Onthe morning of 14 March 2010, a press conference of the Third Session of the Eleventh National People's Congress was held in the Great Hall of the People. At the invitation of Mr. Li Zhaoxing, spokesman of the NPC Session, Mr. Wen Jiabao, Premier of the State Council, met journalists from home and abroad and answered their questions.
Premier Wen Jiabao's opening remarks: Good morning, friends of the press. The Chinese people have encountered extreme difficulties in the past two years, and have traveled an extraordinary journey with solid steps. This will leave an imprint in the annals of history. The road ahead will not be smooth. It may even be filled with difficulties and challenges. We must always remember the adage that "For a journey of 100 miles, 90 miles should only be considered half the distance". We must never slacken our efforts or waver in our resolve. And we must reinforce our confidence. "However high the mountain may be, one can always ascend to its top". In the face of difficulties, our only answer, only solution and only hope lie in our own hard work. I have deep love for my country. There is no land on Earth that can arouse such passion and excitement in me; there is no river in the world that can trigger so many thoughts and reflections. "For the ideal that I hold dear to my heart, I will not regret even a thousand deaths." This will be my guiding principle in my work during the next three years.
Financial Times: I'd like to ask a question about China's currency policy. The economy is now growing very strongly in China. You've recovered very quickly. And the inflation is now rising almost close to the 3% target you set for the year. So regardless of pressure and comments from other countries, isn't it now in China's interest to begin appreciating your currency?
Premier: First I don't think the RMB is undervalued. Let's take a look at a set of figures here. We did a survey on the exports of 37 countries to China last year. Sixteen out of the 37 countries saw an increase in their exports to China. The European Union's total exports dropped by 20.3%, yet its exports to China only fell by 1.53%. Germany's exports to China reached a record high of €76 billion. Exports by the United States dropped by 17%, but its exports to China only declined by 0.22%. China has become a major export market for its neighboring countries, including Japan and the ROK. It is also an important export market for European countries and the United States.
Second, we have kept the RMB exchange rate at a basically stable level since the outbreak of the international financial crisis. This has played an important role in facilitating the global economic recovery. We started the reform in the RMB exchange rate regime in July 2005. And since then the RMB has appreciated by 21% against the US dollar. The real effective exchange rate of the RMB rose by 16%. Here I would like to point out that between July 2008 and February 2009 when the world economy was in the midst of grave difficulties, we did not devalue the RMB. Actually the real effective RMB exchange rate rose by 14.5%. In 2009, our exports dropped by 16%, but our imports only declined by 11%. China's trade surplus thus declined by US$102 billion. A basically stable RMB exchange rate in the midst of the international financial crisis has contributed to the recovery of the global economy.
Third, a country's exchange rate mechanism is determined by its economic conditions. And any change in the exchange rate policy is a response to the overall economic situation of the country. We call for free trade, because free trade helps keep the economy going like flowing water and brings benefits and peace to the people. We are opposed to the practice of mutual finger-pointing between countries, or even taking strong measures to force another country to appreciate its currency, because such practice is not in the interest of the reform of the RMB exchange rate regime. On trade issues, we have always maintained that trade disputes should be resolved through consultations. And we believe that equal consultations will always lead to a win-win or all-win solution.
Fourth, we will continue to implement a managed floating exchange rate regime based on market supply and demand. We will continue to reform the RMB exchange rate regime and keep the RMB exchange rate basically stable at an appropriate and balanced level.
Xinhua News Agency: The International Monetary Fund has made quite optimistic forecasts of the world economy and China's economy for this year and the next. However, some economists believe that both the world economy and China's economy face the risk of a double-dip. They even hold the view that a double-dip is unavoidable. You said in your report on the work of the government that this year will be a very complex year for the Chinese economy. I would like to get your perspective on the worries of the public. What will the Chinese government do to avert the risk of a double-dip? And why is this year going to be a very complex year for China?
Premier: This year is going to be a very complex year for the Chinese economy, because we still face a lot of uncertainties. I believe in spite of the overall recovery in the world economy, the major challenges and problems in the global economy have yet to be fully addressed. The unemployment rates in some major economies have been hovering at a high level. Some countries have witnessed the outbreak of sovereign debt crisis. There are still risks in the financial sector and public finance. Prices of bulk commodities on international markets and exchange rates of major currencies are not yet stable. As a result of inflation expectations, some countries are facing difficulties in making policy decisions. All these may cause setbacks in the global economic recovery and may even lead to a double-dip.
