In the morning of March 14, 2012, the press conference of the 5th session of the 11th NPC was held in the Great Hall of the People. Premier Wen Jiabao, at the invitation of NPC session's spokesperson Li Zhaoxing, met with Chinese and foreign press and took their questions.
At the beginning of the press conference, Wen said that "friends of the press, this is the last time for me to meet you after the NPC and CPPCC sessions. I'd like to thank you for your long term interest in China's reform and development".
This year might be the most difficult yet probably the most promising year. People need their government to be calm, resolute and trustworthy and government needs people's trust, support and help. In the face of deepening international financial crisis and the European debt crisis, it most important that we run our own affairs well. In my last year of office, I will not waiver in carrying out my duties and will remain true to my conviction. I will always be with the people.
Now I'm ready to take your questions.
Xinhua News Agency: Mr. Premier, I'm from Xinhua News Agency and xinhuanet.com. This year is the last year of the term of this government. How do you evaluate your work?
Wen: I have served as premier for nine years. They have been nine difficult but extraordinary years. I always feel that much work remains to be finished and many things to be properly addressed and that there are many regrets. I understand that all the power of the government comes from the people and every piece of work that I have done for the people during my term of office is only the fulfillment of my due responsibilities. I feel truly encouraged and happy that I have those opportunities to serve the people as a public servant. I sincerely hope that people will forget me and all the concrete things I have done for them will fall into oblivion as one day I will go to my eternal rest.
Due to incompetent abilities as well as institutional and other factors, there is still much room for improvement in my work. Although I have never committed any intentional mistake in my work caused by irresponsibility, as the head of the top executive body of the country, I should assume responsibility for the economic and social problems that have occurred during my term of office, for which I feel truly sorry.
In my last year of office, I will be as committed as ever like an old skate and make my utmost efforts to serve the people, make up for the shortfall in my work with new achievements and win people's understanding and forgiveness. When one is in office, he should discharge his duty conscientiously and when leaving office, he should conduct himself with humility and exercise self reflection. I will adhere to this principle to conduct myself and place hope on the next generation. I believe they will perform better than me.
I have devoted 45 years of my life to the service of this country and remain committed to the conviction that I shall dedicate myself to the interest of the country in life and death irrespective of personal weal and woe. I have always devoted myself to the country and the people with strong passion and energy and never pursued personal gains. I have the courage to face the people and the history. There are people who will appreciate what I have done, but there will also be people who criticize me. Ultimately, history will have the final say.
NBC: Overall last ten years have seen China's fastest economic growth thanks in part to the benign international environment and trading system. With due respect, Premier Wen, in your last year of office, if you would have one thing that you are allowed to do to balance the US-China economic relationship that can create American jobs, for example considering the award bestowed to you recently in Boston by the International Longshoremen's Association, then what's it that you would like to do? Would you consider for example reforming China's trade regime that some American critiques say distorts global competition in China's favor?
Wen: Recently, the International Longshoremen's Association in the US gave me the Award of Best Friend of the American Workers. Although I am the recipient of the award, I would rather see this award as a strong example showing that the business relations between China and the US are mutually beneficial.
If there was only one thing that I can do to ease the China-US trade imbalance, what will it be? In fact, I have been thinking about this question for a long period of time. In 2009 and 2011, I exchanged in-depth views with President Obama on this topic. To ease the bilateral trade imbalance and resolve the difficulties and frictions of the business relations between the two countries, we should rely on cooperation. For that purpose, I have put forward a package of proposals on promoting the bilateral business, financial and investment cooperation. The following are the main content of my proposals: first, further enhance the two-way trade between China and the US. China should import more from the US and the US needs to ease restrictions on exports to China. Second, increase mutual investment. The two countries should create favorable conditions for investment and agree on investment protection. Third, reinforce cooperation in high-tech fields, including new energy, new materials, energy conservation, environmental protection and aviation so as to expand areas of cooperation. Fourth, step up cooperation on infrastructure construction and link such cooperation with financial cooperation. It means that China will invest in infrastructure construction in the US, which will create job opportunities for local American workers. It is a win-win outcome.
