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Premier Zhu Rongji met with Chinese and foreign correspondents on a press conference of the Fifth Session of the Ninth National People's Congress (15/03/2002)
On March 15th, the Fifth Session of the Ninth National People's Congress gave a press conference, during which Premier Zhu Rongji met with Chinese and foreign correspondents and took their questions.

Q: (CCTV) Despite the sluggish world economy, China has set its economic growth forecast for this year at 7%. Is this growth rate achievable? And what major measures will be taken?

A: It is true that we have set our forecast of our economic growth rate at 7%. And this figure is arrived at after we have given careful consideration to all the factors including the adverse factors such as the slowdown in the world economic growth. So 7% is within reach.As for the specific measures that we are going to adopt to achieve this growth rate, I have already outlined the measures in the Report on the Work of the Government. Judging from our economic performance in the first quarter of this year, the result is actually  better than I expected.  According to the forecast of the State Statistical Bureau, the GDP of the first quarter of this year will grow by 7.5% over the same period last year. And this gives me much confidence that we will be able to achieve the 7% growth rate.

Q: (Xinhua News Agency) This year's fiscal deficit will stand at 309 .8 billion yuan, accounting for 3% of GDP. What is your view concerning China's fiscal risk? And would this have an impact on the next government?

A: The day before yesterday, I came across a report in one of  Hong Kong's newspapers. That report awarded me with an honorary titile, which is, a Deficit Prime Minister. Since I never accept any honorary title or honorary degree, I have to make a few remarks to explain my views.

I have checked the relevant information about the fiscal situation in 24 countries. In the year 2000, 19 countries had fiscal deficits, including the major developed countries. So I think the problem is not whether or not the country has a fiscal deficit. The most important thing is whether such a deficit is affordable. And more importantly, one has to look at where the deficit goes to.

China's fiscal deficit will be 309.8 billion yuan this year, accounting for 3% of our GDP. The total size of outstanding debt is 1.87 trillion  yuan, accounting for 18% of our GDP. And both figures are well below the internationally recognized safety level. Most importantly, the deficit is not incurred to make up for the deficiency in our regular budget. It is not consumed. Rather it is used to develop infrastructure projects.

In this government, we have issued a total of 510 billion yuan of treasury bonds. With issuance of treasury bonds, we have managed to mobilize capital from the banks and other sectors. So, as a result, over 2 trillion yuan have been spent to undertake various kinds of projects, including over 25,500 kilometers of highway, of which 8,000  kilometers are express highway. We have also built 4,000 kilometers of trunk railways. If we also include the figures for the electrified railways and upgraded railways to make them double track, then the total mileage exceeds 7,000 kilometers. We have also upgraded the power grids in the rural areas. The number of subscribers of fixed lines and mobile phones have reached 320 million. All of these are very real progress.

Therefore what I will leave behind to the next government are not  just debts, but more than 2.5 trillion yuan of excellent assets. These excellent assets will generate significant economic and social benfits for China's future economic growth for a long time to come. What is most important is that with the issuance of 510 billion yuan of treasury bonds in the past few years, as well as the bank loans that arise from the issuance of treasury bonds, we have managed to bring along the development of the national economy. And that has made it possible for us to sustain our rapid economic growth rate. Our fiscal revenue has been growing very rapidly year after year and that has made it possible for us to improve the livelihoods of our people. Over the past few years, the salary for civil servants has almost doubled. And we have also put in place a fairly sound social security system. This has also made it possible for us to earmark a lot of financial resources to develop China's education, science and technology.

At the same time, the savings deposits have been increasing over the past few years. Every year there would be an increase of 700 to 800 billion yuan of savings deposits. In other words, had we not adopted the pro-active fiscal policy and the prudent monetary policy, the Chinese economy might have collapsed. This shows that the intensity of our pro-active fiscal policy was just right. You can see that during the four years since 1998, the price index has neither gone up nor fallen down significantly. The fluctuation has been kept within the range of 1 percentage point, just about right. This shows that China's "Kongfu" is fairly good. I'm sorry I can't accept the honorary title of "Deficit Prime Minister". Please take it back. By adopting the pro-active fiscal policy, our country not only overcome the impact of the Asian Financial Crisis, but greatly developed our  national economy in this period. I'm really proud of it.

Q:(Chosun Ilbo of the Republic of Korea) Yesterday, more than 20 North Koreans entered the Spanish Embassy in Beijing. How will China handle this?

A: The Ministry of Foreign Affairs of China has consulted with the relevent embassies and has reached agreement with them. This matter will be handled in accordance with law.

