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Wen confident on 8% GDP growth for 2009

(Xinhua)
Updated: 2009-02-03 10:58

Chinese Premier Wen Jiabao said Sunday he is confident that China will maintain economic growth at "about 8 percent" this year.

"China's GDP was at 9 percent as a whole last year, but in the fourth quarter of 2008 we also had a big decline and it fell to 6.8 percent," Wen told the Financial Times. "Our economy is under increased downward pressures and all this means that we are now facing great difficulties."

Related readings:  China's economy grows 9% in 2008  Premier Wen says toughest year ahead  Policymakers ponder ways to spur consumption  China announces new policies to expand consumption

However, the premier said he still feels confident under such circumstances, adding the confidence of growth at "about 8 percent" is dependent on four factors, including correct, effective policy measures.

All of the measures the government has adopted are aimed at boosting consumer spending and stimulating the real economy on which the crisis has landed its major impact, he said.

The central government's 100-billion-yuan ($14.6 billion) investment announced in December 2008 and another 130-billion-yuan investment announced in January 2009 have both been put in place in terms of real funds and on what projects the money will be spent, Wen said, referring to the swift action taken to respond to the crisis.

"We must take forceful steps. Under special circumstances, necessary and extraordinary measures are required," he said. "We should not be restricted by conventions. Success or failure depends on the pace and intensity of those measures."

Wen gave several examples, saying that around the end of last year and early this year, Beijing took steps to make household appliances, agricultural machinery and automobiles more available in rural areas of China.

From the beginning of this year, the government started to transform the value-added tax, which is expected to save Chinese businesses 120 billion yuan, he added.

"The trick in spurring consumer spending is not to engage in sloganizing, but actually to put money into people's pockets," Wen said. "We do believe that consumer spending is vital in boosting economic development."

To further elaborate on his words, the premier said the sales tax on vehicles with small engines has been halved.

Meanwhile, 74 million low-income people have received lump-sum spending subsidies. Former employees of state-owned enterprises received pension supplements and there have been subsistence allowances for vulnerable groups. Beijing also has significantly increased the salaries of 12 million primary and middle school teachers in the state system.

"I think people will be ready to spend when they have the money," Wen said.

Wen arrived in London on Saturday for a three-day official visit. Britain is the last leg of his week-long European tour, which began Tuesday and has already taken him to Switzerland, Germany, the European Union headquarters in Brussels and Spain.