-- At the Press Conference of the Fifth Session of the 10th National People's Congress

The Fifth Session of the 10th National People's Congress held a press conference at the Great Hall of the People on March 16. At the invitation of Spokesman Jiang Enzhu of the session, Premier Wen Jiabao answered questions from the Chinese and foreign press. Below is an outline of his answers.

Wen: Ladies and Gentlemen, Comrades, this is my last press conference as the premier of this government during the sessions of the National People's Congress  (NPC) and the Chinese People's Political Consultative Conference (CPPCC). People all over China have followed the two sessions with keen interest. Over one million questions were posted for me on the Internet, and have been read by over 26 million people. Yesterday, I browsed the website and came across this question: How close does the premier feel to us in his heart? What is on his mind? Yesterday afternoon, I received a letter written to me by pupils from a primary school forwarded by a deputy. Busy as I was, I replied with a writing brush, wishing them all the best. I also read a news story on the Internet about a CPPCC member who has put forward a proposal for four years now, calling for the establishment of medical insurance for children. I took his proposal very seriously and immediately gave written instructions that we need to handle matters concerning children's health on a priority basis and that the related government departments should take steps to address this issue.

It has been four years since this government took office. These four years have taught us one thing: We must be guided by the fundamental principle that all the power of the government is bestowed upon us by the people and that all the power belongs to the people. Everything we do should be for the people; we must rely on the people in all our endeavors, and we owe all our achievements to the people. We must uphold honorable conduct as public servants. Government officials should be good public servants and serve the people. They do not have any other power. We must remain under the conviction that as long as we free our minds, keep pace with the advance of time, seek truth, continue reform and opening up, pursue scientific, harmonious and peaceful development, we will surely turn China into a prosperous, democratic, culturally advanced, harmonious and modernized society.

Forming of Forex Investment Companies Not to Impact Dollar Denominated Assets

Wall Street Journal: I have two questions. International investors are now very interested in China's stock market, do you think the rise of the stock market over the past two years went too far too fast? And are average Chinese investors risking too much? What measures is your government considering to further cool down or regulate the stock market? And on another topic related to investment, the government has announced plans for a new agency to manage the diversification of China's foreign exchange reserves. Can you tell us what kind of assets this agency will invest in?

Wen: I pay much attention to the development of the stock market in this country, but more importantly, I pay more attention to the health of this market. Since the beginning of last year, we have strengthened our efforts to enhance the development of the infrastructure and institutions of the capital market. Particularly, we have successfully pursued the reform on the non-tradable shares of listed companies, resolving issues left from the past. Our goal is to build a mature capital market. We need to improve the quality of listed companies, put in place an open, fair and transparent market system and strengthen the supervision and control over the capital market via further improvement of the legal system. China will also encourage timely disclosure of stock market information and enhance the awareness of individual investors about market risks.

As to the issue of how to use China's foreign exchange reserves, this is indeed a big issue. From our  experience, we know how difficult it was when we lacked foreign exchange. In the 1990s, China did not have enough foreign exchange, so we had to borrow from the IMF, which only loaned us US$800 million. Now our foreign exchange reserves have exceeded US$1 trillion. How to properly use them has become a new problem to us.

China pursues a policy of diversifying its foreign exchange reserve based on its own security concerns. China is preparing for the establishment of a foreign exchange investment organization, which will not be affiliated to any government department or institution. The organization, which will be subject to supervision, is aimed at operating investment in line with state laws to preserve and increase the value of the foreign exchange reserve.

It has not been long since China began making outbound investments and we still lack experience on this regard. The country's non-financial outbound investment only reached US$73.3 billion by the end of 2006. Last year, China added US$16 billion of outbound investments to this account. This number is insignificant compared with the figures of developed countries.

It is true that in China's foreign exchange reserve, US dollar denominated assets account for quite a  fortune. China purchases assets denominated by US dollars to the mutual benefit of both countries. The new foreign exchange investment company will not impose any adverse impact on US dollar denominated assets.

Pay Attention to the Most Vulnerable Groups

People's Daily: Premier, you just told us that yesterday afternoon you wrote back to primary school pupils, showing your concern for people's well-being. People's well-being has been the biggest concern of the deputies of the two sessions, as well as the focus of the Government Work Report. In your report, which is down-to-earth in style, a number of policy initiatives for improving the well-being of the people and increased government input for this purpose are proposed. What financial measures will be adopted to ensure the effective implementation of these policies so that people will benefit from them?

