PATTAYA, Thailand/BEIJING(Reuters) – China’s  economy is in a better shape than expected with March  industrial output growth exceeding forecasts, but it still  faces big challenges, Premier Wen Jiabao said yesterday.

Wen, speaking on the day when the central bank reported a  record rise in new lending last month, said industrial output  growth picked up to 8.3 per cent in March from a record low of  3.8 per cent in the first two months of the year.

Analysts polled by Reuters had expected a 6 per cent rise in  industrial production, due for official release on April 16  along with first quarter economic growth figures and other  data.

“China’s economy has shown some positive signs, but we can  all see that our economy still faces some very big  difficulties,” Wen told reporters in the Thai seaside resort of  Pattaya, where East Asian leaders were holding a summit.

He said China’s policymakers have taken appropriate action  to help the world’s third largest economy to weather what has  turned into the worst global crisis since the 1930s Great  Depression. “Chinese government policy has been timely, correct and  decisive,” Wen said.

In the latest sign that the government’s efforts to revive  the economy were beginning to bear fruit, new loans and money  supply growth surged to record highs in March.

Banks extended 1.89 trillion yuan ($276.6 billion) in local  currency-denominated loans in March, bringing the total for the  first quarter to 4.58 trillion yuan − nearing the government’s  full-year target of at least 5 trillion yuan.