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     Wen: Ladies and gentlemen, good morning. As you know, there are more than 2,000 journalists from China and abroad covering the NPC and CPPCC sessions. However, due to the limited seating capacity of this hall, only about 700 of them are present here. I"d like to use this opportunity to express my thanks to the journalists for their interest in China"s reform and development as well as their objective and fair coverage of China.
      Let me also say, as a matter of fact, every person in China has great interest in the affairs of their own country. Yesterday I logged onto xinhuanet.com and saw hundreds of questions raised by ordinary people, since they knew I was going to give a press conference. I was deeply touched by their interest in national affairs. Many of their proposals and suggestions narrowed the serious consideration of the government. Now the session of the NPC is over, yet the road ahead could be rather bumpy. We must be mindful of potential problems and get fully prepared for the worst. We must be sober-mined, cautious, prudent especially when the situation is getting a little better. Our nation has gone through so many disasters and hardships in history that we are now blessed with the essence of urgency, determination for survival and aspirations for peace and development. Our country is so big, problems so numerous and complicated. And we, as a nation, must have courage to overcome difficulty, confidence to win and dauntless spirit to work hard and prevail. Today I"m here at this press conference ready to answer your questions. I"ll speak from my heart. I"m neither nervousXinhua: Last year, you said macro-regulation was a new and severe task for the government. It was no easier a task than fighting against SARS. Now that a year has passed could you comment on last year"s work with regard to macro regulation? Could you speak to new features and characteristics of macro regulation for this year? Will you intensify the policy measures?

        Wen: In the past couple of years, we have been facing a battle of contact in terms of economic development. To fight this battle, we have combined a series of policies. We can say now these policy measurers have achieved remarkable results. We have been successful in avoiding major ups and downs in the economy, preventing excessive price hikes, keeping prices at a stable level and maintaining steady and fairly rapid economic growth. Now we must not slacken in our efforts in the slightest way. The situation we are facing now is like going upstream. If we don"t forge ahead, we will be left lagging behind. Let me put the problems we face in proper prospective. First, the foundation for macro regulation needs to be consolidated further. We face considerable difficulty in further raising grain output and increasing farmers" income. In particular, because of price rises in capital goods, it is more difficult for us to achieve these goals in terms of increasing grain output and farmers" incomes. Moreover, investment growth in fixed assets may pick up again. Coal, electricity, oil and transportation are in short supply. In the first two months of this year, power generation has increased by 12 per cent. Yet 25 provinces, autonomous regions and municipalities experienced blackouts. In the economy, the supply chain is overstretched. Second, we are facing a series of dilemmas in our economy. For example, a slow economic growth rate won"t do, because it would make it more difficult for us to create jobs, increase revenue, and engage in necessary undertakings for society. Yet too fast economic growth rate won"t do either, because it may make the economy to stretched out for a long time in an unsustainable situation. Third, the problems we face in China"s economy can all boil down to structural problems, growth patterns and institutional problems. All these deep-rooted and underlying problems will take time to be addressed. In a word, the top priority for the government is to further strengthen and improve macro regulative policy measures in order to sustain a steady and fairly rapid economic growth rate. If a journey is 100 miles, travelling 90 is half of it. We must not stop and we must not waste our previous efforts. In the meantime, we must also take special attention to differentiated treatment for different situations. We must take both administrative and economic means to achieve macro regulative objectives.

         Bloomberg: A lot of social problems have cropped up in the course of rapid economic development in China, and one of them is the wealth gap. To address problems facing agriculture, rural areas and farmers is top on your agenda. But some people are saying unless farmers are granted the right to use land or they are transferred the ownership of the land, it is impossible to solve the problems. Do you think it is possible to grant farmers land use rights or give them the ownership of the land? Wen: China"s reform started in the countryside. China"s rural reform started with the right to manage land by farmers. In the countryside, land is under collective ownership. In the early days of the reform and opening up, the first step we adopted in the countryside was to set up the family contract responsibility system. Farmers were given the right to manage their land, and such rights of the farmer have been extended time and again. Now I can say directly that farmers" autonomy to manage their land won"t change for a long time. Actually it will never change.

       ERA News from Taiwan: The just-concluded session of National People"s Congress adopted the Anti-Secession Law by an overwhelming majority. The passage of the new law has been a subject of great interest to many people. People are especially interested in a section of the law which provides for continued exchanges between the two sides of the Taiwan Straits.