It is impossible for China to develop its economy out of the context of broader international economy. It is true that the Chinese economy has stabilized and is turning for the better, but I shall also point out that there has not yet been a fundamental improvement in the operations of many Chinese businesses, which mainly rely on government policy support. The impact of the international financial crisis on the Chinese economy is, to a certain extent, the impact on our economic structure and growth pattern. We cannot expect to complete the arduous task of economic restructuring and changing the growth pattern in a short span of time. We must make long and hard efforts. We will continue to give priority to transforming the growth pattern and economic restructuring and thereby address such problems as the lack of balance, coordination and sustainability in the Chinese economy. This year we will work to maintain fast and steady economic growth, and at the same time restructure our economic structure and manage inflation expectations, thus ushering in a bright future for the Chinese economy. And only in this way can we avert the risk of a double-dip.
Newsweek Magazine: According to media reports, some American officials and analysts say that the Chinese delegation, the representatives at Copenhagen, the Climate Change Summit in December, were perceived as arrogant, and that you, Mr. Premier, your decision not to attend the key meeting there even though other heads of state, including President Barack Obama, were in attendance at the meeting was a reason for disappointment and surprise by some of the other participants. What is your response to this and how did the proceedings in Copenhagen look from your perspective?
Premier: As a Chinese proverb goes, "My conscience stays untainted in spite of the rumors and slanders from the outside." But I want to thank you for giving me an opportunity to clear up what really happened in Copenhagen.
On the evening of 17 December last year, the evening before the start of the high-level segment of the Copenhagen Conference, the Queen of Denmark hosted a banquet for the participating leaders of the Copenhagen Conference. At the banquet, I learned from the leader of a European country that there would be a small group leader's meeting after the banquet. I was shown a list of the invited countries and the list had the name China on it. I felt shocked because I had not received any notification about this meeting.
It was at this moment that the leader of a big emerging country sent his staff to me, telling me that his leader wanted to talk to me for an urgent matter. The leader told me that he had just received a notice about this small group leaders' meeting from the leader of a European country. I told him that I had not received any notification.
Upon returning to my hotel, I immediately called members of the Chinese delegation to a meeting to check what had really happened. I learned that indeed the Chinese delegation had not received any notification of this meeting. Under such circumstances, I decided, first, we would inquire of the secretariat of the conference for the accurate information. Second, I asked Foreign Minister Yang Jiechi to call US Secretary of State Hillary Clinton to tell her the real situation. And third, I decided that although the Chinese delegation had not received any notification, I would still send Vice Foreign Minister He Yafei to the meeting.
Let me tell you that President Obama had not yet arrived in Copenhagen by that time. Upon arriving at the meeting, Vice Foreign Minister He Yafei voiced a protest on behalf of the Chinese delegation and he said, "I have come to this meeting uninvited."
Why was China not notified of this meeting? Up until today, no one has given us any explanation and it still is a mystery to me.
In the sixty hours that I spent at Copenhagen, I had little time for rest. As you may know, I held meetings with leaders of Germany, the UK and Japan. I met with leaders of India and Brazil. I also held meetings with representatives of the G77 and AU and leaders of some small island countries. I met US President Obama twice, and we had long conversations. I also had meetings with the UN Secretary-General and Prime Minister of the host country, Denmark. The Chinese delegation put in a large amount of efforts at the Copenhagen conference, and our efforts were widely recognized.
I did not give up the efforts and continued with consultations with leaders from other countries when the Copenhagen conference ran into difficulty and leaders of some delegations were even getting prepared to leave Copenhagen. China worked with other countries attending the conference and, with joint efforts, we made possible the Copenhagen Accord. This achievement has not come easily. It is the best outcome that could be achieved on an issue that concerns the major interests of all countries.
After the Copenhagen conference, I wrote letters to the UN Secretary-General and Danish Prime Minister respectively last January, stating in clear-cut terms that China highly commends and supports the Copenhagen Accord. Not long ago, China once again wrote to the UN, stating that China fully supports the Copenhagen Accord and confirming that China can be included in the list of countries supporting the Copenhagen Accord.
It still baffles me why some people keep trying to make an issue about China. The issue of climate change concerns human survival, the interests of all countries and equity and justice in the world. We are fully justified to stick to the principle of "common but differentiated responsibilities". And China will continue to work with other countries to advance the international efforts in tackling climate change.