Q: (Kyodo News) I have got two questions. One is related to Japan-China relationship. This year marks the 30th anniversary of the normalization of diplomatic relations between the two countries. And we can expect to see frequent high-level exchanges between the leaders of the two countries. According to my information, through diplomatic channels, the Chinese side expressed the hope that the Crown Prince and the Crown Princess of Japan can come to China for a visit. My question is, will their visit facilitate the growth of bilateral ties and will they be welcomed by the Chinese people? The second question is related to China's internal matters. Now in the Chinese society, there has been the problem of polarization between the high-income people and the low-income people. Some experts have also called for the improvement of the situation and they think it is necessary to cultivate and expand the so-called "middle class". Do you agree to such a view? If yes, what measures are you going to adopt?

A: This year marks the 30th anniversary of the normalization of diplomatic relations between China and Japan. The year before last, the Chinese and Japanese sides reached the agreement that this year will be the Year of China-Japan Friendship and a series of events will be organized to celebrate the occasion to strengthen communication and exchanges between the two sides. In China, we will have the Year for Japanese Culture and in Japan, the Year of Chinese Culture. As for the invitation to the Crown Prince and Crown Princess of Japan, we have made our wishes known to the Japanese side a long time ago. And we hope that they can accept our invitation to visit China. I am confident that once they are in China, they will be warmly welcomed by the Chinese people.

Concerning your second question which referred to the widening gap between the rich and the poor, I think that this problem does exist. You may well still remember that Mr. Deng Xiaoping used to say that we should allow some people to get rich first, which means that inevitably some people are yet  to get rich. So within a certain historical period of time, the widening of the gap between the rich and the poor seems unavoidable.

However, while we implement the policy to enable some of the people to get rich first, we always adopt policies to help the low-income groups. How to increase the income of farmers is a subject that I devoted a considerable amount of my time when I delivered the Work Report. And it has been regarded as the central task of this government. We have also attached great importance to the development of the social security system which will take care of the laid-off workers, the unemployed and the retirees. These are the priorities of our work. Apart from the budgetary allocations, the most important means  to reduce the gap between the rich and the poor is the tax policy, which means to help the groups who are yet to get rich through our tax policy. I believe that this problem will be solved after a certain period of time.

Q: (Economic Daily of Hong Kong) Right now, discussions are underway between Hong Kong and the Mainland to facilitate closer economic and trade ties between the two sides and to have arrangements similar to a free trade area. My question is, what measures will the central government adopt to consolidate Hong Kong's position as the financial center in Asia.

A: Since the establishment of the Hong Kong SAR government,  Hong Kong has encountered temporary economic difficulties due to the impact of the Asian Financial Crisis. Nevertheless, I always believe that Hong Kong still has irreplacable advantagous position. Hong Kong's GDP is about the same size as that of Guangdong Province. No major city in the Mainland can  surpass Hong Kong in the near term. I believe Hong Kong will be able to overcome its temporary economic difficulties. We have every confidence in that.

As for how the central government will help and cooperate with HK SAR government, right now, officials from the central government and HK SAR government are having close consultations. Anything that will bring tangible benefits to Hong Kong, as long as it's feasible, the Central government will give it full support. I am confident that Hong Kong will surely maintain its status as a financial center in Asia. With China's accession to the WTO, Hong Kong is blessed with even more opportunity.

Q:(Ita-Tass)  This year you are going to meet with Russian Prime Minister again. Could you characterize the current China-Russia relations, including the prospects of economic relations and trade between the two countries?

A: Over the past few years, the strategic and cooperative relations of partnership between China and Russia have been making very good progress. Last year, President Jiang and President Putin signed the Treaty on Good-neighborliness, Friendship and Cooperation between the two countries. That Treaty has further consolidated the friendly relations and cooperation between China and Russia. And that Treaty also resulted in real progress in our economic relations. For instance, last year the trade volume between the two countries  increased by one third over the previous year.  And that figure is incomplete as it failed to include many of the border trades. As far as the published figure is concerned, the expansion was truly significant.

Last year, I had a regular meeting with the Russian Prime Minister in St. Petersberg and we agreed to advance our cooperation in the fields of economy, trade and other areas. I can foresee that, in two to three years' time, the size of our economic cooperation and trade will  be doubled.

This year the regular meeting between the prime ministers will take place in Shanghai. On that occasion, the two of us will work together to make sure that our friendly cooperation in all fields, including economic cooperation and trade, will make very rapid progress.

