Wen rejects revaluation of yuan

Chinese Premier Wen Jiabao gestures as he speaks at a press conference after the closing session of China's National People's Congress in Beijing yesterday. He said that Beijing is making progress in foreign exchange reforms. PHOTO: AP

China's premier yesterday rejected pressure for an immediate increase in the value of its tightly controlled currency, while promising to do more to help the rural poor and small investors in its scandal-plagued stock markets.

Premier Wen Jiabao (溫家寶) said Beijing is making progress in foreign exchange reforms and said more changes might come unexpectedly.

"Some people strongly demand that we raise the yuan's value but they haven't given much thought to what sort of problems would ensue. This is very irresponsible," Wen said at a news conference.

Wen said planners face myriad problems as they try to keep China's economy growing at a rapid but sustainable pace while grappling with a raft of potentially destabilizing problems: widespread poverty in the countryside, unemployment, inadequate social welfare programs and ailing financial markets.

"The situation now is like going upstream. If we don't forge ahead we will fall back," Wen said after the close of the annual session of China's ceremonial legislature.

"Our country is too big, our problems are too numerous and too complicated," he said.

The US and other trading partners are lobbying China to let its currency, the yuan, trade freely on world markets, or at least to raise its value.

Chinese leaders say they plan to do so eventually, but that doing so now would cause financial turmoil and damage the country's frail banking and financial industries.

"Work related to exchange rate reform is in progress," Wen said. "As to timing, the reform measures to be adopted may come unexpectedly."

Wen also promised more help for the poor -- a key issue for Chinese leaders, who worry that mounting anger at poverty in the countryside, home to 800 million people, could threaten Communist rule.

Wen promised to protect the rights of farmers to use land, but didn't answer when asked whether China will ease its ban on private land ownership and allow farmers to buy their plots.

Farmers now can obtain control of their land under leases of up to 30 years. Economists say that if they had title to their land, farmers could use it as collateral for bank loans, boosting rural prosperity.

Conflicts over seizures of farmland by local officials for industrial parks, golf courses and other real estate development have provoked protests in areas throughout China.

"The farmers' right to use the land will not change for a long time," Wen said. "Actually it will never change."

The government plans to take steps to boost sagging stock prices and protect investors by improving the quality of companies that list shares and making markets "open, fair and transparent," Wen said.

"We should protect the interests of investors, especially nongovernment investors," he said.

Share prices on China's two stock markets in Shanghai and the southern city of Shenzhen have been falling for several years. The slump has stymied efforts to push ahead with financial reforms and provoked protests from angry individual investors.

"China will continue the policy of supporting the capital market and we are taking measures to strengthen work in this respect," Wen said. He blamed lackluster share prices on "imperfect mech-anisms" in an economy that is still making a transition away from central planning.

The government has taken over several brokerages and pledged new protections for small investors.

But government plans to sell off massive state holdings in many companies have alarmed inves-tors, who fear that a flood of new share offerings would push prices still lower.