Compiled by Caijing

(Caijing.com.cn) Chinese Premier Wen Jiabao met the press on March 13 after the conclusion of the annual session of the National People's Congress. Wen reiterated that confidence is what China needs to implement its all-around economic stimulus package, which is designed to boost China’s slowing economy.

Economic Stimulus Plan

According to Wen, 1.18 trillion yuan of China's two-year 4-trillion-yuan stimulus package will be totally new investment, which comes directly from the central government. The money will focus on improving people's livelihood, technology upgrading, environmental protection and major infrastructure projects.

Apart from the 4-trillion-yuan package, China will cut taxes by 600 billion yuan, increase retirement pensions, hike salaries of 12 million teachers, raise rural income and provide more subsidies for farmers, and spend 850 billion yuan on reforming the health care sector in the next three years.

Wen said that China has prepared plans to cope with even bigger difficulties amid the financial crisis and is ready to roll out new stimulus package at any time.

Yuan Exchange Rate

Premier Wen Jiabao said that no country should impose pressure on the devaluation or appreciation of the Chinese currency. China will keep the Yuan at a stable and reasonable exchange rate.

The Premier said that since China reformed its exchange rate in July 2005, the currency has appreciated 21 percent against the dollar. Over the past year, despite the depreciation of currencies in European and other Asian countries, the Chinese Yuan still appreciated, which has put pressure on China's exports.

Foreign Reserves

Wen Jiabao said he is “a bit worried” about the risk to China’s foreign exchange holdings as the global economy weakens, and reiterated that the United States needs to honor a “guarantee” to safeguard the value of China’s dollar-denominated reserves.

Wen’s remarks point to mounting concern in China over the US handling of the economic crisis. China is the United States’ largest creditor, holding US$1.95 trillion in foreign exchange reserves at the end of 2008.

Continuing on the theme of risks to China’s foreign exchange holdings, Wen said that reserves “should be mainly used for overseas investment and international trade,” an apparent rebuff to the rising number of special interests seeking to deploy more of China’s wealth in the domestic economy.

Increasing Contributions to IMF

The premier said that increasing contributions to the International Monetary Fund (IMF) is the responsibility of all IMF members. He called for reforming the internal governance structure of the IMF, in order to prevent financing and investment risks. He also said that the fund should pay more attention to the interests of developing countries.

Yuan Settlement Plans for HK-Mainland Trade

China has completed plans for a trial program permitting the use of its currency for trade settlement in transactions between the mainland and Hong Kong, said Premier Wen Jiabao.

“The trial program will begin as soon as possible after it’s approved by the State Council,” said Wen.

The Hong Kong trial would be the first use of the yuan, which is not convertible on capital accounts as a trade currency beyond the mainland.

GDP Growth Target

Premier Wen Jiabao said he considers the 8 percent economic growth target a “difficult” goal but added that China can deploy fresh stimulus measures “at any time” in order to achieve it.

“It is indeed difficult to achieve this [8 percent] goal, but it is possible,” Wen said at a media briefing in Beijing after the close of the National People's Congress session. "We are ready to put forward new stimulus policies at any time."

Fiscal Deficits

The premier said that China's fiscal deficit is under control and the government's debt level is safe.

Employment

Regarding the problem of unemployment, the Premier said that the most important job is to improve support for small and medium-sized enterprises. He said that the government has set detailed policies to create jobs for graduate students and migrant workers.

Wen said that society remains stable despite the gloomy employment situation during the global financial crisis.