China PM tough on economy


  • Business
  • Friday, 30 Apr 2004

BEIJING: Chinese Premier Wen Jiabao said on Wednesday China was committed to forceful measures to cool its dangerously fast-growing economy, which has benefited global growth but, left unchecked, has the potential to drag it down. 

Wen also said, on the eve of a 10-day tour that includes stops in Germany, Belgium, Italy, Ireland and Britain, that he hoped to build on a partnership with the European Union – his first visit to the continent since he was named premier in March last year. 

But his strongest comments were reserved for his own economy, which logged 9.7% growth in the first quarter 2004 but faces resurgent inflation due to unchecked expansion in money supply, bank credit and fixed asset investment. 

Wen Jiabao

China has restricted bank lending, singled out cement, steel and aluminium projects in a broad clampdown to stamp out excess development and, just on Wednesday, issued new land-use rules to rein in industrial growth. 

“We believe that all those measures are going to take off in future, and we hope not to see any major ups and downs in our economic development,” he said. 

Wen’s comments helped push prices down in metal markets, as traders in both stock and futures markets worried that any moves aimed at cooling China’s economy could cut into strong demand for metals that have underpinned profits of many companies. 

The pressures would require China to tread softly in reforming the yuan, he said, and sudden changes would threaten global growth. 

“If we change the system rashly, it will certainly bring unpredictable problems to the domestic economy, and at the same time could affect the financial stability of the region and even the world,” the Chinese premier said. 

Wen offered no preference for which path China might take, saying only that the government would keep an open mind and was willing to give serious study to any proposal. – Reuters

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