Wen defends economic policies of last 10 years

By Li Qiaoyi and Wang Xinyuan in Tianjin Source:Global Times Published: 2012-9-12 1:50:03

Premier Wen Jiabao on Tuesday defended China's massive stimulus package of 2008 that has helped the nation secure growth amid the global economic crisis, while reviewing his 10-year tenure as premier of the world's growth engine.

"I want to make it clear here that it was precisely due to our resolute decision and scientific response that China was able to avoid factory closures, job losses and the return of migrant workers to their home villages", Wen said at the the Annual Meeting of the New Champions, also known as Summer Davos, in Tianjin.

Wen made the remarks in response to suggestions that China had paid an "undue price" during the rollout of the 4-trillion-yuan stimulus package.

Thanks to these efforts, China swiftly achieved an economic upturn and promoted the economic recovery of the global economy, Wen said, noting that "these stimulus measures helped us keep the good momentum of the economic development, maintain social stability and harmony and protect China's modernization process from major setbacks."

The main reason behind the nation's current economic downturn is an obvious slowdown in fixed-asset investment rather than exports, Li Daokui, a former central bank advisor said Tuesday during the forum, pointing to the necessity of the launch of investment projects in fostering economic growth.

China's economic policies over the past decade helped improve productivity and led to the development of the middle class, Christoph Nettesheim, senior partner and head of China with the Boston Consulting Group, told the Global Times Tuesday.

About 200 million Chinese households will form the middle class by 2020, and that paves the way for consumption and further growth of China, he said.

While noting that the government's massive stimulus package has helped the nation fare through the crisis, Justin Yifu Lin, former World Bank chief economist, also remarked during the forum that the real estate sector might be an indication of the side effects of the package.

If the government had entirely relied on fiscal injections rather than credit investment, the economic effects of the package would have been much better, according to Lin, who also cautioned against the potential side effects of the government's recent batch of newly approved investment projects.

Wen also promised a stabilizing economy in the wake of a raft of policies and measures that have been taken by the government since May, including stepping up structural tax cuts, lowering the required reserve ratio, cutting the benchmark deposit and lending rates twice, allocating 26.8 billion yuan ($4.23 billion) from the central budget to support technological upgrade by enterprises, pushing forward trade facilitation and expanding imports, among others.

Assuring that the world's second largest economy will meet its official growth target of 7.5 percent set earlier this year, Wen said "I don't' agree that China's high growth rate period is over after the past three decades' reform and development."

Wen Ya and Xinhua contributed to this story

Posted in: Business, Economy

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