Chinese Premier Wen Jiabao expressed concern over the outlook for the U.S. government debt China holds, urging Washington to take effective policies to restore the American economy to health. He also said China can do more to boost its economy if that becomes necessary.
Speaking at his annual press conference, Mr. Wen voiced confidence in the Chinese government's ability to keep its own economy growing, and said it has the resources to roll out additional stimulus measures if needed.
"We have reserved adequate ammunition. We can at any time introduce new stimulus policies," he said.
Mr. Wen reaffirmed that China can meet its traditional target of economic growth of around 8%. He said market expectations last week of another stimulus package were based on "rumors and misunderstandings," and that China's existing four trillion yuan investment program addresses "both short term and long term needs."
But he noted that the U.S. remains the world's largest economy, and said that China is closely watching the effects of policies taken by U.S. President Barack Obama.
"We have lent a huge amount of money to the U.S., so of course we are concerned about the safety of our assets. I do in fact have some worries," Mr. Wen said in response to a question. He called on the U.S. to "maintain its credibility, honor its commitments and guarantee the safety of Chinese assets."
China holds the world's largest foreign-exchange reserves, reported at $1.946 trillion at the end of 2008, and about two-thirds of that sum is believed to be held in U.S. dollar assets, primarily Treasury bonds. Mr. Wen repeated China's position that the foreign reserves are managed with a view to "safety, liquidity and profitability" – in that order. He said that while China's first priority is to protect its own interests, it will "at the same time also take international financial stability into consideration, because the two are inter-related."
The generally mild-mannered Mr. Wen, who holds a press conference every year at the close of the National People's Congress, China's legislative session, spoke in an unusually forceful tone in addressing concerns about the effect of China's own policies on the global economy.
He noted that China has not pushed down the value of the yuan, and repeated the government's commitment to currency stability "at a reasonable and balanced level." The yuan has hovered around 6.84 to the dollar since July 2008, but Mr. Wen noted that because the dollar has strengthened against other Asian and European currencies, the yuan has actually been stronger overall, which he said has pressured Chinese exports.
Mr. Wen said China alone would decide where the yuan goes from here. "No country can pressure us to appreciate or depreciate" the currency, he said.
Mr. Wen said China has maintained social stability overall, despite an increase in job losses.
He said the most important way for the country to address unemployment is to support the development of small- and medium-sized enterprises, which employ 90% of workers.
His comments underscore how such smaller companies have been hurt badly by the global financial crisis, but also show the difficulties the government will likely face in creating jobs, since a big part of the government investment plan targets infrastructure projects likely to help bigger companies.
"We will make boosting employment a key task in economic and social development, and will continue to take forceful measures" to support employment, he said.
Mr. Wen also said China hopes to reach an agreement on closer economic cooperation with Taiwan as soon as possible and said both sides need to cooperate to deal with the global financial crisis. He also said China will make "reasonable arrangements" for the island's participation in certain international groups, such as the World Health Assembly, the decision-making body of the World Health Organization. The Chinese government has long opposed Taiwan's participation in international organizations.
China will resolutely support the economic development of Hong Kong and Macau, and introduce a yuan-settlement trial involving both territories as soon as possible, Mr. Wen said.
Using the yuan to settle trade is an important step toward the eventual full convertibility of the yuan. It also allows Chinese traders to know exactly how much they will receive in their local currency, a way to bypass the currency risk that has buffeted the export sector over the last 12 months.
Responding to a question whether China is willing to increase its contribution to the International Monetary Fund, Mr. Wen said that increasing the IMF's capital isn't a matter for just one country, but a burden that should be shared by all IMF members in line with their quotas. He repeated China's stance that the IMF should take into account the interests of developing countries.
The European Union this week called for a doubling of IMF resources and U.S. Treasury Secretary Timothy Geithner has laid out several proposals to increase funding for the Fund.
China has been at pains to show it is being a responsible global citizen amid the financial crisis, speaking out frequently against protectionism and taking some measures to open its own markets. Mr. Wen's comments came a day after China said it had begun to allow local authorities to approve certain foreign investments, in a move to ease foreign investment at a time when it has been declining sharply. Foreign investment has been vital for providing jobs and introducing new technology and management practices.
Mr. Wen was speaking on the eve of a meeting of finance ministers and central bankers of the Group of 20 nations in London, which will lay the groundwork for the summit of G20 leaders on April 2.
