China has “adequate ammunition” to fend off the worst effects of the global economic slowdown and is ready to add to already announced stimulus measures if needed, the country’s premier has said.

Speaking to reporters at the end of the annual National People’s Congress (NPC) in Beijing on Friday, Wen Jiabao outlined a four point plan for recovery, saying the government’s “priority task remains to bolster confidence”.

“First and foremost, we need very strong confidence,” he said.

“Only when we have confidence can we have courage and strength, and only when we have courage and strength can we overcome difficulties.”

Wen was speaking at a rare press conference with international and local reporters in Beijing’s Great Hall of the People.

“I expect that next year both China and the world will be better off”

Wen Jiabao,
Chinese premier
 
Mixing optimism with caution, he reiterated his warning made at the opening of the congress last week that 2009 would be a challenging year for China, but said the government had “prepared contingency plans to handle greater difficulties”.

“We have prepared enough ‘ammunition’ and we can launch new economic stimulus policies at any time.”

Wen said the central government share of the already-announced $586bn stimulus plan would be used in “projects for public welfare, technological innovation, environmental protection and infrastructure projects”.

With the bulk of that money already allocated in the government budget, he said he was convinced that recovery was within sight.

Welfare spending

“I expect that next year both China and the world will be better off,” Wen said.
Delegates to the NPC formally backed Wen’s $586bn stimulus plan [Reuters]
The stimulus plan also gives a strong boost to social welfare spending, which the government hopes will boost domestic consumption by encouraging Chinese, who typically save about 20 per cent of their income, to spend more.

Earlier the almost 3,000 delegates to the NPC formally endorsed Wen’s plan to shore up the world’s third-largest economy and maintain growth levels the government says are needed to create jobs and maintain stability.

Under the plan Wen has said China will still be able to achieve eight per cent growth as long as what he called the correct policies were implemented.

Confidence

Nonetheless he admitted that attaining that level of growth would be a challenge.

“I believe that there is indeed some difficulty in reaching this goal,” he said in response to one reporter’s question. “But with effort it is possible.

“This is the government’s commitment and responsibility… This shows our confidence and hope.”

China’s ruling Communist party has staked its legitimacy on providing continuous growth and its ability to lift millions out of poverty, so maintaining a minimum growth rate of eight per cent – widely thought to be the minimum needed to hold the jobless rate at manageable levels – has become the government’s top priority.