China's economy recovering steadily, but hard battle ahead: Premier Li

China's economy is showing steady recovery, but a hard battle still lies ahead as the situation remains severe both at home and abroad, state radio quoted Premier Li Keqiang as saying on Monday.

The government would continue to adopt a proactive fiscal policy and prudent monetary policy, Li was quoted as saying, pledging to cut taxes and ramp up credit support for firms.

The world's second-largest economy is gradually emerging from a 6.8% economic decline in the first quarter, its first contraction on record.

Li said the economy was recovering gradually and had returned to growth.

"We should strengthen our confidence in development," state radio quoted him as saying. "But the situation at home and abroad is still grim, and we should prepare to continue to fight a hard war."

The government has also rolled out a raft of measures, including more fiscal spending, tax relief and cuts in lending rates and reserve requirements, to revive the virus-hit economy and support employment.

The government is due to release second-quarter gross domestic product data on Thursday.