China's economy expanded 11.9 percent year on year in the first quarter, indicating a solid recovery of the world's third largest economy, but also fanning concerns of asset bubbles.

The gross domestic product (GDP) in the first three months totaled 8.07 trillion yuan (1.19 trillion U.S. dollars), the National Bureau of Statistics (NBS) announced Thursday.

The rise was 5.7 percentage points higher than the same period last year, when it dropped to 6.2 percent, the lowest in a decade, and was higher than the 10.7 percent of the fourth quarter last year.

"With the implementation of the stimulus package to combat the global economic downturn, the Chinese economy achieved a good start this year as the recovery momentum continues to consolidate, laying a solid foundation to meet the annual economic target (of 8 percent growth)," NBS spokesman Li Xiaochao said at a press conference on Thursday.

"The 11.9-percent growth in the first quarter is largely a result of last year's low comparison base, and the government's stimulus," Li said.

The better-than-expected growth was largely driven by domestic demand, as retail sales surged 17.9 percent year on year in the first quarter, and fixed-asset investment rose 25.6 percent.

"The growth is strong, and above potential, but there are signs of overheating," said Steven Green, head of research of Standard Chartered Bank (China).

He said with stimulus already partly ended, the key was whether the authorities could steer the economy on to a more sustainable growth path, or whether inflation or asset bubbles would occur in the second half of the year and trigger a bigger policy-induced slowdown in 2011.