Charting a New Course

Chinese Premier Wen Jiabao spoke to Chinese and foreign media at a press conference on March 14, after conclusion of the Fifth Session of the 11th National People’s Congress, China’s top legislature. Edited highlights follow:

Charting a New Course

Chinese Premier Wen Jiabao spoke to Chinese and foreign media at a press conference on March 14, after conclusion of the Fifth Session of the 11th National People’s Congress, China’s top legislature. Edited highlights follow:

Sino-U.S. trade imbalance

Cooperation is the way to address the trade imbalance between China and the United States as well as the difficulties and friction arising from it.

The United States should ease restrictions on its exports to China, and China is prepared to buy more from the United States. The two countries should create favorable conditions for mutual investment and enhance cooperation in infrastructure construction. The two countries should also expand cooperation in hi-tech fields, including new energy, new materials, energy conservation and aviation.China’s investment in U.S. infrastructure construction would boost the employment of U.S.workers.

I believe that cooperation always triumphs over confrontation. As long as we continue to move in this direction, business ties between China and the United States will enjoy sustained and sound growth.

China’s international balance of payments,particularly in trade of goods, is approaching basic equilibrium. China’s current account surplus in 2011 only accounted for 2.8 percent of its GDP, below the 3-percent level that is internationally recognized as appropriate.

The real effective exchange rate of the Chinese currency has risen by 30 percent since China launched the exchange rate regime reform in 2005. The exchange rate of the yuan in the Hong Kong market for nondeliverable forwards began to float in both directions last September, which indicates the real effective exchange rate of the yuan has reached its natural equilibrium. China will continue to advance the exchange rate regime reform to have the yuan move in both directions by a larger margin.

China will stick to the principles of the Doha Round of world trade negotiations to facilitate free trade and oppose trade protectionism.

Cross Straits relations

The political, economic and cultural foundations for the “1992 Consensus” on the one-China principle have been enhanced and popular support for the “1992 Consensus” has become stronger. The mainland and Taiwan should accelerate follow-up negotiations of the Economic Cooperation Framework Agreement and expand bilateral business ties.

We will pay particular attention to accommodating the interests of small and mediumsized enterprises, and industries with local characteristics in Taiwan, particularly those in central and south parts of the island.

The mainland will promote financial cooperation and give special care to Taiwanfunded businesses on the mainland.

The two parts of the ancient ink paintingDwelling in the Fuchun Mountains, by famous Yuan Dynasty (1271-1368) painter Huang Gongwang, was fi nally put on display as one piece in Taipei last year. This showed that Chinese culture has strong cohesion and inspiration. Deep-rooted common cultural bonds will help resolve the merely decadeslong political grievances across the Taiwan Straits. It’s my sincere hope that the two sides will work together to promote people-topeople and cultural contact.

I am willing to visit Taiwan as a tourist after retirement, though this also depends on the circumstances at that time.

Political reform

I have addressed the topic of political reform in China on many occasions in recent years,giving my view on the topic in full and in detail. My long-standing interest in political reform comes from a strong sense of responsibility.

Although after the crackdown on the Gang of Four in 1976, the Communist Party of China adopted resolutions on many historical matters, and decided to conduct reform and opening up, the mistakes of the “cultural revolution” (1966-76) and feudalism have yet to be fully eliminated.

As the economy continues to develop, such problems as income disparity, lack of credibility and corruption have occurred. I’m fully aware that to resolve these problems we must press ahead with both economic and political reforms,in particular reforms to the leadership system of the Party and the country.

Now the reform drive in China has come to a critical stage. Without successful political reform, it’s impossible for China to fully institute economic reform and the gains we have made in these areas may be lost, and new problems that have emerged in Chinese society will not be fundamentally resolved, and such historical tragedies as the “cultural revolution” may happen again in China. Any member of the Party and all government of fi cials with a sense of responsibility must fully recognize that further reform is an urgent task for China.

I know very well that the reform will not be easy and reform efforts will not succeed without the consciousness, the support, the enthusiasm and creativity of our people. To conduct reform in a country with 1.3 billion people, people must always bear in mind China’s national circumstances and develop socialist democracy in a step-by-step manner.

COMMITED LEADER: Premier Wen Jiabao talks about his tasks during his last year in of fi ce at a press conference on March 14

However, the process of reform can only go forward and must not stand still, let alone going backward because there is no other alternative.

Housing market

The housing market concerns fi scal, banking,and land policies of the government as well as the interests of businesses, so that the regulation in this sector has encountered massive resistance.

However, regulatory efforts in recent years have paid off, as the government has a very fi rm resolve, and has been able to curb speculative and investment-driven demand with focused measures.

The people’s demand for housing is strong and persistent as China is a big country with 1.3 billion people, going through rapid industrialization and urbanization.

