As an annual routine, the Chinese premier meets the press after the closing ceremony of each year's session of the National People's Congress (NPC). Wen Jiabao, who was appointed to a second five-year term as premier at the First Session of the 11th NPC, answered questions from domestic and foreign journalists on March 18. Premier Wen's main points follow.

Inflation control

Wen said that controlling the rising prices and curbing inflation is the top priority of the government.

He acknowledged that it will be hard for China to attain its goal of containing the consumer price index (CPI) growth at about 4.8 percent and controlling price hikes this year, and it is made even more difficult by the worst sleet and snow disaster in decades in the first two months of this year.

"But we have no plan to change this goal," he told reporters.

Wen explained that it shows the resolve of the government to control price rises and curb inflation by setting the goal, and it will help to stabilize the people's expectations for price rises by doing so. "With prices rising very rapidly, the expectations for price hikes are usually more fearful than the price rises themselves," he said.

In addition, China has set this goal because it has confidence in what it has, Wen said, referring to the country's grain reserves of 150-200 million tons and general oversupply of major industrial products.

"As long as we take the right policies and effective measures, we are fully confident that we can control the excessive rises in prices," he said.

"When mapping out this year's economic policies, the first thing is to prevent the fast-growing economy from overheating, so that we can better address problems surfacing from the economic growth," he said.

"However, China is a developing country with a population of 1.3 billion, which demands that we keep the economy at an appropriate growth rate to confront employment pressure," he said. The problems that emerge on the road ahead shall be resolved through development, he stressed.

"We must strike a balance between economic development and inflation control. Now we have set our 2008 goal for gross domestic product growth at 8 percent and a target for CPI rise at about 4.8 percent, showing that we are trying to hit a balance," he said.

"I know it's a tough task," he added. The year 2008 may be the most difficult year for the Chinese economy, largely due to growing uncertainties both inside and outside the country, said Wen. "It will be harder to make decisions."

"We shall keep a close eye on economic changes and trends, take timely and flexible measures in response, and have a good command of the pace, direction and intensity of macroeconomic control measures to ensure steady and fast economic development, creation of about 10 million new jobs and effective control of inflation," he said.

Economic policies

China's adoption of a tight monetary policy and a prudent fiscal policy is based on the country's reality, to address the excessive growth of fixed assets investment, money supply and credit, and the trade surplus, said Wen.

China's economy is already tied to the globalized economy, and, as a result, all kinds of changes and fluctuations in the international economy will inevitably be reflected on China's own economy, said Wen.

"The government will keep a close eye on the latest world economic trends and make flexible, prompt reactions to future changes," he said.

The effects of the government's economic policies would only be seen in the middle and long term, not within a short span of one or two months, said Wen.

"I myself watch very closely the development in the world economy and the U.S. economy," said Wen. "What concerns me now is that the U.S. dollar is depreciating continuously, and when the U.S. dollar will reach the bottom in this depreciation process, what kind of monetary policy the U.S. Government will adopt and where the U.S. economy is heading will draw our close attention."

With regard to the reform of the renminbi exchange rate regime, Wen said that China has let the yuan (a denomination of renminbi) appreciate steadily since July 2005, when the government started to peg the yuan to a basket of currencies.

"The yuan has appreciated about 15 percent against the U.S. dollar in the past two years, with appreciation even faster recently," Wen said.

"No matter what monetary policies are adopted, we shall weigh their advantages and disadvantages and take both aspects into consideration, as the changes in both interest rates and exchange rates have pros and cons," said Wen.

"I know it (how to properly adopt various monetary policies) is a great test to China," he said. "Anyway, China still has good economic fundamentals with huge market potentials, especially in rural areas. We shall have confidence in China's economic development."

Tibet riot

On March 14, violence involving beating, destruction of property, looting and arson broke out in Lhasa. In the incident, cruel rioters injured, or even killed innocent people on the street by extremely crude means, smashed vehicles and public facilities, torched private houses, stores and schools, Wen said.

"This incident has seriously disrupted order in Lhasa and inflicted heavy losses of lives and property of the people," he said.

There are ample facts and there is plenty of evidence to prove that the recent riot in Lhasa was organized, premeditated, masterminded and incited by the Dalai Lama clique. The consistent claims made by the Dalai Lama clique that they pursue no independence but peaceful dialogue are "nothing but lies," said Wen.

"The local government and related departments have been strictly keeping with the Constitution and laws, and have exercised extreme restraint," he said, adding that the local government has taken proper measures to quiet down the incident and protected the interests of the people in Lhasa and in Tibet.

He said since the peaceful liberation and especially the democratic reforms in Tibet, the region has moved forward and become more developed. "Those claims that the Chinese Government is engaged in the so-called ‘cultural genocide' are nothing but lies," he said.

The Chinese Government is fully capable of maintaining stability and order in Tibet, and at the same time will continue to support economic and social development, improve the livelihood of all ethnic groups, and protect the culture and environment in the region. "We will never waver from this position," he said.

Wen also said that the door of dialogue still remains open to the Dalai Lama so long as he gives up the position for "Tibet Independence."

Taiwan question

Admitting that the situation in Taiwan is "in a sensitive stage" at the present time, the premier said what concerns him most is to maintain peace and stability across the Taiwan Straits and promote common development on both sides.

This should be the mainstream and main chord in growing cross-Taiwan Straits relations, he said.

The "referendum on joining the United Nations under the name of Taiwan" will deny the reality that Taiwan and the mainland belong to one China, he said. It will jeopardize relations across the Taiwan Straits, harm the fundamental interests of people on both sides, and threaten peace across the straits and even in the Asia-Pacific region, he said.

Premier Wen reiterated that all issues concerning China's sovereignty and territorial integrity should be decided by all Chinese people, including Taiwan compatriots. "No one could ever succeed in the attempt to separate Taiwan from China and such attempts are doomed to fail," he said.

On the precondition of one China, the mainland hopes to restore peace talks as soon as possible, he said.

"In such negotiations, whatever topics could be put on the table, including such significant issues as putting an end to the state of hostility between the two sides."

Cross-straits trade

"We will continue to increase economic and trade exchanges with Taiwan, particularly we want to resume the ‘three direct links' between the two sides as quickly as possible," said Wen.

"To serve the interests of people in Taiwan, we are even ready to make necessary sacrifices," Wen said. "For example, Taiwan has been running a huge trade surplus with the mainland for many years. In 2007, trade between the mainland and Taiwan stood at $120 billion, with Taiwan having a surplus of over $70 billion," he added.

However, more than 2,000 products from the mainland are still forbidden to enter Taiwan's market. In spite of this, the mainland has continued to give market access to products from Taiwan, including agricultural products, said the premier.

Taiwan has also imposed restrictions on investment from the mainland, while more than 70,000 Taiwan enterprises have entered the mainland market, bringing a total investment of $48 billion. If the investment through the third party was included, the figure was over $70 billion, Wen said.

He said the mainland will continue to expand the scope of economic exchanges with Taiwan in such fields as investment, trade, tourism and finance for mutually beneficial cooperation.

Government work

Premier Wen said, "While we continue strengthening economic adjustment and market regulation, we'll pay much more attention to social management and public service."

Government work should also be open and transparent. "Only when the government understands the needs at the grassroots can the government make progress. Only when the people know what the government really does can they offer stronger support and more constructive criticism," he said.

Wen added that the government will also promote public finance reform, so that public finance can help readjust the economic structure, change the economic growth pattern, and improve people's livelihood as well as environmental protection.

The premier said that he was resolved to press ahead with public finance reform in his five-year tenure, so that the people's money could be better spent to serve people's needs.

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