President Obama took my proposals very seriously and competent authorities of the two sides are making relevant studies. I believe that cooperation is always better than confrontation. So long as we move in the right direction, the business relations between china and the US will enjoy sustained and sound growth.
As to your question concerning the reform of China's trading system, I would like to elaborate on three issues. First, basic balance of import and export. I would like to tell you clearly that in 2011 China's current account surplus to GDP dropped below 2.8%, lower than 3% which is the internationally accepted reasonable level. That is to say, China has achieved a basic balance of international balance of payments and trade in goods. Second, exchange rate about which the US is concerned. Since we launched the reform of exchange rate formation mechanism in 2005, the real effective exchange rate of the Chinese currency has appreciated by 30%. I would like to draw your attention to a phenomenon. Since September last year, the RMB exchange rate has started two-way fluctuations on the Hong Kong NDF market. It shows that the RMB exchange rate might have reached an equilibrium level. We will press ahead with the RMB exchange rate reform, and in particular will promote two-way fluctuations. Third, we will adhere to the purpose of the Doha round of talks, support free trade and oppose protectionism.
Taiwan China Times: over the past 4 years, the two sides of the Taiwan Straits have achieved three direct links and direct flight and their business exchanges and people-to-people contacts have reached a historical high. The Taiwan media believe that the past 4 years probably witnessed the most stable and peaceful development of relations across the Taiwan Straits of the past 60 years. Such development opportunities will possibly continue in the next four years. In your last year of office, how do you see the prospects of the cross-Straits cultural exchanges? When you mentioned the exhibition of the Dwelling in the Fuchun Mountains in Taiwan June last year, how did you feel at that moment? We are very interested to know whether you plan to travel to Taiwan after you retire in March next year.
Wen: It is the tenth year in a row that I address the Taiwan question on this occasion and each time I am filled with strong emotions. I am glad to see that last year the two sides of Taiwan Straits enhanced exchanges and compatriots across the Straits became closer to each other. The political, economic and cultural foundation and the popular support for the 1992 consensus and the cross-Straits relations have been strengthened. To take concrete measures to promote the peaceful development of cross-Straits relations and especially enhance the bilateral business relations in the last year of my term of office, I would like first of all to accelerate the ECFA follow-up negotiations. When strengthening the cross-Straits business ties, we will pay special attention to the interests of small and medium-sized businesses, industries in a disadvantaged position and the grassroots people in Taiwan, particularly the interest of people in central and southern Taiwan. We will further promote the cross-Straits financial cooperation. Measures will include boosting the cooperation of banks' currency settlement system and encourage banks of the two sides across the Straits to hold equity in each other so that banks can play their role in supporting business cooperation. We will pay particular attention to the Taiwan-invested companies on the mainland and create conditions for them to transform and upgrade themselves and expand the domestic market.
In 2010, I told the story of the Dwelling in the Fuchun Mountains. I believe that with utmost sincerity no difficulty is insurmountable. I'm glad to learn that the two pieces of the painting which have been separated for so long are finally put together on display in Taipei. It shows that the Chinese culture has strong cohesiveness and inspiration. I wish I could have been able to go and watch the display. I cannot help but ask why the several thousands of years of cultural bond cannot resolve the political grudges which have lasted for several decades. I sincerely hope that the two sides across the Straits will work together to promote cultural exchanges and people-to-people contacts.
As to whether I will travel to Taiwan after my retirement, to be honest, I'm willing to go if the conditions permit. I would like to ask you to convey my greetings to the Taiwan compatriots. I remember there was a poem written by a poet in central Taiwan named Lin Chaosong after Taiwan was ceded saying that "there's no way to heal the wound in my heart, but there's one day when the half moon becomes full again." I believe that with the joint efforts of all compatriots of the Chinese nation we will achieve the reunification and revitalization of the country, for that the entire Chinese nation will feel proud.
