Wen Looks at Fresh Chinese Stimulus (Updated)
During his visit to London, Premier Wen Jiabao was interviewed by the Financial Times, and dismissed concerns that China’s high domestic savings rate fueled the global economic crisis and said the government may take “further new, timely and decisive measures” to stimulate the economy:
Mr Wen is on the fifth leg of a European tour aimed at reassuring trade partners that China will join the west in a co-ordinated effort to tackle the global economic crisis.
Although Mr Wen declined to rule out explicitly a devaluation of the renminbi, he stressed that Beijing intended to keep its currency stable at a “balanced and reasonable level”. He added: “Many people have not come to see this point. . . If we have a drastic fluctuation in the exchange rate of the renminbi, it would be a big disaster.”
Mr Wen said China’s economy had slowed sharply in the fourth quarter of 2008, with growth dipping to 6.8 per cent. He reeled off a list of measures – including massive infrastructure spending and handouts to consumers – which Beijing was taking to ensure economic growth reached “around 8 per cent” this year.
In a separate article, the FT reports that Wen also said in the interview that China would pump RMB200 billion (US$30 billion) into the Agricultural Bank of China, the last state-owned bank to be restructured.
Read also about Wen’s meeting with British Prime Minister Gordon Brown, via BBC.
[Update]The transcript can be found here, and is excerpted below:
Lionel Barber: Consumer spending, Premier Wen, is crucial. Do you agree with the proposition that consumer spending is patriotic?
Wen Jiabao: We would not put it as simply as that. I think that is a view that is maybe held by some media people or by some individuals.
But we do believe that consumer spending is vital in boosting economic development. I don’t think we can know how much a consumer will spend eventually, and whether he wants to spend is not dependant on what kind of slogan we have.
But it is really dependant on how much money he has in his pocket and whether we have those marketable products available. We have actually taken some steps to address this issue. At the beginning of this year we gave lump sum subsidies to 74 million people.