The first case of the rare H7N9 virus was reported from Beijing on Saturday after a seven-year-old girl was admitted to a city hospital with the symptoms of the disease.
The flu has now killed 11 persons across China and at least 44 people are known to be infected by it.
The first case from Beijing triggered murmurs of panic in the city with social media platforms buzzing with the news.
What has worried residents more is that the child's parents work in a poultry market in Shunyi located in the suburbs of the capital which now has about 20 million residents.
According to state media, the child was being treated at the Beijing Ditan Hospital, and was in stable condition, Zhong Dongbo, deputy director of the Beijing Municipal Health Bureau, said in a press briefing.
"The girl developed flu symptoms, including fever, cough, sore throat and headache, Thursday morning. She was brought to the Beijing Ditan Hospital to seek medical treatment around noon and was then hospitalised for lung infection," state-run Xinhua news agency reported.
It added: "The child received the drug Tamiflu as well as intravenous drips on Thursday night and later was transferred to an intensive care unit after condition worsened. After oxygen therapy and other treatment, her suffocation and coughing symptoms eased markedly and body temperature fell to 37 degrees Celsius from 40.2 degrees Celsius, a spokesman with the Beijing Ditan Hospital said."
Two people, presumably her parents, who have had close contact with the child have not shown any flu symptoms, a spokesman said. He added that the girl's parents were engaged in live poultry trading in a township of Shunyi District in Beijing's northeastern suburbs.