      My questions are: Under the framework of the new law, what specific measures will the State Council adopt to promote the continued exchanges? Moreover, there are many business people from Taiwan living in cities on the mainland, either doing business or they have already settled down. Will this law affect their interests? If not, will the law actually turn out to be promoting and protecting their interests? Wen: Let me first ask you a question: "Have you read the law?" ERA News: I have some knowledge of the law and I"ve read the explanatory notes related to the law. Wen: I must thank this journalist from Taiwan for raising this question. First of all, let me send my greeting to the 23 million compatriots in Taiwan. Your question actually gets to the essence of this law. This law is meant to strengthen and promote cross-Straits relations. This is the law for the peaceful reunification, and it is not targeted against the people in Taiwan, nor is it a war bill. The law has clearly provided for promoting personnel exchanges, encouraging and facilitating economic co-operation, including "three direct links" between the two sides, encouraging and facilitating exchanges between the two sides in educational, scientific, technological and cultural fields. The law has also provided for protection of the legitimate rights and interests of Taiwan business people. The law is matched to check and oppose Taiwan Independence forces. Only by checking and opposing Taiwan independence forces, will peace emerge in the Taiwan Straits. Peace and stability in the Taiwan Straits will create favourable conditions for Taiwan business people to invest in the mainland and also for foreign investors to come to the mainland. You ask for specific measures, that is, according to the recent important remarks made by Party Secretary-General Hu Jintao on the question of Taiwan, we will protect the legitimate rights and interests of Taiwan business people in the mainland; for anything that is conducive to the people of Taiwan, we will do it. First, we should promptly make cross-Straits charter passenger flights available not only on traditional festivals, but also on a more permanent basis. Second, we should adopt measures to address the issues related to sales of agricultural products from Taiwan, especially, southern Taiwan to the mainland. Third, we should promptly solve problems so that fishermen from the mainland can continue their contract labour services in Taiwan. There are other favourable policies and convenient measures we will adopt for this purpose.

        Reuters: The renminbi question has been the focus of world attention, with many foreign trading partners urging China to adopt a more flexible exchange rate. China has said it could be a long term process, but what reform plans do you favour now? And, when will the first change occur? Wen: China"s exchange rate reform actually started in 1994 and it has not stopped even today. Our objective for the reform is to create a market-based, managed and floating exchange rate. When we consider reform plans, our purpose is to make the exchange rate more responsive to supply and demand in the market. What we have been doing is to lay a solid foundation for such reform. A number of necessary conditions would include first, macroeconomic stability and growth, and second, a healthy financial situation. In the meantime, we have already eased many of the controls on foreign exchange. When we talk about change in the exchange rate regime, or revaluation of the renminbi, we have to ask questions like what impacts these measures will have on China"s economy and Chinese enterprises, and what impacts they will have on our neighbouring countries and other countries in the world. On these issues, no agreement has been reached. Frankly speaking, many of the people who have been strongly urging the revaluation of the renminbi haven"t given much thought to the problems that would arrive from doing so. China is a responsible country. When we decide upon the revaluation of our currency, or reforming our exchange rate regime, we must take into consideration not only our domestic interests, but also possible impacts on neighbouring countries and the world. Finally, let me say that work related to exchange rate reform is in progress. Regarding the timing of the reforms and measures to be adopted, maybe they will come around unexpectedly.

       China Central Television: You have spoken on many occasions that the economic priority for 2005 is to further promote reform and you have called this year "a year of reform." In your report on the government"s work, you emphasize that the task for this year is to deepen reform unswervingly, and to remove the structural integument to economic growth. Then in your view, what are the most urgent issues to be addressed this year? Wen: Right, I have said on many occasions that this year is "a year of reform." I said so for three reasons: First, to eliminate the destabilizing and unhealthy factors in the economy and to solidify the achievements of macro regulations will have to rely on reform. Second, to address the deeply rooted problems in the economy and achieve a restructured transformation of the economic growth pattern will rely on reform. Third, to realize social fairness and justice and build a harmonious society will also have to rely on reform. Reform is not a task for any single year. It is going to be a long-term task. And, in many cases with regard to reform, "sooner is better than later." Otherwise the problems will become too entrenched to unravel. For this year, there are five priorities in our reform. First, to restructure government bodies and to transform the functions of the government. Second, to promote State-owned enterprise reform, focusing on corporate governance and share-holding systems. Third, to promote financial reform, which is a critical and often problematic aspect of our economy and requires great efforts from us. Fourth, rural reform. Centring on reform of the rural taxes and administrative fees, the purpose is to change those elements in the superstructure in the rural area that are no longer consistent with the economic phase. And fifth, social security reform. We must step up the development of a social security system that is suitable for China"s reality. This is a year of reform, but it is not only so. It is a year we are going to fight the toughest battle in the reform process.

