China leader defends trade policies

BEIJING - China vowed to remain alert to any renewed signs of economic crisis and forcefully defended its currency, trade and more assertive foreign policies as helping global rebalancing, not undermining it.

Premier Wen Jiabao repeatedly took issue with United States, whose relations with Beijing have soured in recent months. To U.S. criticisms that China keeps its currency undervalued and thus harms U.S. exports, Wen said Beijing opposed "finger-pointing or taking strong measures to force" a readjustment of the yuan. Likewise, he said the recent White House reception to Tibet's exiled Dalai Lama and U.S. arms sale to Taiwan "caused serious disturbance in relations."

"The responsibility does not lie with the Chinese side, but the United States," Wen said in a wide-ranging news conference, his only regular meeting with the media all year. "With mutual trust both countries can forge ahead, but with mutual suspicion both countries will fall behind."

Wen, who is No. 3 in the Communist Party hierarchy and chiefly responsible for the economy, dwelled on China's strong bounce-back from the world economic crisis and whether the current global recovery could be sustained. He cited high unemployment rates, debt crises in foreign nations such as Greece and high government deficits abroad, while at home, he said, there are worries about inflation and businesses' over-reliance on the massive stimulus and loans China used last year to keep the economy running.

"All of these may cause setbacks in the recovery of the global economy and may even cause a double-dip," he said.

Wen spoke following the closing of the annual session of the party-dominated national legislature, which earlier Sunday approved a blueprint to keep government spending high, though at half the rate of last year, to buffer any economic turbulence. Sizable increases were given to education, pensions and low-cost housing - part of a yearslong effort by Wen and President Hu Jintao to more fairly spread the benefits of growth among rural and working-class Chinese.

A mild-mannered, grandfatherly and truly popular figure often called the "people's premier," Wen spoke frankly that economic ills left untended could threaten Communist rule. A particularly toxic combination, he said, were inflation, the rich-poor income gap and corruption - all current problems.

"These will be strong enough to affect our social stability and even the stability of state power," he said.

Normally high security in Beijing was tightened further in the past two weeks for the National People's Congress and a meeting of the top government advisory body. After Wen's news conference, police dragged away and put into a van at least two people - one of whom was complaining about a housing dispute - as they tried to get the attention of officials and reporters outside the hulking Great Hall of the People. A third person, who said he was a teacher, was led away separately.

As the leadership's only news conference of the year, the government sometimes uses the event to send a message to the public and the world. This year, Wen sought to tamp down rising pressure from Washington, the European Union and other governments over currency and trade practices and beat back a perception that Chinese arrogance has grown apace with its global clout.

On the yuan, also called the renminbi, Wen said the currency was not undervalued, noting that even as global trade plummeted last year, U.S. and EU exports to China shrank at a lower rate. With more than $800 billion of its foreign exchange reserves invested in U.S. Treasury securities, Wen said the value of the U.S. dollar was a "big concern" and asked Washington to take unspecified steps to reassure investors.

He pronounced himself a staunch supporter of free trade, warning against protectionism and currency devaluations to boost exports as harmful to economic recovery.

"I believe that free trade not only promotes growth of the world economy. At the same time, it promotes harmony in the world and changes and improves people's lives," he said.

Wen also fired back at critics of China's performance at the last year's Copenhagen climate change conference. Asked why he skipped a meeting of some foreign leaders, including President Barack Obama, Wen said he was snubbed, having never been formally invited, and so sent a vice foreign minister instead.

"So far no one has given us any explanation about this and it still is a mystery," he said.

When asked if China would play a bigger role in international affairs, Wen said China is still a developing country, focused on improving living standards, and even when rich and powerful, it would not seek to dominate others. "China is a country that is focusing its energy on promoting development at home. It is important for us to have sound external conditions and a peaceful, stable environment," he said.