We have set the target of providing adequate living space for the people, but this does not mean that each person will necessarily have his or her own home. We will continue to encourage people to rent houses.

If we develop the housing market blindly,a bubble will emerge in the housing sector.When the bubble bursts, not only the housing market will be affected, it will weigh on the entire Chinese economy.

Housing prices should match people’s income and the construction cost, and the pro fi t should be reasonable too. The government will not slacken its efforts to regulate housing prices, which are still far above reasonable levels.

In the housing sector, we should allow the market to play a fundamental role in allocating resources. At the same time, the hand of the government is indispensable, as it can promote stability and social equality.

Hong Kong’s development

Fifteen years have passed since Hong Kong returned to the motherland. What has happened in Hong Kong over the past 15 years has shown that the principles of “one country,two systems,” “Hong Kong people governing Hong Kong” and a high degree of autonomy have strong vitality.

In the past 15 years, Hong Kong encountered two fi nancial crises. But under the leadership of the government of Hong Kong Special Administrative Region (HKSAR)and with the joint efforts of the Hong Kong compatriots, it has successfully weathered the fi nancial crises and sustained its status as an international fi nancial center and still enjoys a sophisticated free economy.

In 2011, the per-capita GDP of Hong Kong reached a record high of $34,200 and the employment situation there is in positive shape. Hong Kong now faces both dif fi culties and opportunities. The global fi nancial crisis and the European debt crisis still have had an adverse impact on Hong Kong and pressure remains. Moreover, Hong Kong faces the dual pressure of slowing economic growth and in fl ation.

Under such circumstances, Hong Kong must continue to work hard to develop the economy, improve people’s lives, advance democracy and maintain social harmony.Efforts should be made to address such important matters as social equity, consumer price hikes, people’s housing needs, education and people’s medical care on a priority basis.

The election for the fourth-term chief executive of HKSAR is currently underway.I believe that as long as the principle of openness, justice and fairness is observed and relevant legal procedures are complied with,Hong Kong people will elect a chief executive who enjoys widespread popularity.

Economic growth

China lowered its GDP growth target for 2012 to 7.5 percent, the first time in many years that the target has dropped below 8 percent. Slower growth is made to fi t with the 12th Five-Year Plan for national economic and social development, which targets a 7-percent annual GDP growth rate from 2011 to 2015,and to guide people in all sectors to focus their work on accelerating the transformation of the pattern of economic development and making growth less dependent on natural resources and environmental consumption.

Indeed, the Chinese economy faces slowing growth due to the impact from the European debt crisis and the diminishing of contracting overseas demand. Under such circumstances, to lower the growth target mainly aims to facilitate economic reform. The Chinese economy will overcome the current unbalanced, uncoordinated and unsustainable development mode to achieve expansion of higher quality, which will be helpful for world economic growth.

China’s GDP has topped 47 trillion yuan($7.42 trillion). On this basis, the growth rate of 7.5 percent cannot be counted as low, not to mention the economy would keep expanding at this pace.

We will make every effort to let ordinary people enjoy more bene fi ts.

Social justice

The government has done a lot of work over the past nine years to promote social equity and justice.

On the legal front, the government has incorporated the requirement on respecting and safeguarding human rights into the Chinese Constitution. The government has also formulated the Property Law to protect the legal property rights of the people, amended the Election Law to ensure equal rights of election of urban and rural residents, and abolished the regulations that restrict the freedom of mobility of rural residents to cities. China’s urbanization rate has surpassed 50 percent thanks to the removal of these restrictions.

The government has abolished agricultural taxes so as to ease the burdens on farmers.Also, the government now provides nine-year free compulsory education, offers free vocational education to rural students, and grants subsidies and scholarships for university students and high school students in rural areas.

The government also put in place a social security system that includes an old-age pension, unemployment insurance and health care programs. The health care programs already cover 1.3 billion people.

All these measures are an institutional step of our society toward social justice. I know that income disparity and judicial injustice still incur many complaints from the people.The government will continue to work hard to promote social justice during my last year in office. The government will formulate an overall plan for the reform of the income distribution system. The government will formulate and introduce a regulation on the expropriation and compensation of collectively owned rural land so as to ensure farmers’ property rights to the land they have contracted. The government has raised expenditure on education to 4 percent of national GDP.

I don’t feel surprised at all that there have been some critical comments on the Internet about the performance of the government and I think it is only natural for that to happen.

The government must seriously reflect on the critical views that people have made and, in fact, the government has often been inspired by such comments from the public when making decisions on major issues.

I have often thought about inviting some representatives of the people, who on a regular basis make critical comments about the work of the government, to Zhongnanhai, the seat of the Chinese Government, so that we can have face-to-face discussions on issues they are interested in.