        Ming Pao: The central government has all along hoped for stability and prosperity in Hong Kong. Now that the economy has picked up, society has been stabilized in Hong Kong. Why, at this moment, has the central government accepted the resignation of Mr Tung Chee-hwa? What are your expectations of the Acting Chief Executive Mr Donald Tsang? Wen: I would like to thank you for your question. The resignation of Mr Tung Chee-hwa has been the focus of attention among compatriots in Hong Kong. As you said, in the past more than seven years since China resumed the exercise of sovereignty over Hong Kong, the principle of "one country, two systems" has been implemented in real earnest. The capitalist system in Hong Kong has not changed, the law in Hong Kong has basically been intact, and the way of life there has been the same. In particular, I wish to point out that Hong Kong has overcome the difficulties brought about by the financial crisis and achieved economic recovery and a higher living standard for its people.
Mr Tung has resigned for health reasons. I believe he has been sincere and he will win the understanding of people in Hong Kong and respect of the central government. In the past seven years, Mr Tung has done tremendous and creative work for the implementation of the principle of "one country, two systems," the Basic Law and for continuing the prosperity and stability in Hong Kong. He is hard-working, he has few complaints and he has the courage to take responsibility. He has demonstrated in his work a strong sense of responsibility to compatriots in Hong Kong and to the country. I believe history will treat him fairly for his efforts and contributions. I believe compatriots in Hong Kong shall never forget what he has done. After his resignation, the election of the new chief executive will proceed in strict accordance with the Basic Law and other laws in Hong Kong. I believe people in Hong Kong are fully capable of running Hong Kong well. The central government is steadfast on the principle of "one country, two systems," Hong Kong people administrating Hong Kong and a high degree of autonomy. We will strictly follow the Basic Law. At this moment I hope our compatriots in Hong Kong will work together with one accord for better development and I hope they will do an even better job for continuing the prosperity and stability in Hong Kong.

      ITAR-TASS: In the latter half of this year you are going to meet the Russian prime minister. Could you brief us on the latest development in economic co-operation and trade between China and Russia, especially in the energy sector? Any programmes? Wen: China and Russia are friendly countries toward each other, sharing a border of 4,000 kilometres long. Over the years, the relationship between the two countries has grown better than ever before. Last year, the two countries identified principles for developing a strategic partnership of co-ordination. We worked out programmes on the implementation of the Sino-Russian Treaty on Good-Neighbourliness, Friendship and Co-operation, and set a goal for US$20 billion in trade by the end of this year. And this volume is to be further increased to between US$60-80 billion by 2010. China and Russia have solved a historical legacy on the boundary issue, laying a solid foundation for greater development of bilateral ties in the future. In the latter half of this year, I am going to meet the Russian prime minister for a 10th regular meeting. We are going to discuss further issues related to economic development and trade between the two countries, in particular energy co-operation. With regard to energy co-operation, I wish to make three points. First, energy co-operation between China and Russia is an important component to the overall friendly relationship between the two countries. Second, energy co-operation between our two countries is based on equality and mutual benefit. Third, there are already important agreements concerning energy co-operation. We have agreed to increase Russian oil exports to China through use of railways. The targets are 9 million tons for 2004, 10 million tons for 2005 and 15 million tons for next year. The Russian Government and President Putin have made it very clear that preference will be given to China when they build the Siberian oil gas pipeline. We have also targeted the possibility of co-operation in oil and gas development. In addition, efforts have been made in other areas of economic co-operation and trade.

       Asahi Shimbun: I have two questions. The first is about relations between China and Japan. When you answered the question asked by the Russian reporter, you described the relationship between China and Russia as better than ever in history. But talking about relations between China and Japan, despite the ever-expanding personnel exchanges and trade, people usually characterize our political relationship as cold, while the economic relationship is seen as hot. But recently the situation has changed to one where the political relationship is cold and even economic ties have cooled. What is your comment on such a situation? Moreover, what does China expect from Japan in order to solve these problems? My second question is about energy and the environment. The rapid development of China has brought about good opportunities to other countries, especially the neighbours. We are glad about it. However, there is also the question of sustainability of energy supplies and the environment. This is a particular concern for China"s neighbours. What measures are you going to adopt to solve these problems?

