Premier says China ready with new stimulus

Premier says China ready to expand stimulus, voices worry about holdings of US Treasuries

BEIJING (AP) -- China is ready to expand its stimulus if the impact of the global slowdown worsens, its top economic official said Friday, and he appealed to Washington to safeguard the value of Beijing's U.S. assets.
"We already have our plans ready to tackle even more difficult times, and to do that we have reserved adequate ammunition," Premier Wen Jiabao said at a news conference following the close of China's annual legislative meeting. "That means that at any time we can introduce new stimulus policies."

Wen expressed confidence China can emerge from its slump "at an early date," saying the country and the world should be better off next year.

But he gave no details of possible additional stimulus, nor did he say under what conditions Beijing might expand its 4 trillion yuan ($586 billion) package to boost growth in the world's third-largest economy.

Wen and other officials have pointed to rising bank lending, power demand and other tentative signs the stimulus is taking effect. But growth in consumer spending is weakening, suggesting it has yet to spur private sector spending and investment, which analysts say will be key to its success.

The premier expressed concern about the safety of its vast holdings of U.S. Treasury securities and other debt. He noted that China is the biggest foreign creditor to the United States and appealed to Washington to make sure its response to the financial crisis does not damage the value of Beijing's holdings.

"We have made a huge amount of loans to the United States. Of course we are concerned about the safety of our assets. To be honest, I'm a little bit worried," Wen said. "I would like to call on the United States to honor its words, stay a credible nation and ensure the safety of Chinese assets."

Analysts estimate that nearly half of China's $2 trillion in currency reserves are in U.S. Treasuries and notes issued by other government-affiliated agencies.

Last month, during her visit to China, Secretary of State Hillary Rodham Clinton sought to reassure Beijing that Treasury notes and other government debt would remain a reliable investment.

Communist leaders worry about rising job losses and possible unrest amid a trade slump that saw Chinese exports fall 25.7 percent in February from a year earlier. They have promised to spend heavily to create jobs and boost exports.

Wen said Beijing can meet its 2009 growth target of 8 percent, despite skepticism by private sector economists, who expect as little as 5 percent. That would be the strongest of any major country but could lead to more waves of job cuts.

"I really believe we will be able to walk out of the shadow of the financial crisis at an early date," he said. "After this trial, I believe the Chinese economy will show greater vitality."

The premier promised to focus on job creation and give more help to smaller companies, which he said generate 90 percent of Chinese new employment.

"We will pay all attention possible to this issue and we will never overlook this issue," he said.