Lianhe Zaobao: in recent years, you have addressed the topic of political structural reform on many occasions, which has drawn wide attention. What is the reason that you address the topic repeatedly? What is the difficulty for China to advance political structural reform?
Wen: Yes, I have talked about political structural reform on many occasions in recent years. It should be said that I have elaborated my views on this topic comprehensively and in great details. If you ask why I'm so concerned about this topic, I would like to say it is because of my sense of responsibility. After the crackdown of the Gang of Four, our Party adopted the resolution on the several historical issues since the founding of New China and launched reform and opening up. However, the mistake of the Cultural Revolution and the impact of feudalism have yet to be fully eliminated. As the economy grows, such new problems as unfair distribution, lack of credibility and corruption have emerged. I am fully aware that to resolve these issues we must conduct not only economic structural reform but also political structural reform, especially reform of the leadership system of the Party and the state.
Now the reform has come to a critical stage. Without a successful political structural reform, it is impossible for us to completely carry out the economic structural reform, the achievements of reform and development we have gained might be lost, the new problems faced by the Chinese society might not be fundamentally resolved and such historical tragedy as the Cultural Revolution might happen again. All the Party members and government leaders with a sense of responsibility should fully recognize this urgent task.
Of course, I'm fully aware of the difficulty of the reform. Without the consciousness, support, enthusiasm and creativity of the people, no reform can succeed. In such a big country with a population of 1.3 billion as China, we must build socialist democracy step by step bearing in mind China's national conditions. It will not be an easy process. But the reform can only move forward. It cannot stagnate or even retrogress because stagnation or retrogression offers no way out.
I know that people are interested in not only what I say and what my ideal and belief is but more in what results my efforts can achieve. I would like to tell you that I will dedicate myself fully to China's cause of reform and opening up so long as I have breath.
People's Daily: The recent round of housing market regulation has drawn wide attention. The central authorities have shown strong resolve and adopted tough measures. Housing price in some cities has started falling. My question is how much the housing price should drop to be considered as reaching the regulation target. In addition, with slowdown of economic growth and pressure on local finance, will this round of regulation be abandoned halfway?
Wen: Called by a sense of responsibility, I recently reviewed carefully the housing market regulatory measures which had been launched since 2003. In fact, we have released six regulatory measures in 2003, formulated eight measures in 2005 and adopted another six measures in 2006. However, why those measures have not made any difference? People are blaming us, saying that the more regulatory measures there are, the higher housing price will be and that our regulatory policy cannot make its way out of Zhongnanhai. I feel deeply depressed by such remarks. I know that the housing market is influenced by the fiscal, financial and land policies and involves the interests of the central and local governments and the interests of financial institutions and real estate companies. Our regulation has encountered massive resistance.
Why only in the past two years we have seen a glimmer of hope and some progress of housing market regulation? It is because first we have very firm resolve and second we have identified the crucial issue of curbing speculative and investment-driven demand and adopted targeted policy measures.
I have a basic view about the housing market, which is that China has a population of 1.3 billion and is in a stage of rapid industrialization and urbanization and therefore the demand for housing is firm and will always exist. Of course, we have been trying to provide adequate housing for all the people, but it does not mean that everyone should own their home. Our direction should be to encourage more people to rent.
With regard to the development of housing market, I have several opinions: first, we should maintain the long-term, stable and healthy growth of the real estate industry. If we allow it to develop blindly, there will emerge bubble in the housing sector. Once the bubble bursts, it will not only impact the real estate market but also drag down the entire economy. Second, what does bringing the housing price to a reasonable level mean? I think that a reasonable housing price should match people's income, the construction cost and reasonable profit. Now, I'd like to tell you clearly that in some places the housing price is still far from falling to a reasonable level. Therefore, we shall not loosen the regulation. Otherwise, our previous efforts will be wasted and the housing market will plunge into chaos, which will undermine the long-term, healthy and stable development of the housing market. Third, when developing the housing market, we should undoubtedly make best use of the fundamental role of market in allocating resources, or use the hand of the market. However, the hand of the government is also indispensable because it can ensure stability and promote equality.