Q:(CNN) Campare to 1998 when you gave your first press conference as premier, you look a little tired and mellow, although just as handsome. I cannot imagine what it is like to be managing the affairs of 1.3 billion people. How has it been like? What is the single problem that gives you the most headache and sleepless nights? You have achieved a lot, perhaps with still a lot of unfinished tasks. Could you talk about the things that are left to be desired?

A: I don't know what other correspondents would say that I look more tired than I looked in 1998. But after all, four years have passed since then. It's a natural law that people do get old. But I can say that over the past four years, I never relented my efforts in performing my duty.

Over the past four years, this government has achieved a lot, especially in overcoming the impacts of the Asian Financial Crisis on China as I mentioned earlier . Moreover, we managed to  constantly develop ourself during this period. But still there are many things that are yet to finish. What is my major headache? At present, the priority is how to increase the income of Chinese farmers. Over the past four years, the civil servants have nearly doubled their income, while the price index remains stable. And over the past three years, we have managed to turn around the majority of large and medium-sized State-owned enterprises. As a result, most of the employees have seen their salary going up significantly. And thanks to the improvement of the social security system, the retirees are also getting more benefits. I believe all these people are happy. By comparison, China' s farming community are not seeing a rapid increase in their income. In certain areas, they even see a drop in their income. Over the past few years, the central government has been making tremendous efforts regarding this problem and you can see that I talked a great length about it in my work report, But there is no easy solution. The fundamental way out is to restructure China's agricultural production and rural industrial pattern. At present, China's supply of grains exceeds demand and the same is true with  other agricultural products. Whatever you grow, there's an excess. Without a fair price, the famers cannot get good income. With China's entry into the WTO in particular, the agricultural products from the United States would enter the Chinese market on a massive scale, and then the price of China's homegrown agricultural produce would decline further, making it even harder for Chinese farmers. This is what gives me a lot of headaches.

I don't know if you are aware that in recent years the soya bean exports of the United States have amounted to the annual soya bean product of China which is 15 million tons. When China introduced the regulation on the import of genetically modified products, which is consistent with the practice in many countries in the world, the US leaders would come and raise the issue of soya beans. They would say this question has a bearing on the export of US farmers with 1 billion dollars involved and the Chinese side should exercise caution. But with regard to China's export of steel products to the United States, the US side has announced an 8-30% increase in import duties. China's exports of 350 million US dollars worth of steel products will be affected. So just like the US leaders concern themselves with the question of soya beans, can I show concern over China's exports of steel products to the United States? Would it be acceptable to the US side if I increase the import duties of soya beans by 30%?

Let me come back to the question of headaches. Although this problem is giving me headaches, I think it can be resolved in the end. China now has a grain reserve of 500 billion kilograms and this allows us to use the grain reserve to help the poor and return the farmland to forests, grassland, and lakes. As a result, the farmers will see their income increased directly or indirectly. At the same time, we are introducing the tax-for-fee reform in the rural areas which aims to ease the burden on the farmers. So I believe that, with all these efforts, the difficulties of the Chinese farmers can be eased and after some time, when the agriculture structure is readjusted, the Chinese farmers will have a rise in their income. But this does take some time.

Q:(People's Daily) When you became the premier, you outlined the goals for this government which include "one must", "three completions", and "five reforms". Will all these goals be fulfilled in your term?

A: I think that the "one must, three completions, and five reforms"  which I suggested at the beginning of my government in 1998 have  been basically completed over the past four years. When I talked about "one must", I referred to the objective to make sure that our economy could grow by 8% for that year in particular and the RMB must stay stable in its exchange rate. The RMB was not devaluated. The growth rate for that year was 7.8%, slightly lower than I expected. The reason was known to all. We suffered severe flood in 1998 and, compounded with the Asian Financial Crisis, the economic growth was slightly less.

By "three completions", the first one is to complete the program to turn around the majority of the large and medium-sized state-owned enterprises and make sure they start to generate profits in three years' time. And this objective has been realized. Had there not been the state-owned enterprises, who turned over revenue to the central government, China's finacial situation would not be as favorable. Actually our fiscal revenue has been growing twice as much as our GDP.

With regard to the financial reform and banking reform, we have introduced significant reform measures in the commercial banks in China. We refer to the US experience of the RTC and set up AMC, Asset Management Corporations, which would take over the non-performing loans from the commercial banks. And now the operations of commercial banks in China have been greatly improved. Last year alone, the size of non-performing loans has been reduced by 3%.

As for the efforts to streamline the government, actually in that very year, the number of staff in the ministries of the State Council was cut by half and right now the efforts are going on to streamline the government institutions at provincial, municipal and county levels.

