Wen warns of economic problems facing China

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China's gross domestic product expanded 7.6 percent from a year earlier in the second quarter, falling below 8 percent for the first time in three years. [File Photo]

China should brace itself for still more economic woes ahead even though the country's growth rate remains above target, Premier Wen Jiabao said in his latest pledge on maintaining economic stability.

Aside from the issue of the economy during a three-day inspection tour in Chengdu, Sichuan Province, that ended yesterday, Wen invited six child survivors of the 2008 Wenchuan earthquake to have dinner with him, encouraging them to face their future with confidence.

During a meeting with senior government officials from Henan, Hunan, Guangxi, Sichuan and Shaanxi at the weekend, Wen said: "The economic growth rate is still within the government target range set at the year's beginning, and stimulus policies are working to land the country on the route toward stabilization.

"However, we should be clear that China's economic rebound is not yet stable, and economic hardship may continue for a period of time."

Wen urged government officials and businesses to take stock of the complexity and severity of current economic difficulties in a bid to reach China's economic and social development targets this year.

The government will prioritize job creation and provide financial aid and tax breaks to companies suffering from slowing exports due to sinking overseas demand, Wen said. Private investment will be encouraged and the government will promote industrial upgrading and urbanization to spur consumption.

China's gross domestic product expanded 7.6 percent from a year earlier in the second quarter, falling below 8 percent for the first time in three years, the National Bureau of Statistics revealed last Friday.

It dragged down first-half economic growth to 7.8 percent, not very far from the 2012 target of 7.5 percent set in March this year in the face of faltering global economic conditions.

During the inspection tour in Chengdu, Wen visited several private companies in the food and logistics industries, and praised their contributions in job creation and technological innovation.

He said the government would treat state-owned enterprises, foreign-funded companies and private firms equally and pay due attention to the development of private firms to encourage them to grow.

Wen has conducted a series of inspection tours in recent weeks to gauge the economic fundamentals in the world's second-largest economy. The premier called for more aggressive efforts to stabilize the economy last weekend during a tour in Jiangsu Province.

"We should see that the fundamentals remain good and there is still great potential in China's process of industrialization and urbanization," Wen said. "But we can't ignore the difficulties, especially when the downward risks are still huge in the economy."

He noted the government would increase efforts to preset and fine-tune its policies, and make them more targeted, foresighted and effective.

Fast-easing inflation has made room for more supportive policies, Wen said, and urged a good combination of stabilizing investment with implementing longer-term growth plans, of promoting urbanization with agricultural modernization. The premier also pledged to continue improving people's livelihoods, upgrading industries, exploring emerging markets and encouraging private investment.

More efforts must be made to deepen reform of income distribution, raise people's incomes, improve social networks and create more jobs, Wen added.