       Wen: The relationship with Japan is one of the most important bilateral relationships for China. We are pleased to see that after normalization of ties, the relationship between China and Japan has enjoyed tremendous development. Last year, our trade approached US$170 billion. People travelling back and forth between the two countries exceeded 4 million. But as you said, there are obstacles to this relationship, especially in the political field. The fundamental problem is that Japan should correctly view history. I would like to use this opportunity to propose three principles in order to strengthen and improve relations between China and Japan. In addition to the three documents governing the normalization of relations between the two countries, I believe our relationship should also follow the three principles I am going to elaborate. First, take history as a mirror and face forward to the future. This year marks the 60th anniversary of China"s victory in the War of Resistance Against Japan (1937-45). This part of history reminds us of the untold sufferings the war brought to the people in China, in Asia and also in Japan. We hope Japan will seize this opportunity in order to promote friendship between China and Japan. Second, Japan should stick to the one-China principle. The security alliance between Japan and the United States is a bilateral matter between these two countries. Yet we are concerned in China because it is related to the question of Taiwan. The question of Taiwan is China"s internal affair and it brooks no direct or indirect interference by any foreign forces. Third, we should strengthen co-operation for common development. Friendly co-operation between China and Japan has tremendous potential, especially in the fields of economic co-operation and trade. Our purpose of promoting such co-operation is for shared development. In addition, I also wish to make three suggestions. First, conditions should be created in order to promote high-level exchanges and visits. Second, the foreign ministries of the two countries should work together to launch strategic studies concerning ways and means to promote friendship between the two countries. And, third, the historical issue should be appropriately handled.

      People"s Daily: My question is about agriculture, rural areas and farmers. I have noticed that in your report on the government"s work, you said these three issues remain top priorities in all your work. And you have proposed specific measures to address these issues, including abolishing agricultural taxes by the end of next year. What do you think is the fundamental solution to these problems and the long-term plan? Wen: Thank you. Your question has reminded me of remarks made by Nobel laureate economist Theodore Schultz. He said most of the people in the world are poor. So if we knew the economics of the poor, we would know much of the economics that really matter. Most of the world"s poor people earn their living from agriculture. So if we knew the economics of agriculture, we would know much of the economics of being poor. I am no economist, but I am deeply aware of the paramount importance of agriculture, rural areas and farmers in China. Without moderate prosperity in the countryside, there will be no moderate prosperity for the whole country. Without modernization in the countryside, there will be no modernization for the whole country. I do have a long-term plan for rural reform and development. It has two phases. In the first phase, we introduced the basic economic system of a family contract responsibility system, which in essence was to give greater autonomy to the farmers in production and management. As a result, it has liberalized productivity in the countryside. In the second phase, we should make industry nurture agriculture and cities support the countryside. We should give more to, take less from and liberalize the countryside. I believe we have entered the second phase now. We must accomplish four jobs for the second phase. One is to promote rural reforms with rural tax and administrative fee reforms as the central task. Second, we should improve productivity in the countryside by building water conservancy projects and promoting wider applications of agriculture-related science and technology. Third, we should develop education, science, technology, culture and other social undertakings in the countryside. Fourth, we should promote primary-level democracy by ways of self-governance among villagers, direct elections at the village level and greater transparency in government affairs at the county and township levels.

      CNN: The question I would ask is about the Anti-Secession Law. In the legislation you stated what you would call China"s right to use non-peaceful means against Taiwan. Could you clarify what those means could be? And if there is a conflict, a broader conflict with the United States, could China build an army that could win any war it has to fight, as you stated in your address to the NPC? Wen: First of all, let me explain again what kind of law the Anti-Secession Law is. It is by no means promulgated against the people in Taiwan. It is to oppose and check Taiwan Independence forces. It is by no means a war bill, it is for peaceful reunification of the country. It is not aimed at changing the status quo in the Taiwan Straits, which is that both sides belong to one China. It is conducive to peace and stability in the Taiwan Straits. Second, let me talk about what the status quo in the Taiwan Straits is, which is a very important question. There is only one China in the world. Although the mainland and Taiwan have not been reunified, the fact that there is only one China has never changed even in the slightest way. That is the status quo in the Taiwan Straits. Third, there are three scenarios according to the law where non-peaceful means will be executed. These three scenarios are the last thing we wish to see. So long as there is a ray of hope, we will do our utmost to promote a peaceful reunification. We have enacted this law to give expression of the will of the entire Chinese people, including the 23 million compatriots in Taiwan, their will to safeguard national unity and territorial integrity and oppose secession of Taiwan from the country. If you care to read two anti-secession resolutions adopted in the United States around 1861, you will find that they are very similar to each other. In the United States, the civil war broke out soon after. But we here do not wish to see such a situation. In China, there is an ancient saying: "Even a foot of cloth can be stitched up; even a kilo of millet can be ground. How can two blood brothers not make up?" The compatriots in Taiwan are our own brothers. We hope all the compatriots in Taiwan will understand the intention of the legislation. We also hope that all countries and people in the world who uphold the one-China principle and care for peace and stability in the Taiwan Straits will understand and support this law. You also asked about the increase in China"s military strength. Let me spend a few minutes on this. China pursues a defensive national defence policy. China"s military strength, if compared to that of your country, especially in terms of military expenditure, is left far behind. I don"t think I still have to cite any figures here. In the recent hundred of years, China was subjected to bullying and humiliation. Yet till now our country has never sent a single soldier abroad to occupy an inch of foreign land. Taiwan is completely China"s internal affairs. It brooks no interference from any foreign country. We do not want foreign interference. Yet we are not afraid of any.

