China has adopted a package plan to curb inflation that includes interest rate adjustment. China has adopted a managed floating exchange rate regime based on market supply and demand with reference to a basket of currencies. Changes in the exchange rate are a result of multiple factors, including the balance of international payments and market supply and demand. In this sense, inflation can hardly be the main factor in determining the exchange rate policy.

Commenting on China's achievements in economic and social development during the 11th Five-Year Plan, Hu said the 11th Five-Year Plan was a truly eventful period in the course of China's development. Facing complex changes at home and abroad and major risks and challenges, China adhered to the Scientific Outlook on Development, strengthened and improved macro-regulation, gave full play to the basic role of the market in resource allocation, took proactive steps to curb unstable and unhealthy factors in the economy, maintained steady and relatively fast growth of the national economy as well as maintained social stability and harmony.

In the past five years, it is estimated that China's GDP grew at an average annual rate of 11 percent and per capita GDP reached US$4,000. Agricultural development accelerated and grain output increased on a continuous basis. Important progress was made in economic restructuring. The development of different regions became more balanced. Urbanization and development of the new countryside steadily advanced. Good progress was achieved in energy conservation and pollution reduction. In addition, foreign trade enjoyed stable and relatively fast growth. While developing the economy, China continued to put people's interests first and paid more attention to developing social programs and improving people's livelihood. Per capita incomes of urban and rural residents are estimated to have risen at an average annual rate of over 9.3 percent and around 8 percent respectively over the past five years. The number of people living below the poverty line in rural areas decreased noticeably. Education, social security, health care and other social programs developed more rapidly. In short, remarkable achievements were made in China's socialist economic, political, cultural and social development and in the building of a conservation culture. At the same time, China is still the largest developing country in the world and long and hard effort is still needed to build a moderately prosperous society in all respects and basically achieve modernization.

Hu said the rise of the overall price level has a very strong structural component, yet it is on the whole moderate and controllable. There is a basic balance between total supply and total demand, and the material basis is strong enough to maintain market supply and stabilize the overall price level. China has the confidence, conditions and ability to stabilize the overall price level.

While answering questions about the political restructuring in China, Hu said China has always maintained that people's democracy is the life of socialism. Without democracy, there can be no socialist modernization. Developing socialist democracy is a goal to which China has always been committed. China's reform is a comprehensive one, covering economic restructuring, political restructuring, cultural restructuring and social restructuring. In the past 30-plus years since reform and opening-up began, notable progress has been made in China's political restructuring. The fact that China has enjoyed sustained, rapid economic growth and social stability and harmony proves that China's political system fits China's national conditions and meets the requirement of overall economic and social development.

Political restructuring must deepen in the course of economic and social development and meet people's growing enthusiasm for participating in political affairs. The political restructuring pursued in China is aimed at advancing the self-improvement and development of the socialist political system. China will continue to expand people's democracy and build a socialist country under the rule of law in keeping with China's national conditions. China will ensure that all work of the state is based on law and that the lawful rights and interests of the people are safeguarded. China will define the institutions, standards and procedures for socialist democracy, expand people's orderly participation in political affairs at each level and in every field, mobilize and organize the people as extensively as possible to manage state and social affairs as well as economic and cultural programs in accordance with the law, and strive for continued progress in building socialist political civilization.

Concerning China's path of peaceful development and its relations with the the Asia-Pacific region, Hu said following the path of peaceful development is a solemn commitment by the Chinese government and people to the international community. It is a policy to which China will always adhere. Specifically, it means that China will achieve national development through hard and creative work, by reforming and improving its institutions, and by maintaining friendship and mutually beneficial cooperation with other countries.