Hong Kong TVB: Mr. Premier, you visited Hong Kong in 2003. Nine years have passed and Hong Kong has experienced many changes since your last visit. We will embrace new changes in the future as well. What is your view about the ongoing election of Chief Executive of the Hong Kong Special Administrative Region government? Except the challenges brought by the change of government and the European debt crisis, what are the other underlying issues you think Hong Kong needs to address? How do you see the future development of Hong Kong?
Wen: I have deep love for Hong Kong. When I visited Hong Kong in 2003, I quoted a line from Mr. Huang Zongxian's poem to describe my feeling about Hong Kong. It reads "every inch of mountain and river on this land is as precious as gold". Hong Kong has been back to the motherland for 15 years. Changes in Hong Kong over the past 15 years show that the principles of "one country, two systems", "Hong Kong people governing Hong Kong" and a high degree of autonomy have strong vitality.
Over the past 15 years, Hong Kong has experienced twists and turns and encountered two financial crises. However, under the leadership of the SAR government and with the joint efforts of the Hong Kong compatriots, Hong Kong has successfully overcome the financial crises and maintained its status of international financial center and a high degree of free market economy. In 2011, the per capita GDP of Hong Kong reached a historical high of US$34,200 and employment was in a good condition. Hong Kong now faces both difficulties and opportunities. On the one hand, the financial crisis and the European debt crisis still exert impact and on the other hand, Hong Kong faces dual pressure of economic downturn and inflation. Under such circumstances, Hong Kong must work hard to develop the economy, improve people's livelihood, advance democracy and maintain social harmony. Particular efforts should be made to solve such major issues as social justice, price stability, housing, education and medical care of the people.
Currently, the election of the fourth Chief Executive of Hong Kong SAR government is underway. I believe that the Hong Kong compatriots will elect a chief executive who enjoys the support of the majority of Hong Kong people as long as the principle of openness, justice and fairness is observed and relevant legal procedures are strictly followed.
At present, Hong Kong does face some difficulties, but I would like to quote Mr. Deng Xiaoping that "we should have confidence that Hong Kong people are able to run Hong Kong well".
I truly hope that I will have another opportunity to go to Hong Kong, to visit the residents of Amoy Garden and to talk to the students of the University of Hong Kong. I would like to ask the journalist from Hong Kong to convey my greetings to the Hong Kong compatriots.
Washington Post: one year ago, you were asked by one of my colleagues about the possibility of elections in China. You said it had to come gradually step by step. The Chinese should first show that they can run a village and then a township. This year, people all over the world are electing their leaders in direct elections. That has had many people wondering and asking the question exactly when Chinese citizens will enjoy the same right to elect their leaders in a competitive and direct election.
Wen: I have said on several occasions that we must adhere to the practice of self-governance by villagers and the villagers' lawful right to directly elect the village committee must be protected. Many practices have proved that the direct election of village committee is successful. The villagers have not only shown strong enthusiasm but also formulated strict procedures of election according to the Villagers' Committee Organization Law.
I still believe that if the people are able to run a village they will be able to run a township and then a county. We should continue to encourage the people to make pioneering explorations in this direction which will enhance their capabilities. I believe that democracy in China will be developed gradually in line with China's national conditions. No force can hold this process back.
Caijing: The GDP growth target for this year has been lowered to 7.5%. Is it just a temporary cut in the growth speed or is it more of a permanent one? Does it mean that this will be the end of China's high economic growth period? Secondly, the international community has, to some extent, placed the hope of tiding over the economic crisis on China's strong economic growth. How will China's downward adjustment of its economic growth target affect the global economic recovery?
