 from the same period of last year, and easing price gains, which provides more room for monetary loosening.

Growth of the consumer price index, a key gauge of inflation, dropped to 1.8 percent year on year in July, the slowest rate since February 2010.

The country's central bank earlier in the year slashed the reserve requirement ratio for banks twice and interest rates twice in a bid to boost lending and shore up growth.