Chinese Premier warns about outlook

China is facing a “most complicated” year economically, and will have to be both cautious and flexible regarding the timing of a stimulus exit, according to Chinese Premier Wen Jiabao.

China has to strike a balance between maintaining economic growth, adjusting economic development model and managing inflation expectations, Wen told a press conference after China’s annual parliamentary session.

Wen also pledged to keep the yuan stable at an appropriate and balanced level — despite foreign pressure for China to strengthen its currency.

Relations between China’s domestic economic targets and uncertainties in the global recovery are causing complications for the Chinese economy, Wen said.

“Challenges and problems in the world economy have not been fully addressed, as major economies are plagued by high unemployment and debt crisis, which poses risk of a ‘double dip’,” Wen said.

The government faces a dilemma because it needs a focused, intense stimulus to contain any potential inflation without derailing economic expansion, he said.

Although China quickly emerged from the global recession thanks to stimulus, chronic problems such as over-dependence on public investments and exports still exist. Many Chinese enterprises have not witnessed an improvement in performance, and rely on stimulus to keep them afloat, Wen said.

Priority must be given to economic restructuring and transformation in the development pattern to solve China's economic imbalances, incoherence and unsustainability exposed in the crisis, he added.