China's economy faces its most difficult year yet due to a US-led global economic downturn and the ravages of inflation at home, Chinese Premier Wen Jiabao said today.
In a closing press conference at the annual parliamentary meeting, Wen said his government faces the conflicting tasks of trying to create jobs through fast-paced economic growth while also battling inflation and excessive investment and credit.
'I am afraid that this year could be the most difficult year for the Chinese economy,' Wen said. 'It is difficult because of the uncertainties both inside and outside the country,' he added.
China's economy boomed at an 11.4% rate last year, with inflation rising 4.8% for the year. Prices continued to climb to a near 12-year monthly high of 8.7% in February.
Wen's government has targeted 8% economic growth for 2008, while vowing to maintain inflation at 4.8% for this year.
'China is a developing nation of 1.3 billion people, so we must maintain a certain speed of economic development to resolve the employment pressures,' Wen said.
'To obtain these goals we need to address the problems of unstable, uncoordinated and unsustainable economic development,' he added.
Inflation has emerged as a key political concern in a country where sharp price rises have traditionally stoked unrest.
Wen said China was concerned about the falling US dollar and the state of the US economy, but reiterated that domestic conditions would determine the nation's monetary and fiscal policies.
With China increasingly interlinked with the global economy, a world economic downturn would impact domestic growth, he said. 'I am deeply aware that this is a big challenge to China, but I can tell everyone that China's economy is fundamentally sound,' he said.