Wen: After I delivered the government work report, the highest attention from media organizations across the world has been paid to the annual growth target of China. I believe they have put their interest on a very important issue. For years, we have set the average annual growth target of the Chinese economy at around 8%, but this year we have set the target at 7.5%. This is because we want to shift China's economic growth towards the progress in science and technology and the higher educational level of the Chinese labor force. We hope that China's economy will achieve a high-quality growth and our economic development will serve the primary goals of making structural adjustments to our economy and transforming our development model. We hope that China's economic development will no longer come at the costs of resource consumption and environmental pollution. Rather, we hope that we will be able to put China's economic growth on a path that is conducive to energy conservation and the protection of the eco environment. We hope that the growth of China's economy will deliver greater benefit to the Chinese people.
We have already made this decision in the formulation of the 12th Five-Year Plan. We have set the average annual GDP growth during the 12th Five-Year Plan period at 7%. By setting this year's growth target at 7.5%, we want to bring it in line with the requirements set out in the 12th Five-Year Plan for China's economic growth. At the same time, I'd like to point out that the economic slowdown in China is mainly the result of our proactive macro control. One should recognize that China's economy is under downward pressure due to the contraction of the external market caused by the European debt crisis. Under such circumstances, we have taken the decision to adjust downward China's GDP growth target, mainly because we want to continue to press ahead with our economic structural adjustment.
I also want to point out that when we announced the growth target for this year, it is the consensus among the economists, experts, scholars, and the media organizations from many countries around the world that this is actually a piece of good news for the world because if we in China can truly overcome the problem of lack of adequate balance, coordination and sustainability in our economic growth and get Chinese economic growth on the path of quality development, this, in a fundamental way, is good news for the global economy.
Now, we must continue to strike a balance among maintaining steady and robust economic development, making economic structural adjustment and managing inflationary expectations. China's economic aggregates now total RMB47 trillion. On top of such a large base figure, 7.5% GDP growth target is not a low target. If we can maintain such a growth rate while our economic aggregates continue to rise, this target cannot be considered low at all. Moreover, we need to work even harder to enhance our economic growth efficiency so that more benefits will be extended to the Chinese people. We have confidence that we will be able to do that.
CCTV: You have said on many occasions that you must work hard to promote social equity and justice, but the Chinese people still feel that there are still many problems that involve lack of equity and justice in the Chinese society, I want to ask you what steps you will take during the remainder of your term of office to promote social fairness and justice. Secondly, we know that you often log onto the Internet, there are a lot of comments by the netizens of China on the work of your government and you yourself. There are both positive ones and critical ones. How do you see the criticism about you and your work on the Internet?
Wen: I have said before that equity and justice shine more brightly than the sun. Equity and justice are the defining nature of socialism. As a matter of fact, over the past 9 years, the government has put in a large amount of efforts in promoting social equity and justice. I believe that these efforts should be widely recognized. On the legal front, we have amended the Chinese Constitution and we have incorporated respecting and protecting human rights into the Chinese Constitution. We have formulated the Property Law to protect, on the basis of law, the legal private assets of the Chinese people. We have amended the Election Law to ensure equal rights of election of urban and rural residents. We have abolished the regulations that put restrictions on the freedom of mobility of rural residents into the cities. In a short span of these years, China's urbanization rate has exceeded 50%. Secondly, in the rural areas, we have abolished the agricultural tax so as to ease the unreasonable burden of Chinese farmers. Thirdly, as far as education is concerned, we have basically made the free 9-year compulsory education universally available. We have exempted the tuition fees for the students from rural areas who are engaged in the vocational education. We have provided scholarships and financial aid for students from rural areas during their senior high school and college education. We have provided subsidies for students from poor families who are engaged in the rural boarding school education. Fourthly, we have established and improved the social security system that covers old-age support, unemployment insurance, medical insurance and subsistence allowance. The program of medical insurance for both working and non-working urban residents and the program of the rural cooperative medical care now cover 1.3 billion people in China. All these are institutional arrangements we have made to promote social equity and justice. But I'm fully aware that the people are still complaining about income disparities, judicial injustice and some other problems. We must continue to do a conscientious job in promoting social equity and justice.