Wen: The ultimate goal of our reform and development is to meet the increasing material and cultural needs of our people. To reach the goal, China must address the issue of the people's well being, which includes clothing, food, housing and transportation. The most important one is to ensure that people have equal opportunities in education. We need to continue to pursue a proactive employment policy. We need to gradually narrow the gap in terms of income distribution. And we need to put in place a rural and urban social security system that covers all people.

To resolve the issue concerning people's well-being, we must have a systematic guarantee. We have legislation in place to exempt farmers from agricultural tax and agricultural specialty property tax; to make free nine-year compulsory education universal; and we are also going to legislate on minimum subsistence allowances to improve the living conditions of the needy.

China is considering building a basic allowance system covering the urban and rural areas. On this regard we also need to have legislation. We are planning to have reforms on the health care and medical system covering the urban and rural areas, which will also eventually be completed with systematic guarantees. Once we have the system in place, things will not change easily. Neither will they change with government and leadership.

In addressing issues concerning people's well- being, we also pay attention first and foremost to the needs of the most disadvantaged groups since their population in urban and rural areas accounts for a large part of the total population, particularly the farmers. We all know that the speed of a fleet is not determined by the vessel which travels the fastest, but the one that travels the slowest. If we improve the living conditions of those in difficulty, we improve the well-being of the whole society.

To improve people's well-being, we must also make every effort to ensure that people can live a happy life. We also need to ensure that people have their democratic rights and social status. We need to promote equality and justice in the society.

The Coming Visit to Japan as an "Ice-Melting Journey"

NHK (Japan): I have two questions. The frist one is on Japan-China relations. Japan-China relations now have an opportunity for improvement. On the other hand, many problems remain. What needs to be done to improve these relations? My second question is on the abduction of Japanese nationals. What role can China play regarding this issue?

Wen: China and Japan are geographically close neighbors facing each other across a very narrow strip of water. Under joint efforts by the two governments, we have reached an agreement on removing the political obstacles in the way of growing bilateral relations. That facilitated the successful visit to China by Japanese Prime Minister Shinzo Abe in October last year. To develop friendly ties and cooperation and to further the friendship that will last generations to come between them, Japan and China must follow not only the trends of history, but also the will of the people. Although we still have many problems between us, we already have a solid foundation for growth of our ties. That is the three political documents.

The three Japan-China political documents have summed up what we have achieved in the past in a political, legal and factual sense. These also adopted a long-term and strategic perspective and planned for the future growth of our relations. We will remain committed to the spirit of the three documents and take history as a mirror to guide future growth of our relations.

If Prime Minister Shinzo Abe's visit to China in October last year can be termed as an "ice-breaking journey," I hope my visit to Japan in April will be an "ice-melting journey." During this upcoming visit, I hope that I can reach consensus with Prime Minister Abe on the context of establishing strategic, mutually beneficial China-Japan relations and setting up a bilateral economic cooperation mechanism. We also plan to increase our exchange and interaction in the scientific, technological, educational, people-to-people exchange and other fields. Particularly we need to increase exchanges between our young people. I hope the two countries can build friendship and cooperation that will produce sound and stable development in the long run.

We have expressed sympathy to the alleged abductions of Japanese citizens and our standing on this manner. This matter is between Japan and the Democratic People's Republic of Korea. I hope that Japan and the DPRK, through negotiations and communications, can smoothly resolve this problem.

Mainland Closely Watching Secessionist Activities in Taiwan

ETTV (Taiwan): The year 2007 is a crucial year for cross-Strait relations. The political relations across the Taiwan Strait are now cold, but people-to-people exchanges are very active. More and more business people are coming to the mainland from Taiwan. Now that chartered flights are open for Taiwan business people to go to the mainland and fruit from Taiwan can be sold to the mainland, people in Taiwan are now showing a great interest in the possibility of mainland tourists visiting Taiwan. When will such visits take place? What other steps are you going to take to advance cross-Strait relations? With the upcoming Olympic Games in Beijing and election in Taiwan, the year 2008 is  a crucial year. What is your view on and expectation of the future of cross-Strait relations?

