China: Wen Jiabao Talks To Chinese netizens On The Economy27 February, 2011, 16:13. Posted by Zarathustra
Tags: Economy, Growth, Inflation, Real Estate, Wen Jiabao
Premier Wen Jiabao talked to Chinese netizens this morning. On the whole I don’t think there are many things really new here as far as the economy is concerned. He continued to recognise the problems of high inflation and home prices. He recognise the needs to shift the growth model, and back down the demand from the West on Chinese Yuan appreciation.
Here are some highlights of the points:
On Economic growth
Wen Jiabao confirmed that the growth target in the 12th five-year plan would be 7% each year. The government will put the focus on improving the “quality and efficiency” of growth, and in his own words, that means the government hopes to be able to share the economic growth with more people and improve their lives, and make the growth more sustainable. Thus the government will not only look at the growth, but to look at other indicators such as efficiencies, environment. etc, and most importantly, whether the people are happy with the development.
Wen Jiabao certainly thinks that inflation is a big concern for the government. Whether you believe or not, he said the government has taken actions to lower inflation from 5.1% in November to 4.6% in December, and stayed before 5% in January. Naturally, he knows that people do not trust statistics from the National Bureau of Statistics, but he insisted that the figures are reflecting the truth.
He also mentioned that food prices and oil prices have been rising in the international market, so it is not entirely a Chinese problem.
To tackle the problems of inflation, he said the government will take actions at four fronts. First of all, liquidity will be controlled. Second, to increase productions, particularly agricultural productions (he also mentioned steps the government has taken to tackle the winter drought in wheat-producing areas of China. Third, improve logistics of agricultural products to lower the costs of transportation and prevent damages in the course of transportation. Fourth, to better manage the market to stop speculations and hoarding of commodities.
On Home Prices
Wen Jiabao talks about home prices again (certainly). He said the government has taken actions in the past year or so to curb home prices. The government has increased housing supply and invested to build 5.9 million affordable housing in last year, and will continue to do so. In the coming 5 years, the government will invest and build 36 million affordable housing, mostly for rental. The government will continue to stop home buying purely for investment and speculation. The government will also manage the market to stop developers from hoarding. The Premier also asked real estate developers to live up to the social responsibility. In his own words he said although the government “has not investigated the profit each real estate developer is making, real estate developers are the members of the society, thus they have to hold the responsibility to the society”.
An interesting statistics which the Premier cited was that 80% of people in China are living in properties they own.
On Chinese Yuan Exchange Rate
The government will continue the currency reform, but Wen Jiabao said the currency reform will have to meet three requirements. First, the Chinese government will be able to take the initiative. Second, the reform will be gradual. Third, the reform will be manageable by the government. The Premier rejects the idea of quick appreciation as it will hurt exports and manufacturing, which will undoubtedly lead to high unemployment. When that happen, he said, the government will have no way to increase domestic consumption, which is very important for rebalancing growth.
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