China's Wen vows to boost growth

Chinese Premier Wen Jiabao hinted Tuesday at new stimulus measures to boost flagging growth, while vigorously defending his decade in charge of the world's second-largest economy as Beijing approaches a sensitive leadership transition. China's economy "was showing signs of stabilising" and would likely meet the 7.5 percent expansion the government set for the year, Wen said in a speech to the World Economic Forum in the eastern city of Tianjin. "We are fully confident that we have the... capability to overcome difficulties on the way ahead, maintain fast and stable economic growth and realise development at a higher level and with better quality," he said. "Economic growth is still within the target range set at the beginning of the year."  Wen spoke as the slowdown that began last year appears to be deepening. The economy grew at a three-year low of 7.6 percent in the second quarter and data released this week indicated further weakness in the current third quarter. China, which long enjoyed annual growth rates of more than 10 percent, has been hit hard by problems in major export markets as Europe grapples with its prolonged debt crisis and the United States with stubbornly high unemployment. Beijing has already cut interest rates twice this year to boost flagging growth and trimmed the amount of funds banks must place in reserve three times since last December, but Wen said there was room for more policy tinkering. "We will, according to economic trends, make full use of the advantage of having relatively big space for fiscal and monetary policy (moves)," he said, without giving specific details.  But in a question-and-answer session after the speech, Wen elaborated by emphasising that despite a slowdown in government revenues, authorities still have ample firepower at their disposal. Wen said that the government has about a one trillion yuan surplus on its balance sheet and around 100 billion yuan in what he called "stability and adjustment funds". The government "will not hesitate to use" such money, he said. Last week, state press said that a massive infrastructure package worth more than 1.0 trillion yuan ($158 billion) had been approved for projects including subways and highways. Wen has been a fixture at annual World Economic Forum meetings in China since the so-called "Summer Davos" began in the world's largest country in 2007. He used his appearance to laud his record as premier over the past 10 years, citing accomplishments ranging from increased grain output to bigger roles for technology and education in driving economic development. "There are booming businesses, improved macroregulation by the government and a stable social and political environment," he said. Wen also vigorously defended a massive 4.0 trillion yuan fiscal stimulus package launched to fight the 2008-2009 global economic crisis. He noted that he has served China for 45 years and will be retiring soon, though avoided any mention of the country's looming once-a-decade leadership transition. China's leaders are readying a handover of power to a new generation at a party congress expected in weeks but that has been plagued this year by speculation of an intense backstage power struggle. And in recent days, the absence from scheduled public engagements by Vice President Xi Jinping, the presumptive successor to President Hu Jintao, has added another layer of concern to the closely watched process.