In the last year in office, this government plans to take on some tough tasks. We are determined to accomplish these tasks rather than pass the problems to the next government. First, we will develop the overall plan for the reform of income distribution system in China. Second, we will formulate and introduce a regulation on the expropriation and compensation of the collectively-owned rural land so as to ensure farmers' property right to the land they have contracted. Third, we will extend the coverage of old-age insurance programs to the entire Chinese population. Fourth, on the basis of the newly-set poverty standard, we are going to press ahead with the work of poverty elimination. Fifth, we have arranged the budget for meeting the targets of raising our educational expenditure to 4% of the GDP. We must make full efforts to meet these targets and ensure the wise use of every piece of the expenditure.
All the power of the government comes from the people. We should create conditions for the people to criticize the government's work. I don't feel surprised at all that there have been some critical comments on the Internet about the performance of the government. I think that it is only natural for that to happen. I sincerely believe that the government should seriously reflect on the critical views people have made. As a matter of fact, the government has often found fruitful thoughts from those comments and views made by the public while making decisions on many major issues. I have often thought about inviting some representatives of those who regularly make critical comments on the work of the government to Zhongnanhai so that we can have a face-to-face discussion about the issues they are interested in. If you have followed the news coverage of my work of soliciting views on the report of the work of the government, you may have found out that such a practice has been tried, but I don't think it's sufficient yet.
During my term of office as the premier, there have been some slanders about me. I have not allowed myself to be disturbed by those slanders. But still, they have caused some pain, not the pain because a man of integrity and loyalty has been questioned and wronged, but because my independent character has not won people's understanding. That has made me feel a little worried about this society. I'll continue to press ahead with my work and to uphold my ideals without hesitation and misgivings and with the courage that one should not fear the rumors and slanders from others.
Al Jazeera: It is well known that the friendly relations between China and Arab countries and the entire Middle-East region have had a long history. China has been committed to working with the rest of the international community to help find solutions to related problems. But on the issue of Middle-East, in particular the issue Syria, it seems that China's position varies greatly from the positions of many other countries. What is the exact position of China on the Issue of Syria and what is China's consideration behind all these efforts surrounding the Syrian issue? How does China see the Arab people's demands for democracy? Is China concerned that its relationship with the Arab people will be affected?
Wen: On the issue of Syria, China has no personal interests and China does not seek to protect any party including the Syrian government. We make our own right judgment and determine our own position on this issue on the basis of actual facts. The position of the Chinese government on the Syrian issue is four-fold: first, the lives of civilians must be protected and the killing of civilians must be immediately stopped by all relevant parties in Syria; second, China respects the legitimate aspirations for change and for the pursuits of their own interests of the Syrian people; third, China supports the special envoy jointly appointed by the UN and the Arab League in his mediation efforts; and fourth, China has deep sympathies for the humanitarian plight of the Syrian people. We have participated in the relevant international humanitarian aid and we will continue to do so. At the same time, China has, through its own ways, worked intensively on relevant parties for the early launch of a political dialogue process. We believe that the demand for democracy by the Arab people must be respected and truly responded to. I believe that this trend towards democracy cannot be held back by any force.
There have been friendly exchanges between China and Arab countries stretching up to 1,000 years. It has been China's consistent position to respect the Islam civilization and support the just cause of Arab countries. The two sides have engaged in productive cooperation in a wide range of areas. Not long ago, I visited Saudi Arabia, the UAE and Qatar. I feel that there is consensus between China and Arab countries, including the Gulf countries that cooperation has been the mainstay of the relations between the two sides. As the Arab world undergoes changes, I believe that the position of the Chinese side will win the understanding and trust of the Arab countries and eventually the relations and exchanges between China and Arab countries will strengthen.
China National Radio: People have paid very close attention to the Wuying case of Zhejiang Province. Do you personally think that Wuying should be sentenced to death? How do you think the difficulties confronted by private capitals in investing and financing?
