China hit hard by global downturn

“[But] as a big responsible country, China has acted in a responsible way during this crisis.”

Unrest fears

Wen’s comments come in the wake of an increasing number of reports of unrest over jobs.

More than 1,000 workers clashed with riot police in eastern China over unpaid wages two weeks ago. In November, hundreds of workers sacked from a toy factory in Guangdong province, southern China’s export heartland, clashed with police and smashed buildings.

Declining demand for Chinese exports has forced thousands of factories to close and newly unemployed migrants to stream from coastal manufacturing regions back to their rural hometowns.

As many as 40 million workers from rural areas could be without jobs soon, according to a Chinese Communist Party School official cited by Britain’s Telegraph newspaper.

Despite all that, and the International Monetary Fund predicting on Wednesday that global growth would fall to its slowest pace in six decades, Wen remained upbeat about China’s prospects.

He said China’s economic growth would still grow by eight per cent this year – just down from the nine per cent recorded last year – which could help restore confidence in global markets and stem the financial crisis.

“We have the confidence, conditions, and ability to maintain steady and fast economic growth and continue to contribute to world economic growth,” he said in his speech.

Beijing announced a $586bn stimulus package in November to boost domestic consumption through increased spending on construction and other projects, and Wen said he said seen “small signs of recovery which give me hope”.

‘Blind pursuit of profit’

Wen said positive relations with the US would help alleviate the economic downturn.

Despite his concerns Wen said he is confident that China can weather the global crisis [AFP]

“Peaceful and harmonious relations will make both winners and a confrontation will make both losers,” he said.

But his call for co-operation was overshadowed by a dispute over Beijing’s exchange rate policy after Timothy Geithner, the new US treasury secretary, called China a “currency manipulator” last week, using a term the previous administration avoided for years.

Wen also criticised US and Western financial institutions, blaming “an unsustainable model” of low savings and high consumption for the financial crisis.

He said financial institutions were involved in a “blind pursuit of profit” and displayed “a lack of self-discipline”.

David Li, from the Centre for China and the World Economy, told Al Jazeera that the downturn was already testing relations between Beijing and the new administration in Washington, and he expected “an increase in tension”.

“But overall I am optimistic because the Chinese economy is not dependent on trade with the US or with the rest of the world,” he said.

“The policy emphasis and the driving force will come from domestic investment and domestic consumption.”