Wen: This year and the year 2008 are crucial years for cross-Strait relations. The key to the importance of the two years lies in safeguarding peace and stability across the Taiwan Strait. In my Report on the Work of the Government, I have reiterated that we are strongly opposed to any secessionist activities aimed at achieving "Taiwan independence," particularly the so-called "de jure independence." We are closely watching the secessionist activities and plots by "Taiwan independence" forces on the island, and will never allow any change of the historical fact that Taiwan has been an inalienable part of China since ancient times.

We will make every effort to pursue peaceful development across the Strait and will continue to implement our policies to promote the growth of cross-Strait ties. We will continue to implement various policies on this regard and facilitate the peaceful and stable growth of this relationship. More and more Taiwan business people are coming to the mainland to develop their business. As a matter of fact, the two-way trade volume increased to US$100 billion in 2006, with Taiwan's exports to the mainland reaching US$80 billion. The mainland will make all efforts to protect the interests of Taiwan business people in the mainland as well as interests of Taiwan compatriots who come to the mainland to go to school and for traveling. We will endeavor to push the three "direct-links" with Taiwan. We are going to facilitate the launch of direct charter passenger flights on weekends and direct charter cargo flights. Mainland tourists have been hoping to visit Taiwan and we have been making preparations for quite a long time. We look forward to the day that this will come true at an early date. The peaceful development of mainland-Taiwan relations is a historical trend that no one can block.

Fighting Corruption More Effectively

CCTV: You have just said that government officials should work as public servants and do not have any other power. This applies not only to government functionaries, but also to leading officials. My question is about the anti-corruption issue. The investigation and disclosure of cases involving Chen Liangyu and Zheng Xiaoyu have aroused keen public response. We have received many comments from our viewers. On the one hand, people feel relieved because they had hoped stern action would be taken against corruption. On the other hand, people are disturbed by the corruption that they have seen. How can the power-for-money deals in some areas of government administration be effectively curbed?

Wen: There is no denial that as the market economy continues to develop, corruption cases have occurred one after another and corruption is becoming more serious, sometimes even involving high-ranking   officials in the country.

To address this problem, first and foremost, we need to start our efforts in the institutions and systems. There are many reasons behind corruption, but the most important of all is over concentration of power without effective and proper restraints and oversight. This will need a reform of systems. For example, we should implement the Administrative License Law and reduce the number of items and matters subject to administrative examination and approval. The government departments with a large administrative resources and the power to examine and the approve matters, are very prone to malpractices of trading power for money, abusing power for personal gains and collusion between government officials and business people.

Second, we should advance the reform of the political system. We need to reduce the over concentration of power and enhance supervision over the government by the people. From now on, we need to make sure all examinations and approvals by the government, particularly those involving the interests of the people, be done in an open, fair and transparent manner.

Third, we should combine education and punitive measures. We need to help officials understand that while water can carry a boat, it can also overturn it. Corrupt officials, no matter in what areas the corruption cases are taking place, or how high their rankings are, will be severely punished according to law.

Building Democracy in the Chinese Way

Le Monde: Recently in an article you wrote for People's Daily, you said that the socialist system and democratic politics are not mutually exclusive. You also said that the initial stage of socialism will persist for 100 years. Do you mean there will be no democracy in China in the next 100 years?

Wen: In my article, I made the point that socialism and democracy and rule of law do not run counter to one another. Democracy, the legal system, freedom, human rights, equality and fraternity are not something peculiar to capitalism. Rather, they are the common achievements of human civilization made in the long course of history and the common values pursued by mankind. I also emphasized in that article that there are over 2,000 ethnic groups in more than 200 countries and regions in the world. As they differ in social condition, history, culture and the level of development, they achieve democracy in different ways and in different forms. Whether one likes it or not, this cultural diversity is a fact that no one can change.

You were actually asking what socialist democracy means. Let me make it clear: The essence of socialist democracy is to let the people be masters of the country. To do this, we must ensure our people are entitled to democratic election, decision-making, management and oversight. We need to create necessary conditions to better enable our people to oversee and criticize the government. To achieve this goal, we must to ensure everyone in this country can enjoy all-round development in an equal, fair and free environment. We need to give full play to creativity and independent thinking of the people in this country, and we need to run the country according to law, further improve the legal system and continue our efforts to build a country under  rule of law.