         Press Trust of India: India and China will see the 55th anniversary of their establishment of a diplomatic relationship next month. How do you see the prospects of this bilateral relationship? Can we be good friends and good neighbours? Wen: I hope the 55th anniversary of the establishment of diplomatic relations between China and India will become a new point of departure for deeper friendship and better co-operation between the two countries. I believe that our relationship has already entered a new developmental stage. Soon I will pay a visit to India. The focus of my visit will be to achieve agreement on three important issues. One is to come to grips with the importance of friendship between China and India from a strategic and comprehensive perspective. Because our combined population is 2.5 billion, more than 40 per cent of the world total, the importance of friendship between China and India is immeasurable for Asian countries as well as for the world. Second, there is tremendous potential to be tapped into between our two countries. Therefore we should strengthen co-operation and strive for common development. Although trade between our two countries was only about US$13.6 billion last year, there is tremendous potential for further growth. Third, our two countries should set down principles for solving the historical boundary issues. A fair and reasonable solution that is acceptable to both sides should be found on the basis of equal consultation, mutual understanding and mutual accommodation with respect for history and accommodation of reality. I wish to ask this reporter to send my message back to the Indian people that China and India are not competitors, we are friends. I wish to conclude by quoting from an ancient Indian scripture, probably written more than 3,000 years ago in Sanskrit, that is in the title of "Upanisad." It is to the effect: "May He protect us both together. May He nourish us both together. May we work conjointly with great energy. May our study be vigorous and effective. May we not hate anyone. Let there be peace, let there be peace, let there be peace."

        Handelsblatt, Germany: There has been discussion about the death penalty during the last week. It is said that there has been heated debate within the government about the question of whether the death penalty makes any sense any longer. Is your government really planning to abolish the death penalty? And, if so, when? Possibly before the Olympics? Wen: China is reforming its judicial system, including taking the right to review death penalty to the Supreme People"s Court. However, given our national condition, we will not abolish the death penalty.In over half of the countries in the world, the death penalty still exists. However, what we are doing is to institute an effective system in China to ensure prudence and justice when the death penalty is given.

      Economic Daily: The State Council has issued a nine-point guideline on reform, opening-up and stable development of the capital market. Despite this issue, the stock market has been haunted and the prices of stocks have continued plummeting. Many investors have been trapped in the stock market. Will the government take strong measures to revert such a situation? What expectations do you think investors can have of the stock market? Wen: The question you just asked probably has the highest click rate on the Internet. It is also one of the biggest concerns of the people. The stock market in China has developed in tandem with the development of the socialist market economy. The securities market has made an important contribution to the economic growth of China. However, we should admit, that regarding how to establish an all-around securities market, we are not knowledgeable or experienced enough. Moreover, the infrastructure of such a market is weak and the market mechanism is imperfect. This has resulted in the plummeting of stock prices for years running. Although I seldom speak on the stock market, I am watching it every day. Let me say here, China will continue the policy of developing the capital market and increasing direct financing. We are going to take measures to strengthen work in this respect. First, we should improve the quality of the listed companies, which, I think, is most fundamental. Second, we should establish an open, fair and transparent securities market. Third, we should tighten oversight, and fight flaws and crime. Fourth, we should enhance infrastructure for the securities market, centring on putting an appropriate system in place. Fifth, we should protect the interests of investors, especially those non-government investors. Thank you. Although we meet every year, it is not enough.

 
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