Wen: I have noticed that there has been much public attention paid to the Wuying case. One this matter, I want to make the following points. First, a thorough study must be conducted concerning the legal aspects of private lending and the principles that should be observed in handling this matter so that there will be clearly defined legal safeguards for private lending. Second, the Wuying case must be handled on the basis of real facts and in accordance with the laws. I have noticed that the People's Supreme Court has issued a circular requiring that all cases involving the disputes over private lending must be carefully handled and the People's Supreme Court has taken a cautious attitude toward the Wuying case. Third, the case shows that the development of private finance is not in line with the requirements of social and economic development in China. The problem we face now is that the Chinese companies especially small- and micro-enterprises need to access a large amount of funds. The banks have yet to be able to meet the needs of those companies and there is a massive amount of idle private capitals. We should channel and allow non-governmental investment into finance. We need to bring those private financial activities into an open and standardized environment. We should encourage their development and at the same time put them under strict oversight and supervision. I can tell you here that the People's Bank of China and China Banking Regulatory Commission (CRBC) are now actively considering launching an overall reform in this particular field with Wenzhou as one of the places to try the reform in private finance.
AFP: Over the last year, there have been a series of self-demolitions in the Tibetan area of China. Is this a matter of great concern to you personally? What can your government do? What's the best way for your government to address this situation?
Wen: In the past weeks and months, there have been several instances of self-demolition on the part of monks in the Tibetan-inhabited areas of China. We are opposed to taking such radical moves, which disturb and undermine social harmony. The young Tibetans are innocent. We feel deeply distressed by their behaviors. At the same time, I must point out that all should recognize that Tibet and the Tibetan-inhabited areas of four provinces are inseparable parts of China's territory. The so-called Tibetan government-in-exile in Dharamsala in India is in nature a theocratic one both under the direct control of the Dalai Lama and under his indirect influence. Its purpose is to separate Tibet and the Tibetan-inhabited areas of four provinces from the motherland. We have a firm position and principle on this matter.
Tibet practices regional ethnic autonomy system. Over the past years, Tibet has made significant progress in economic and social development, but we also recognize that Tibet is behind the central and eastern part of China in terms of economic and social progress. The Chinese government has taken strong measures to accelerate the economic and social development in Tibet, including the formulation and execution of a new plan for that purpose in the hope that we would be able to further lift the living standards of the farmers and herdsmen in Tibet. Tibet needs to develop its economy on a sustained basis and at the same time we must pay close attention to conservation of eco environment and preservation of cultural heritages in Tibet. We respect the freedom of religious belief of Tibetan compatriots and their religious belief is protected by the law. We must treat all our Tibetan compatriots as equals and with respect and make continuous improvement in our work in this area.
Wen: If you are not too tired, I would like to take two more questions?
China News Service: The Chinese economy has sustained a robust growth over the recent years, however, the problem of widening income gap has become more acute. In your government reports in recent years, you have said several times that the government wants to reverse the trend of the widening wealth gap in China. What step will the government take to resolve this problem so that more Chinese people will be truly sharing the fruits of China's reform and development?
Wen: To ease the problem of income distribution gap, I believe that it is important to take steps in the following four areas. First, we will continue to increase the income of urban and rural residents and raise the level of minimum wage so that people's income would be able to rise in tandem with economic growth and the increase in productivity. Second, we will make adjustments to income distribution. We will further regulate the income of high-income groups, in particular the income of senior executives of state-owned enterprises and state-owned financial institutions. We will increase the proportion of middle-income groups. Third, we will further improve the social security system. Fourth, we will protect lawful incomes and resolutely ban illegal incomes.
To promote the equal distribution of income, I think that the following three points are very important: first, the government must create equal conditions for all in terms of education, employment and starting one's own businesses so that all people will get started from the same starting line; second, we must pay close attention to the wellbeing of the vulnerable groups in the society. I believe that if the living conditions of the venerable groups can be improved, in essence there will be a sweeping improvement of the living standards of all the people in the society; and third, we must continue to promote the reform of the fiscal system and income distribution system so as to put in place the institutional arrangements for us to achieve the goal of common prosperity.