We have tried to solicit the public’s views when drafting this year’s government work report but more efforts should be made.During my tenure as premier, some slanders about me have caused pain, though without disturbing me. I will continue to press ahead with my work and uphold my ideals without hesitation and misgivings.

Syrian issue

China has no self-interest in the Syrian issue and China does not take sides with any party, including the government of Syria. We make our own judgments and determine our own position on this issue on the basis of actual facts.

Relevant parties in Syria should immediately stop the killing of civilians. China respects the Syrian people’s legitimate aspiration for change and supports the special envoy jointly appointed by the UN and Arab League in his mediation efforts. China has deep sympathies for the humanitarian plight of the Syrian people. We have participated in relevant international humanitarian aid and will continue to do so. At the same time,China has through its own channels worked intensively with relevant parties for the early launch of a political dialogue process.

China believes that the demand for democracy by the Arab people must be respected and truly responded to.

Private lending

A thorough legal study must be conducted on private lending in order to introduce legal safeguards. The case of Wu Ying, a businesswoman from east China’s Zhejiang Province who was given a death sentence in February on charges of fraud and illegal fund-raising,must be handled on the basis of real facts. The Supreme People’s Court is taking a cautious attitude toward the Wu Ying case.

The case shows that private fi nancing activities cannot meet the requirement of economic and social development in China. Chinese companies, particularly small and micro ones, need access to funds, but the banks are not able to meet those companies’ needs and there is a large amount of idle private capital.

The government should allow private capital to enter the financial sector and make the process standardized and open.We need to encourage their development,and at the same time put them under strict oversight and supervision. The People’s Bank of China and the China Banking Regulatory Commission are actively considering launching pilot reform programs on developing private fi nancing activities in Wenzhou, Zhejiang.

Tibet

We oppose the Tibetan clergy’s actions when they take such radical measures as self-immolations to disturb and undermine social harmony. These young Tibetans are innocent and we feel deeply distressed by their behavior.

Tibet and the Tibetan-inhabited areas in the four provinces of Qinghai, Sichuan,Gansu and Yunnan are inseparable parts of China’s territory. The so-called Tibetan government-in-exile in Dharamasala in India is in nature a theocratic one, either under the direct control of the Dalai Lama or under his indirect in fl uence. Its purpose is to separate Tibet and the Tibetan-inhabited areas from China. We have a fi rm position and principle on this matter.

Tibet is still behind central and eastern parts of China in terms of economic and social development although it has made significant progress in these two respects over the past years. The Chinese Government has taken strong measures and drafted new plans to accelerate development in Tibet so as to improve its people’s living standards.

The government should pay attention to protecting Tibet’s eco-environment, culture and traditions while developing its economy.We should respect the Tibetan compatriots’freedom of religious belief and their religious belief is protected by law. We must treat all of our Tibetan compatriots with equality and respect and make continuous improvement of our work in this fi eld.

Income disparities

The government will continue to increase the income of urban and rural residents, and raise the minimum wage levels so that people’s income will rise in line with economic growth and increases in productivity.

The government will make adjustments to income distribution, further regulate the income of high-income groups, in particular the pay and bonuses of senior managers of stateowned enterprises and state-owned financial institutions, while raising the proportion of middle-income groups.

EAGER TO KNOW:Journalists put their hands up to ask questions at Premier Wen Jiabao’s press conference on March 14

The government will further improve the social security system, protect lawful incomes and curb illegal incomes.

To promote income equality, the government must create equal conditions for all in terms of education, employment and starting up one’s own business so that all people will be able to get started from the same starting line.

The government will pay close attention to the well-being of vulnerable groups. Only after the living conditions of those people are improved, can we achieve the goal of raising the living standard of the nation as a whole.

The government must also continue reform in the fiscal system and income distribution system, so as to push forward the institutional structure the country needs to achieve the goal of common prosperity.

Government debts

China’s debt-to-GDP and budget deficit-to-GDP ratios are at a fairly low level, and they are both lower than that of many developed countries and emerging economies.

The government’s debts are at a controllable and safe level. In 2010, the volume of local government debts stood at 10.7 trillion yuan ($1.69 trillion). The figure only increased by 300 million yuan ($47.39 million)by the end of 2011.

The government will properly handle the debt stock, and strictly control the increase of government debts, adding that the revenue and expenditure of local governments must be incorporated into their budgets and final accounts, and be subject to supervision by people’s congresses at the same level.

The majority of government debts are in the form of high-quality assets, with stable cash fl ows and promising returns. The debts of some projects can be repaid by their returns. The market should play a role in handling local government debts in terms of asset disposals, transfers of projects and the sale of equity.

We will take local government debt very seriously, and will not allow it to adversely affect China’s development.