Mr Wen said maintaining quick growth should 'take an even more prominent position' among the government's priorities. -- PHOTO: AP
BEIJING - THE global financial crisis has made 2008 the worst year for China in recent memory, with growth and inflation posing serious challenges, Prime Minister Wen Jiabao said in a signed article.
'We must be aware that this year is the worst in recent times for our economic development,' Mr Wen said in the article, which was carried by Qiushi, a journal published by the Communist Party.
China manufacturing sags
BEIJING - A MEASURE of Chinese manufacturing activity showed factory output shrank sharply in October in the face of waning orders, while officials pledged further steps to boost domestic demand to keep the economy from slowing too much.
Capital controls and the relative conservatism of China's banks have largely insulated the world's fourth-largest economy from direct hits from the global financial crisis, but its reliance on exports to the United States and Europe makes it vulnerable to a drop-off in Western demand.
'The global financial turmoil and the economic downturn are getting worse. Inflationary pressure remains large as world oil prices are still at a high level despite some corrections.'
'All these negative factors have affected and will continue to affect China,' he warned.
China's growth slowed to nine per cent in the third quarter of this year, the lowest quarterly figure since the second quarter of 2003, partly due to a slowdown in exports.
China's trade surplus for the first nine months of the year reached US$180.9 billion (S$266.3 billion), down 2.6 per cent year-on-year, according to customs data.
Mr Wen said maintaining quick growth should 'take an even more prominent position' among the government's priorities.
Meanwhile, he called for a continued focus on inflation, which has emerged as a top policy concern over the past year.
'We should fully grasp the harm that inflation can cause to economic growth, people's livelihood and social stability,' he said.
The consumer price index rose 4.6 per cent in September from a year earlier, compared with a 12-year high of 8.7 per cent in February.
'We should... increase the focus, flexibility and effectiveness of the macro control policies, so as to maintain a balance between achieving stable and relatively fast economic growth and curbing inflation,' Mr Wen said.
China has cut interest rates three times since September, and some analysts are expecting a fourth rate cut before the end of the year.
Authorities have also decided to invest heavily in infrastructure, including US$300 billion in the nation's rail system, as a stimulus measure.
In his article, Mr Wen also urged a boost to domestic consumption to reduce the country's dependence on exports and therefore its exposure to external risks.
'We have to work hard to alleviate and avoid excessive dependence on foreign demand, because it squeezes the real demand inside the country and increases the risk of external impacts,' he said.
'Given the current world economic downturn and the serious export situation, encouraging domestic demand, especially consumption, is particularly important for expanding economic growth potential... and preventing a slowdown.'
He added the government would seek to reform the country's income distribution to 'ease and remove the worries that had prevented residents from consuming more'. -- AFP
