China’s premier worried for U.S. investments

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Beijing has high expectations for U.S. President Barack Obama’s economic recovery strategy, but worries remain about the safety of China’s assets in the United States, Premier Wen Jiabao said on Friday.

Speaking to reporters following the end of the National People’s Congress, Wen remained committed to Chinese government projections forecasting 8 percent growth in 2009.

But Wen tied those growth forecasts to concern over China holding vast amounts of U.S. government debt.

“We have loaned a huge amount of money to the United States,” Wen said at a news conference in Beijing. “Of course, we are concerned about the safety of our assets. To be honest, I’m a little bit worried. I would like for you [a Western reporter] to call on the United States to honor its word and stay a credible nation and ensure the safety of Chinese assets.”

He noted that Obama ”has introduced a host of steps to tackle the international financial crisis” and said he has “high expectations” for those steps.

The premier said that although China has purchased “a huge amount” of foreign-exchange reserves, the country has tried to fend off risks by purchasing diversified interests as the economic crisis has gripped the world.  Watch more from Wen’s news conference with international media »

China has an estimated $2 trillion in foreign reserves and is the United States’ largest creditor, having bought more than $1 trillion of its debt.

Wen outlined a $585 billion stimulus plan for China, calling it “a massive government investment.” It will be “mainly for projects that include people’s well-being,” — technological upgrades, environmental protection, increased farm subsidies, infrastructure and housing projects, including improved housing for people living in shanty towns, he said at the annual session, during which he answered questions from reporters for about two hours.

The premier reiterated projections that China’s economy will grow by 8 percent in 2009, despite doubts expressed by domestic and international economic analysts. Some have forecast growth as low as 5 percent.

“I will admit it will be a difficult job [to reach 8 percent]. This being said, I also believe with considerable efforts it’s possible for us to obtain this goal,” Wen said.

He said it would be possible because China is accelerating its urbanization and industrial development, is working on increasing consumer consumption, and is not struggling with financial liquidity.

China has kept a close watch for social instability as unemployment has surged. The global economic crisis has sapped demand for Chinese exports, forcing an estimated 10 million migrants out of jobs and back to rural areas.

Wen acknowledged that “the unemployment issue is a very serious one,” but said China had taken steps to stimulate the economy. Priorities include developing more small and medium-size enterprises, he said, because they create 90 percent of jobs.

“We have developed specific policies for migrant rural workers and college graduates,” he said, but need to ensure their implementation.

Asked about Tibet, Wen said, “The Tibet situation is on the whole peaceful and stable.” Then he went on to call the Dalai Lama a liar.

“Several days ago, the Dalai Lama tried to rebut Chinese statements and said he’s never asked the government to withdraw troops or remove Han ethnic groups. These are sheer lies,” he said…

www.cnn.com

 

Posted by John Malloy on Mar 13 2009. Filed under International. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry