BEIJING Fri May 23, 2014 7:31am

China's economy still faces "relatively big" downward pressures and timely policy fine-tuning is needed, Premier Li Keqiang was quoted by state radio as saying on Friday.

China's annual economic growth slowed to an 18-month low of 7.4 percent in the first quarter, raising the risk that China could miss its economic growth target - set at 7.5 percent in 2014 - for the first time in 15 years.

"Currently, the economy is generally stable and we see positive structural changes, but downward pressures are still large and we cannot be complacent," Li said during a visit to the northern region of Inner Mongolia.

"We should use appropriate policy tools and pre-emptive fine-tuning in a timely and appropriate manner to help resolve financing strains for the real economy, especially small firms' difficulties in financing and high borrowing costs," he said.

Such policy fine-tuning should help maintain "reasonable growth" in money supply and bank credit, he said.

The government has been using targeted policy measures, including accelerated spending on railways and affordable housing and tax cuts for smaller firms, to underpin growth in the world's second-largest economy.