We still lack experience in socialist development, including the development of democratic and political system. We are willing to adopt an opening-up policy, draw on all the achievements made by advanced  civilizations in the world. We will also consider our conditions and build Chinese democracy in our own way.
You asked if democracy will not occur in China in the next 100 years because I wrote in my article that the primary stage of socialism will remain unchanged for 100 years. This is a misunderstanding. It will take a long time for the immature, unfledged and underdeveloped socialism to become mature, full-fledged and developed. During this period, we will achieve two major tasks and forge ahead with two major reforms. The two major tasks are, first, to make concerted efforts to develop social productivity, and second, to promote social equity and justice. In particular, we should make justice the core value of the socialist system. The two major reforms are, first, to promote market-oriented economic restructuring, and second, to promote democracy-oriented political restructuring.

A democractic system, like any other truth, must be tested by practice. Only practice can tell whether the system practiced in a country or region is good or not.

Hong Kong's Role as International Financial Center Irreplaceable

Hong Kong Economic Times: This year marks the 10th anniversary of Hong Kong's return to China. What is your assessment of Hong Kong's performance in the past 10 years since its return? We know that you care a lot about Hong Kong. What are your expectations of Hong Kong's future growth? In the Report on the Work of the Government just adopted today, you talked about the need to accelerate the reform of the financial system.  What role do you expect Hong Kong as an international financial center, to play in the reform of China's financial system?

Wen: The past decade since Hong Kong' return has been an extraordinary period. Over the 10 years, the Central Government has unswervingly implemented the principles of "one country, two systems," "Hong Kong people administering Hong Kong,"  and a high degree of autonomy. And we have strictly followed the Basic Law, and have not intervened in the administration of the Hong Kong Special Administrative Region (HKSAR) Government. The HKSAR Government has united the Hong Kong people in overcoming a number of difficulties, including the Asian financial turmoil. Hong Kong has stabilized, recovered and grown its economy. The well being of Hong Kong people continues to improve.

At this moment, Hong Kong is at a critical period for further growth. Hong Kong, enjoying the strong backing of the mainland and good opportunities from  the whole world, has a unique geographical advantage. It has the freest economy in the world, extensive links with the rest of the world, a full-fledged legal system and a rich pool of managerial expertise. Hong Kong's role as an international financial, shipping and trade center cannot be replaced. On the 10th anniversary of Hong Kong's return, I sincerely hope that Hong Kong will be more prosperous, more open, more accommodating and more harmonious. The bauhinia flower is now in full bloom. The red bauhinia is beautiful this year, and it will be even more beautiful next year.

Honoring Obligations to Curb Green House Gas Emissions

Financial Times: My question is about Chinese Government's policies on domestic and global environmental protection. Why did the Chinese Government fail to meet its targets for reducing energy consumption and pollution last year? What are the specific reasons? It has been estimated that by 2009, China will become the world's biggest producer of greenhouse gases. Will China at a certain point in the future accept the greenhouse gas emission target jointly set by the international community?

Wen: I have made a full explanation at the NPC session about why we fell short of meeting the targets for reducing energy consumption and pollutant discharge last year and proposed eight measures to address this issue. So I will not repeat them here.

Your second question is about our position on greenhouse gas emissions. We support the Kyoto Protocol. Although China is a developing country, we formulated our own national program in response to climate change according to the international convention on greenhouse gas emissions. We have also set a target to cut energy consumption for per unit of GDP by 20 percent in the period from 2006 to 2010. Although the Kyoto Protocol has not set obligatory targets for developing countries, the Chinese Government is acting with a sense of responsibility to the world and is earnestly fulfilling its due international obligations.

Confident About Further Economic Growth

China News Service: China's growth rate has exceeded 10 percent while inflation rate has been kept below 3 percent for four years running. This is rare both in China and the world. Some experts believe that China's economy will reach a turning point in 2007. What's your view? What do you think are the major problems in China's economy? Will China be able to maintain such a momentum of high growth and low inflation?

Wen: China's economy has maintained fast and steady growth in recent years. However, this gives no cause for complacency, neither in the past, nor now, or in the future. My mind is full of concerns about the pressing challenges. "A country that appears peaceful and stable may encounter unexpected crises."