Reuters: I have two questions. You referred to the problem of local government debt in your government work report. I would like to get your personal perspective on this matter. How big exactly is the local government debt at the moment? What are your thoughts about addressing this problem? Will you consider reorganizing or reshuffling the local government debt? Will the central government consider extending the repayment maturity for the local government debt? Will the government consider issuing new policies in the process of handling this issue? The second question is about the Wang Lijun incident, which has occurred in Chongqing. I have noticed that the relevant governmental departments of China have conducted investigation into this matter after Wang Lijun entered the U.S. Consulate. How do you see this matter? Will this matter affect the trust or confidence of the central government in the leaderships of Chongqing municipal government and CPC Chongqing municipal committee?
Wen: On local government debt, I would like to make the following points: first, the debt-to-GDP and budget-deficit-to-GDP ratios in China are at a fairly low level. They are both lower than those of many developed countries and emerging market economies; second, the government debt level in China is at a controllable and safe level. In 2010, we audited local government debts, which stood at RMB10.7 trillion. By the end of 2011, the volume of local government debt only increased by RMB300 million. In 2011, a total of RMB2,153.6 billion of new loans were made and a total of RMB2,153.3 billion of debt was repaid; third, in the handling of the local government debt, we will properly handle the debt stock and strictly control the increase of government debt. We will properly handle the outstanding local government debt in a step-by-step manner by classifying the debt into different categories and managing them accordingly. For any incremental debt, all the local government debt must be incorporated into the local government budget and final accounts subject to the supervision of people's congresses at the same level; fourth, the majority of local government debt is in the form of high-quality assets with stable cash flows and promising returns. The debt of such projects can be repaid by the returns made from those projects. For public welfare projects, both the central and local governments will find ways for repayment. I can tell you responsibly that last year we have been able to pay off the debts of the schools engaging in compulsory education. At the same time, we will let the market play a role in handling the local government debt through such ways as assets disposal, project transfer and equity sales. In a word, we will take the matter of local government debt very seriously and we will not allow it to adversely affect China's development.
The Wang Lijun incident has received high attention from the people in China and from the international community. I would like to tell you that the central authorities have taken this matter very seriously. After the incident took place, the central authorities immediately instructed the related departments to launch an investigation into this matter. So far progress has been made in the investigation. We will handle this issue in strict accordance with the law and on the basis of actual facts. As far as the results of the investigation and how this matter is handled are concerned, an answer must be given to the people and the results of the investigation should be able to withstand the test of the law and the history.
Over the years, the successive governments of Chongqing and the people in Chongqing have made tremendous efforts to promote reform and development in Chongqing and they have accomplished remarkable achievements in this regard. The current party committee and municipal government of Chongqing must seriously reflect on the Wang Lijun incident and draw lessons from this incident.
I would also add some comments here. Since the founding of the People's Republic of China, under the leadership of our party and the government, we have made remarkable achievements in advancing our modernization drive, yet at the same time, we have taken some detours and learned hard lessons. Since the 3rd plenary session of the 11th CPC Central Committee, in particular, since the central authorities took the decision on correctly handling relevant historical issues, we have established the line of thinking that we should free our mind and seek truth from facts and we have formulated the basic guideline of our party, in particular we have taken the decision of conducting reform and opening-up in China, a decision crucial for China's destiny and future. What had happened shows that any practice we take must be based on the experiences and lessons we have gained from history and must serve people's interest and that any practice we take must be able to withstand the test of history and the reality. I believe that the people fully recognize this point and I have full confidence in our future.
I have given serous answers to all the questions from the journalists and none of my answers is a perfunctory one. It's been three hours and I suppose we could call it the end of our press conference. Thank you.
The press conference was held at the Golden Hall on the third floor of the Great Hall of the People. It lasted three hours. When the press conference ended, Premier Wen Jiabao went over to shake hands with the journalists. There were nearly 1,000 journalists participating in the press conference.