Premier Wen Jiabao: Balancing Growth and Inflation in 2008

The year 2008 will probably be a difficult one for the Chinese economy, Premier Wen Jiabao told a press conference following his re-appointment in March to another five-year term. “We need to find a balance between development and inflation,” he said. “The goal for economic growth is 8 percent, and the rise in the consumer price index (CPI) should be kept around 4.8 percent.” In terms of rising prices, he admitted the goal will “not be easy” to achieve. Maintaining a steady pace of development while controlling inflation will remain the governments top two priorities over the next five years. The twin goals will be difficult to achieve, he said, but the government will insist on them as primary targets. Chinas economic fundamentals remain good, Wen stressed, and the countrys market potential, particularly in the countryside, is excellent. “That is our edge,” he said, “and it will allow the economy ample room for further development.”

Economist Li Yining: No Downturn after Olympics

There will be no economic downturn following the Beijing Olympic Games, one of Chinas most respected economists, Li Yining, said. “The Chinese economy is operating very well now, so I believe China will not experience any downturn. On the contrary, it will keep growing at a fast pace.” In addition, he said, the country will open up new areas for investment. Some special areas of economic activity may disappear after the Games in August, but others will emerge. “The wave of unemployment that afflicts many Olympic cities [once the Games are over] will not happen in China,” Li said. “I dont mean that there are no impediments to Chinas continued growth,” he said, the biggest problems being trade monopolies, the sluggish transformation of government functions, the slow growth of farmers incomes, a shortage of some resources, and environmental degradation brought on by rapid development. Overall, however, Chinas economic situation will continue to improve, he said.

Xiao Gang: No Acquisition of Banks Hit by Subprime Mortgage Crisis

The Bank of Chinas Chairman of the Board Xiao Gang has declared that the insitution will not acquire any of the banks affected by the subprime mortgage market meltdown. “The crisis is set to get even worse,” he said, “and no one knows when it will end. But we are watching it closely.” Xiao said that, for now, the effects will be two-fold, the first being the direct impact of the defaults on banks, and the second being the indirect macro-economic repercussions, which have yet to be gauged. However, he is confident the Chinese economy will remain robust, since China depends primarily on investments, consumption and exports. While exports may fall, consumption will continue to fuel economic growth, and slowing down growth as a means of fighting inflation will, therefore, be one of the Chinese governments main tasks.