BEIJING - CHINESE Premier Wen Jiabao called on domestic companies to keep up their confidence in coping with the global financial crisis, during a tour of the wealthy but export-dependent Yangtze Delta, the Xinhua news agency reported on Sunday.

China is trying to increase domestic consumption to offset a downturn in demand for exports, on which its economy is heavily dependent. Zhejiang Province, which Wen visited along with the country's financial hub, Shanghai, is known for its private entrepreneurs.

Buoying companies' confidence was 'a powerful weapon to deal with the adverse effects of the global economic turbulence and financial turmoil,' Wen said, in a tour of local private enterprises and large-scale companies.

'Great importance should be laid on the difficulties and challenges private companies face and more supportive policies should be given them to create a sound environment for their development,' he said.

Wen encouraged business people in Yiwu, a center for the garment industry, to focus on the domestic market, as well as strengthening their position abroad. China has already provided some relief to struggling garment factories, by restoring some tax rebates on exports.

His visit to the Yangtze Delta came as Shandong, another business-savvy coastal province, announced a nearly 3 per cent drop in employment numbers as of late September, Xinhua said in a separate article.

'The economic slowdown caused by the global financial meltdown has other negative impact on the legitimate rights of workers,' Xinhua cited a spokesman of the provincial federation of trade unions as saying. He cited a slowing rate of salary increases and a growing number of labor disputes.

Shandong has the second highest GDP in China, just after Guangdong Province in the south.

Mr Wen urged big companies to merge or restructure, eliminate outdated production capacity and increase investment in research and development. -- THOMSON REUTERS