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To: RealMuLan who wrote (47335)	3/14/2004 7:26:37 PM
From: elmatador	Read Replies (1) \| Respond to of 74559

PM warns of threats to China's growth By James Kynge and Mure Dickie in Beijing Published: March 14 2004 19:17 \| Last Updated: March 14 2004 19:17 China's economy is at a "critical juncture", Wen Jiabao, prime minister, said in his annual news conference on Sunday, pointing to the threat that over-investment, inflation and shortages of energy pose to the country's rapid growth. Speaking after the closing session of the National People's Congress (NPC), China's legislature, Mr Wen warned: "Deep-seated problems and imbalances in the economy over the years have not been fundamentally resolved." Mr Wen, who became premier a year ago, did not offer new strategies to deal with these problems, which he avoided calling "overheating". Analysts have warned that GDP growth of more than 9 per cent last year, with fixed-asset investment rising by 27 per cent, could create inflationary pressures. Beijing has said it wants to slow investment by curbing bank lending this year through administrative fiat. It also plans to address transport bottlenecks by building more rail lines and roads, allowing more coal to be shipped to energy-starved power stations. "This presents an important challenge to the government. It's a test no less than the Sars epidemic," Mr Wen said. "If we fail to manage the situation well, setbacks to the economy will be inevitable." One widespread concern is that Beijing may prove unequal to the task of slowing investment in sectors such as steel, cement, aluminium and property because such investment is being driven mainly by local authorities or enterprises that are resistant to Beijing's edicts. The premier also struck a surprisingly sombre note over the prospects for Chinese bank reform, following the recent injection of $45bn into the Bank of China and China Construction Bank, two state-owned banks. Calling it a "make-or-break" measure, he said Beijing could not allow its bank reform to fail. But he admitted he was troubled over whether reform to the banks' management and improvements to the competence of bank personnel would be successfully executed. Shortly before Mr Wen's remarks, the NPC voted to adopt significant changes to the national constitution, for the first time protecting the legitimacy of "legally-obtained" private property . This amendment put private property on an equal footing with that of the state, said Xinhua, the official news agency. Another amendment enshrined the respect of "human rights" in the constitution, also for the first time. On the vexed issue of Taiwan, which holds a presidential election next weekend, Mr Wen struck a studiously mild tone - in sharp contrast to that adopted by Zhu Rongji, his predecessor, during the island's last poll in March 2000. Veiled threats of war then failed to stop the election of Chen Shui-bian, candidate of the independence-minded Democratic Progressive party. On Sunday, Mr Wen mainly restricted himself to pro-forma assertions of Beijing's sovereignty over the island and calls for closer economic ties. However, he did reiterate Beijing's opposition to Taipei's plans to hold referendums on mainland missile deployments and possible bilateral talks alongside its presidential vote, saying they offended the "One China principle". Mr Wen avoided adding his voice to recent denunciations by government officials of pro-democracy campaigners in Hong Kong. While officials and state media have called democratic politicians "unpatriotic", Mr Wen merely said he hoped the people of the former British colony, which reverted to Chinese rule in 1997, would focus on "long-term prosperity and stability".