China faces tough year, Wen rejects yuan pressure
BEIJING: China faces a difficult year as it works to maintain economic growth and spur development, but it will not be bullied into changing its exchange rate policy, Premier Wen Jiabao said Sunday.
In a wide-ranging press conference at the end of China's annual session of parliament, Wen said Beijing was not ready to withdraw stimulus measures put in place in late 2008 to pull the world's third-largest economy out of the crisis.
He also warned Beijing would not cede to foreign pressure to boost the value of its currency, nor would it allow the United States to push it too far on the thorny issues of Taiwan and Tibet.
"This year is going to be the most complicated year for the economy," Wen told hundreds of reporters gathered at the Great Hall of the People for his only formal press conference of the year.
"We will maintain the continuity and stability of our macroeconomic policies," he said, adding that as circumstances change, Beijing would make every effort to make its policies "more flexible".
The Communist government launched a 586-billion-dollar stimulus package in late 2008 to boost domestic demand as a way to make up for falling exports, which plummeted when key US and European markets tumbled into recession.
Beijing has since returned to double-digit growth -- a blistering 10.7 percent in the fourth quarter of 2009 -- prompting fears of economic overheating and asset bubbles that could later lead to a bust.
Chinese consumer prices rose for the fourth straight month in February while new lending slowed sharply, official data showed last week -- leading analysts to predict Beijing still had time to implement tough tightening measures.
Wen said that for now, the focus remained on consolidating China's recovery.
"The economic situation remains complicated... even if the world economy were to pick up, the main global economic problems have not completely disappeared," he said.
China's trade partners have repeatedly called for Beijing to allow the yuan to appreciate, saying it is kept artificially low to boost exports.
US President Barack Obama last week called on China to adopt a "market-oriented" exchange rate policy, which he said would make an "essential contribution" to rebalancing the world economy after the crisis.
But Wen rejected those calls, and said the currency's value was not to blame for foreign trade deficits.
"We are opposed to the practice of engaging in mutual finger-pointing among countries or taking strong measures to force other countries to appreciate their currencies," said Wen.
"This kind of practice is not in the interest of the reform of the renminbi (yuan) exchange rate regime."
The premier said China had made "strong efforts" since the outbreak of the international financial crisis to keep the yuan at a "stable level".
The value of the yuan has become a major sticking point in relations between China and the United States, which are badly strained over a number of other issues including a spate of trade disputes, Tibet, Taiwan and Internet freedom.
Wen launched a fresh salvo in the war of words with Washington, saying US arms sales to Taiwan and Obama's talks last month with the Dalai Lama, Tibet's exiled spiritual leader, at the White House had violated China's sovereignty.
He reiterated China's position that responsibility for the problems in Sino-US relations did not lie with Beijing, but with Washington.
"We hope the US will face the issues squarely and take concrete steps" to remedy the situation, he said.
"A peaceful US-China relationship makes both countries winners," Wen said.