The G20 should continue to pay attention to helping developing economies, especially the least developed ones, at its upcoming meetings, Mr. Wen said.
Speaking at his annual press conference, Mr. Wen voiced confidence in the Chinese government's ability to keep its own economy growing, and said it has the resources to roll out additional stimulus measures if needed.
"We have reserved adequate ammunition. We can at any time introduce new stimulus policies," he said.
Mr. Wen reaffirmed that China can meet its traditional target of economic growth of around 8%. He said market expectations last week of another stimulus package were based on "rumors and misunderstandings," and that China's existing four trillion yuan investment program addresses "both short term and long term needs."
But he noted that the U.S. remains the world's largest economy, and said that China is closely watching the effects of policies taken by U.S. President Barack Obama.
"We have lent a huge amount of money to the U.S., so of course we are concerned about the safety of our assets. I do in fact have some worries," Mr. Wen said in response to a question. He called on the U.S. to "maintain its credibility, honor its commitments and guarantee the safety of Chinese assets."
China holds the world's largest foreign-exchange reserves, reported at $1.946 trillion at the end of 2008, and about two-thirds of that sum is believed to be held in U.S. dollar assets, primarily Treasury bonds. Mr. Wen repeated China's position that the foreign reserves are managed with a view to "safety, liquidity and profitability" – in that order. He said that while China's first priority is to protect its own interests, it will "at the same time also take international financial stability into consideration, because the two are inter-related."
The generally mild-mannered Mr. Wen, who holds a press conference every year at the close of the National People's Congress, China's legislative session, spoke in an unusually forceful tone in addressing concerns about the effect of China's own policies on the global economy.
He noted that China has not pushed down the value of the yuan, and repeated the government's commitment to currency stability "at a reasonable and balanced level." The yuan has hovered around 6.84 to the dollar since July 2008, but Mr. Wen noted that because the dollar has strengthened against other Asian and European currencies, the yuan has actually been stronger overall, which he said has pressured Chinese exports.
Mr. Wen said China alone would decide where the yuan goes from here. "No country can pressure us to appreciate or depreciate" the currency, he said.
Mr. Wen said China has maintained social stability overall, despite an increase in job losses.
He said the most important way for the country to address unemployment is to support the development of small- and medium-sized enterprises, which employ 90% of workers.
His comments underscore how such smaller companies have been hurt badly by the global financial crisis, but also show the difficulties the government will likely face in creating jobs, since a big part of the government investment plan targets infrastructure projects likely to help bigger companies.
"We will make boosting employment a key task in economic and social development, and will continue to take forceful measures" to support employment, he said.
Mr. Wen also said China hopes to reach an agreement on closer economic cooperation with Taiwan as soon as possible and said both sides need to cooperate to deal with the global financial crisis. He also said China will make "reasonable arrangements" for the island's participation in certain international groups, such as the World Health Assembly, the decision-making body of the World Health Organization. The Chinese government has long opposed Taiwan's participation in international organizations.
China will resolutely support the economic development of Hong Kong and Macau, and introduce a yuan-settlement trial involving both territories as soon as possible, Mr. Wen said.
Using the yuan to settle trade is an important step toward the eventual full convertibility of the yuan. It also allows Chinese traders to know exactly how much they will receive in their local currency, a way to bypass the currency risk that has buffeted the export sector over the last 12 months.
Responding to a question whether China is willing to increase its contribution to the International Monetary Fund, Mr. Wen said that increasing the IMF's capital isn't a matter for just one country, but a burden that should be shared by all IMF members in line with their quotas. He repeated China's stance that the IMF should take into account the interests of developing countries.
The European Union this week called for a doubling of IMF resources and U.S. Treasury Secretary Timothy Geithner has laid out several proposals to increase funding for the Fund.
China has been at pains to show it is being a responsible global citizen amid the financial crisis, speaking out frequently against protectionism and taking some measures to open its own markets. Mr. Wen's comments came a day after China said it had begun to allow local authorities to approve certain foreign investments, in a move to ease foreign investment at a time when it has been declining sharply. Foreign investment has been vital for providing jobs and introducing new technology and management practices.
Mr. Wen was speaking on the eve of a meeting of finance ministers and central bankers of the Group of 20 nations in London, which will lay the groundwork for the summit of G20 leaders on April 2.
The G20 should continue to pay attention to helping developing economies, especially the least developed ones, at its upcoming meetings, Mr. Wen said.
—Victoria Ruan and Terence Poon contributed to this article.
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