With regard to the "five reforms", they refer to the reform of grain distribution system, investment and financing reform, housing reform, medical system reform, and the reform of taxation. Some of these reforms have been completed and some are still going on. On the whole, I am satisfied with the progress.

So I think this government has made good its promise and delivered what we have promised before the people of this country and before the deputies of National People's Congress. We have a clear conscience. Still there is much room for improvement and we will work even harder to do a good job.

Q: (Taiwan Lianhe Daily) In your Report on the Work of the Government this year, you did not use the language that normally people on the mainland would use when talking about the question of Taiwan. For instance, you did not mention such words as "China will never renounce the use of force", and you did not use a common description, that is, "pursuing Taiwan independence in an incremental approach". Can I ask out of what kind of consideration that you choose not to mention these phrases? Does it reflect that the mainland is having a new thinking on the question of Taiwan?

A: There is no change whatsoever in our policy towards the settlement of the question of Taiwan. We always adhere to the policy of "Peaceful Reunification" and "One Country, Two Systems", as well as the 8-point proposal put forward by President Jiang. What I have not emphasized in the Report does not mean that we have changed our position. We will not undertake to abandon the use of force. These words are intended to give the message to those die-hard forces who still pursue Taiwan's independence. This has not been changed. But there is no need for me to repeat this position every day and every month.

Q:(Bloomberg News) A couple of months ago, we learned of some cases involving the Bank of China and some corruption, fraudulent loans and embezzlement in some of its overseas branches. Is this still a problem in China's banking system? How big is the problem? What is China doing to fix this problem? And because of the reporting of these cases, is this in any way influencing your past policy of encouraging China's financial companies, insurance companies, banks and other agencies to list their shares to have IPOs in foreign countries?

A: The four major commercial banks of China possess a total of over a dozen trillion yuan of assets. So it is not surprising that some  irregularities have occured in certain branches. In the United States, you have the problem of Enron corporation. Because the US side is dealing with the problems of Enron's collapse very seriously, the Chinese media have not been playing up that incident. So I think in the same fashion, there is no need to make the problems in some individual branches of Chinese banks into sensational stories.

Our attitude towards such cases is very serious and we will handle them in accordance with law. The problems that have occured in some inividuals branches will not affect the reputation of China's banking sector and they will not affect the objective to have the banking institutions get listed both at home and aroad.

Q:(AFP) My question is whoever becomes the next prime minister, what kind of merits or strong points should he or she have? What do you think the next prime minister should learn from you and what are the things that he should not learn from you?

A: The press people always struck me with their perseverance in getting the answer to their questions.

As far as I myself is concerned, I don't think I have any merit except that I devote myself completely to my job. I don't want other people to learn anything from me, especially not learn what one Hong Kong  newspaper described of me. According to that paper, I am not good at anything except banging on the table and chair and staring at other people.

But that report is not accurate. It's true that I banged the table and stared at people. If I cannot stare at other people, I would be a vegetable. But I have never done anything like pounding the chair because it really hurts if you do that.

And the report goes on to say that I did all that for the purpose of intimidating the Chinese public. I don't think that anyone would believe that story. I never intimidate the ordinary folks. I only intimidate the venal officials who are corrupt.

Q:(Hong Kong ATV) It is true that as you mentioned earlier, Hong Kong does have certain advantages compared with cities on the mainland. But we have noted that the many major cities on the mainland are also growing very rapidly and they are catching up fast. And these cities know their position very well in the overall economic strategy of the country, whereas in contrast, Hong Kong is not sure about its role. So could you talk more specifically about the role Hong Kong can play in future? Over the past 20 years, Hong Kong has been very helpful in enabling the mainland to get inflow of foreign capital. But they worry that such a role might diminish and even disappear.

A: Hong Kong serves as the financial center in Asia and is also a famous metropolis. Hong Kong still has that advantage. In the 1970's and 80's, no city made more contribution than Hong Kong to China's reform and opening up program. In the future, because of the growth of the world economy, there might be the need for Hong Kong to readjust its economic structure. And I think this is a subject for discussion among the elites of Hong Kong. And we are also having discussions with Hong Kong SAR officials and people from Hong Kong about the subjects. I always firmly believe that Hong Kong's strong points have not been fully utilized. So I think Hong Kong will have no limits in further developing its roles in the future. As I said earlier, no city on the mainland is able to replace Hong Kong in the near term. So we should all have confidence that our objective will be achieved.

Premier Zhu also took other questions from the press.

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