Prime Minister Wen Jiabao says Beijing's stimulus measures are helping consumer spending and growth and, while he warns of some "prolonged difficulties" as the financial crisis spreads, foreign auto makers and other manufacturers already are seeing an unexpected rebound in sales in China.

The resilience of Chinese spending contrasts with sharp cutbacks by American and European consumers, and may help China recover faster from the financial crisis.

Mr. Wen said consumption growth has been especially fast in less-prosperous central and western regions. Auto makers' results support that claim.

A torrent of bank lending, spurred by the government, is increasing investment in China. Consumers are out shopping in response to incentives such as lower mortgage rates and tax cuts on car purchases.

Economic growth slowed to an annual rate of 6.1 per cent in the first quarter, as retail sales, after adjusting for price changes, rose 15.9 per cent for the period. While that was slower than the 17.7-per-cent rise in spending in the fourth quarter of last year, economists say the growth in consumption is encouraging, given rising unemployment in the country and the contrast with shrinking consumption in other major economies.

Mr. Wen has stressed that "confidence is more important than gold or money," and consumer spending levels suggest Beijing's efforts to boost morale are working. Auto makers in particular are benefiting. Vehicle sales in China climbed 5 per cent from February to a record 1.11 million units in March - a tentative turnaround from last autumn, when car sales slowed significantly.

Luxury brands performed well. Daimler AG's Mercedes-Benz unit and Audi AG had their highest China sales in March. So did General Motors Corp., which sells, in ventures with local auto makers, Buick, Chevy and Cadillac cars, plus the micro minivans increasingly popular in rural areas.

Foreign auto makers are coming to China this week for the biannual Shanghai Auto Show, where Mercedes-Benz will unveil its redesigned S-Class S65 sports sedan.

In China, people "still have the money to buy a Mercedes," said Ulrich Walker, chairman and chief executive officer of Daimler's northeast Asia operations. He said that while his customers, who can afford to spend more, aren't influenced by state subsidies on car purchases, China's buoyant stock markets are helping. "At the moment all the signals we're getting look positive" for a good year, he noted.

Auto sales took off at dealerships in rural China that offer Chinese-made micro minivans due to a government program offering refunds for farmers buying new cars or replacing old ones. The Wuling vehicles, built by a GM affiliate, have always been relatively inexpensive, at 30,000 to 40,000 yuan ($4,400 U.S. to $5,800) apiece, but the refunds made them more attractive.

Song Chunliang, a 24-year-old farmer in Shandong province, said he rushed to buy a new vehicle last month after hearing about the subsidies. He considered cars from Wuling's rivals but bought a Wuling Sunshine microvan in the end, using the money he raised by selling his old Changhe-Suzuki and borrowing from a friend.

"I thought about replacing my old car before. But this was such a great promotion plan. I knew I had to act on it immediately," Mr. Song said.