The Purchasing Managers' Index (PMI), a preliminary readout of the country's manufacturing activity, dropped below 50 percent in November, the first time since February 2009. It rebounded to 50.3 percent in December.

The premier noted that China is caught in a position where pressure for an economic downturn and high price levels both exist.

Compared with 2008, when the global financial crisis hit, dwindling external demand and rising costs for enterprises have further complicated the current situation, he said.

"We have a relatively cool market, which is the core of today's problems," Wen told the entrepreneurs.

Boosting domestic demand focuses on consumption demand but also includes investment demand, he said, while stressing that investment must be better structured.

Investment in industries with overcapacity, high pollution and energy intensity, and redundant construction must be curbed, he noted.

The government has underlined a balance between sustaining growth and controlling inflation. The central bank hiked banks' reserve requirement ratio (RRR) six times and the benchmark interest rate three times in 2011 before cutting the RRR in December.

In response to business concerns over fund strains caused by the monetary tightening, Wen reiterated the line of fine-tuning and presetting monetary policies.

"There lies an issue of structure in fund supply. We can't talk about the scale of loans and liquidity on a general level, but should instead analyze the situation of different industries and companies thoroughly to solve the problems one-by-one," he said.

In the visit to a locomotive company, Wen urged the rail industry to strengthen scientific design, staff management and after-sales service, and put safety and quality as the top priority in research and manufacturing.

A high-speed train rammed into a stalled train in east China's Zhejiang province in July, leaving 40 people dead and 172 injured. Official investigators cited design flaws and mismanagement as the cause.

Wen said he "felt deeply sad" about the accident while calling for the continuous development of the high-speed rail industry.

"The accident taught us a lesson and made us understand that we must work arduously with stronger senses of confidence and responsibility to achieve the safe, healthy and sustained development of China's high-speed railways," Wen said during the visit.