Chinese Premier Wen Jiabao (溫家寶) said on Wednesday that China was committed to forceful measures to cool its dangerously fast-growing economy, which has benefited global growth but which, left unchecked, has the potential to drag it down.
Wen, on the eve of a 10-day tour that includes stops in Germany, Belgium, Italy, Ireland and Britain, also said he hoped to build on a partnership with the EU -- his first visit to the continent since he was named premier in March last year.
PHOTO: AFP
China reported 9.7-percent growth in the first quarter of this year but faces resurgent inflation due to unchecked expansion in money supply, bank credit and fixed asset investment.
Counting out a series of problems on his fingers, Wen underscored the weaknesses underlying one of the world's fastest growing economies, problems which he said would prevent all but the most prudent steps in reforming the tightly held yuan currency.
"We need to take effective and very forceful measures to resolve those problems as soon as pos-sible," Wen said.
Beijing has restricted bank lending, singled out cement, steel and aluminum projects in a broad clampdown to stamp out excess development and, just on Wednesday, issued new land-use rules to rein in industrial growth.
"We believe that all those measures are going to take off in future, and we hope not to see any major ups and downs in our economic development," he said.
Wen's comments helped push prices down in metal markets, as traders in both stock and futures markets worried any moves aimed at cooling China's economy could cut into strong demand for metals that have underpinned profits of many companies. The pressures would require China to tread softly in reforming the yuan, he said, and sudden changes would threaten global growth.
"If we change the system rashly, it will certainly bring unpredictable problems to the domestic economy, and at the same time could affect the financial stability of the region and even the world," Wen said.
Analysts have said China may move on the currency towards the end of this year, and officials have said they are studying the possibility of pegging it to a basket of currencies, a measure somewhere in between an outright revaluation and a modest widening of the tra-ding band.
Wen offered no preference for which path China might take, saying only that it would keep an open mind and was willing to give serious study to any proposal.
US metal stocks fell sharply on concerns that credit restrictions in China could dent the country's demand for raw materials. New York metal futures also tumbled. China has been sucking in raw materials to feed a construction boom and rising demand for consumer goods.
"That seems to be behind just about everything, the fact they are trying to curb credit," said James Pogoda, a vice president of precious metals at Mitsubishi International Corp in New York.
"Demand out of China, which has just been huge for the past year or more, could be slowed and could be hamstrung by some of these regulations or whatever is going to be announced," he said.
RETHINK? The defense ministry and Navy Command Headquarters could take over the indigenous submarine project and change its production timeline, a source said Admiral Huang Shu-kuang’s (黃曙光) resignation as head of the Indigenous Submarine Program and as a member of the National Security Council could affect the production of submarines, a source said yesterday. Huang in a statement last night said he had decided to resign due to national security concerns while expressing the hope that it would put a stop to political wrangling that only undermines the advancement of the nation’s defense capabilities. Taiwan People’s Party Legislator Vivian Huang (黃珊珊) yesterday said that the admiral, her older brother, felt it was time for him to step down and that he had completed what he
ROLLER-COASTER RIDE: More than five earthquakes ranging from magnitude 4.4 to 5.5 on the Richter scale shook eastern Taiwan in rapid succession yesterday afternoon Back-to-back weather fronts are forecast to hit Taiwan this week, resulting in rain across the nation in the coming days, the Central Weather Administration said yesterday, as it also warned residents in mountainous regions to be wary of landslides and rockfalls. As the first front approached, sporadic rainfall began in central and northern parts of Taiwan yesterday, the agency said, adding that rain is forecast to intensify in those regions today, while brief showers would also affect other parts of the nation. A second weather system is forecast to arrive on Thursday, bringing additional rain to the whole nation until Sunday, it
CONDITIONAL: The PRC imposes secret requirements that the funding it provides cannot be spent in states with diplomatic relations with Taiwan, Emma Reilly said China has been bribing UN officials to obtain “special benefits” and to block funding from countries that have diplomatic ties with Taiwan, a former UN employee told the British House of Commons on Tuesday. At a House of Commons Foreign Affairs Committee hearing into “international relations within the multilateral system,” former Office of the UN High Commissioner for Human Rights (OHCHR) employee Emma Reilly said in a written statement that “Beijing paid bribes to the two successive Presidents of the [UN] General Assembly” during the two-year negotiation of the Sustainable Development Goals. Another way China exercises influence within the UN Secretariat is
CHINA REACTS: The patrol and reconnaissance plane ‘transited the Taiwan Strait in international airspace,’ the 7th Fleet said, while Taipei said it saw nothing unusual The US 7th Fleet yesterday said that a US Navy P-8A Poseidon flew through the Taiwan Strait, a day after US and Chinese defense heads held their first talks since November 2022 in an effort to reduce regional tensions. The patrol and reconnaissance plane “transited the Taiwan Strait in international airspace,” the 7th Fleet said in a news release. “By operating within the Taiwan Strait in accordance with international law, the United States upholds the navigational rights and freedoms of all nations.” In a separate statement, the Ministry of National Defense said that it monitored nearby waters and airspace as the aircraft