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China's Hu Jintao answers questions with Washington Post

It takes a long time for a country's currency to be widely accepted in the world. China has made important contribution to the world economy in terms of total economic output and trade, and the RMB has played a role in the world economic development. But making the RMB an international currency will be a fairly long process. The on-going pilot programs for RMB settlement of cross-border trade and investment transactions are a concrete step that China has taken to respond to the international financial crisis, with the purpose of promoting trade and investment facilitation. They fit in well with market demand as evidenced by the rapidly expanding scale of these transactions.

China has adopted a package plan to curb inflation, including interest rate adjustment. We have adopted a managed floating exchange rate regime based on market supply and demand with reference to a basket of currencies. Changes in exchange rate are a result of multiple factors, including the balance of international payment and market supply and demand. In this sense, inflation can hardly be the main factor in determining the exchange rate policy.

How do you comment on China's achievements in economic and social development in the Eleventh Five-Year Plan period? Is there a risk that inflation in China could get out of control? Is China's political reform keeping up with the steps of its economic reform?

HU: The Eleventh Five-Year Plan period was a truly eventful one in the course of China's development. Facing the complex changes at home and abroad and the major risks and challenges, we adhered to the Scientific Outlook on Development, strengthened and improved macro-regulation, gave full play to the basic role of market in resources allocation, took proactive steps to curb the unstable and unhealthy factors in the economic operation, and maintained steady and relatively fast growth of the national economy and social stability and harmony.

In the past five years, China's GDP is expected to have grown at an average annual rate of 11% and per capita GDP is expected to have reached US$4,000. Agricultural development accelerated and grain output increased on a continuous basis. Important progress was made in economic restructuring. Development of different regions became more balanced. Urbanization and development of the new countryside was steadily advanced. Good progress was achieved in energy conservation and pollution reduction. And foreign trade enjoyed stable and relatively fast growth. While developing the economy, we continued to put people's interests first and paid more attention to developing social programs and improving people's livelihood. Per capita incomes of urban and rural residents are estimated to have risen at an average annual rate of over 9.3% and around 8% respectively in the past five years. Population below poverty line in the rural areas was noticeably reduced. Education, social security, health care and other social programs developed more rapidly. In short, remarkable achievements have been made in China's socialist economic, political, cultural and social development and in the building of a conservation culture. At the same time, we are keenly aware that China is still the largest developing country in the world and we need to make long and hard efforts if we are to build a moderately prosperous society in all respects and basically achieve modernization.

The rise of the overall price level has a very strong structural feature, yet it is on the whole moderate and controllable. There is a basic balance between total supply and total demand, and the material basis is strong enough to maintain market supply and stabilize the overall price level. We have the confidence, conditions and ability to stabilize the overall price level.

We have always maintained that people's democracy is the life of socialism. Without democracy, there can be no socialist modernization. To develop socialist democracy is a goal we have always been committed to. China's reform is a comprehensive one, covering economic restructuring, political restructuring, cultural restructuring and social restructuring. In the past 30-plus years since reform and opening-up, notable progress has been made in China's political restructuring. The fact that China has enjoyed sustained, rapid economic growth and social stability and harmony proves that China's political system fits China's national conditions and meets the requirement of overall economic and social development.

Political restructuring must deepen in the course of economic and social development and meet people's growing enthusiasm for participating in political affairs. The political restructuring we pursue in China is aimed at advancing the self-improvement and development of the socialist political system. We will continue to expand people's democracy and build a socialist country under the rule of law in keeping with China's national conditions. We will ensure that all work of the state is based on the law and that the lawful rights and interests of the people are safeguarded. We will define the institutions, standards and procedures for socialist democracy, expand people's orderly participation in political affairs at each level and in every field, mobilize and organize the people as extensively as possible to manage state and social affairs as well as economic and cultural programs in accordance with the law, and strive for continued progress in building socialist political civilization.

China stated it is committed to peaceful development. But in the past year, China has become more assertive. Do you think this will affect China's relations with the United States and neighbors in Asia?


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