There are structural problems in China's economy, which cause unsteady, unbalanced, uncoordinated and unsustainable development. Unsteady development means overheated investment as well as excessive credit supply and liquidity and surplus in foreign trade and international payments. Unbalanced development means uneven development between urban and rural areas, between different regions and between economic and social development. Uncoordinated development means that there is a lack of proper balance between the primary, secondary and tertiary sectors and between investment and consumption, and that economic growth is mainly driven by investment and export. Unsustainable development means that we have not done well in saving energy and resources and protecting the environment. All these are pressing problems facing us, which require long-term efforts to resolve.

I have said that China's economy has enjoyed fast yet steady growth for years. Can we sustain this momentum? First, the conditions are there. The most important condition is that we have a fairly long peaceful international environment that enables us to focus on economic development. Second, we have huge potential in domestic market demand. However, the key to sustaining the momentum of China's economic growth lies in our policies and the ability to deal with the changing situation. We will continue to expand domestic demand, especially consumption; press ahead with reform and opening-up to remove institutional and structural obstacles; and enhance knowledge- and technology-based innovation, so as to put our economy on a solid basis. We will continue our efforts to conserve energy and reduce emissions and the discharge of pollutants to make economic growth sustainable. The task is a difficult one, but we are confident that we can accomplish it.

The Dalai Lama Expected to Make Contributions to National Unity

Frankfurter Allgemeine Zeitung: The Dalai Lama has expressed his hope to make a pilgrimage to China. But some officials of your government still accuse him of advocating "Tibetan independence." Why does the Chinese Government still see the Dalai Lama as a separatist although he says he does not advocate independence any more? Would you welcome the  Dalai Lama on a pilgrimage maybe during the Olympic Games in Beijing?

Wen: China's policy toward the Dalai Lama has been clear-cut and consistent. As long as he recognizes that Tibet is an inalienable part of Chinese territory and that Taiwan is an inalienable part of Chinese territory, and gives up his attempts to split the country, we are willing to carry out consultations and dialogues with the Dalai Lama on his personal future. As far as this matter is concerned, the door is always open.

Tibet is an autonomous region of China. If you still remember, the 14th Dalai Lama was the chairman of the preparatory committee for establishing the Tibet Autonomous Region in 1956. But he later set up a so-called "Tibetan Government in Exile" abroad. He calls for "a high degree of autonomy" in Tibet and even demands that all Chinese troops withdraw from Tibet and that all the Han people and other non-Tibetan ethnic groups in Tibet move out. People will naturally ask: Does the Dalai Lama genuinely hope to see a unified China, or is he bent on undermining China's unity? We will not only hear what he says; and more importantly, we will watch what he does. We hope that the Dalai Lama will do more things that are conducive to national unity and the development of Tibet.

China's Space Test Targeting No Other Country

Associated Press: China conducted an anti-satellite test this year. Although the United States and the former Soviet Union did the same in the past, they haven't done so in the last 20 years. Are this test and the fact that China is steadily enhancing its military power consistent with China's advocacy of peaceful development?

Wen: The recent test conducted by China in outer space targets or threatens no other country and violates no relevant international treaties. China stands for the peaceful use of outer space and opposes an arms race in outer space.

I wish to solemnly r eiterate here that China's position on the peaceful use of outer space remains unchanged. I also wish to call on the countries concerned to negotiate and conclude a treaty on the peaceful use of outer space at an early date.

Since the beginning of the NPC and CPPCC sessions this year, we have been asked questions such as whether China's military expenditure is transparent, whether China's outer space test is in contradiction to its idea of peaceful development and whether China poses a threat to the rest of the world. In response to these questions, I have two points to make. First, China is a country with a territory of 9.6 million square km and a population of 1.3 billion. It has 22,000-km-long land boundary and 18,000-km-long marine boundary. China's military expenditure ranks low in both absolute and relative terms compared with other countries. Even some developing countries are ahead of China in ranking, not to mention developed countries. Second, China suffered from aggression and oppression by imperialist powers in its modern history after the Opium War in 1840.

The Chinese nation knows full well the tremendous sufferings of being enslaved and subject to foreign aggression. That's why we are most sincere in our commitment to peaceful development. We have a defense policy that is defensive in nature. China's limited armed forces are solely for the purpose of safeguarding the country's security, independence and sovereignty. On this matter, we are completely transparent.

(China.org.cn)