February 27, 2010 / 11:01 AM / 9 years ago

UPDATE 1-China's Wen confident of balancing growth, inflation

* China confident of growing fast, controlling inflation

* Premier silent on yuan, hopes for warm trade ties with U.S.

* Wen warns property speculators, vows to curb home prices

(Adds details)

By Langi Chiang and Alan Wheatley

BEIJING, Feb 27 (Reuters) - China will stick to a pro-growth monetary policy but will make sure inflation does not derail the world’s third-largest economy, Premier Wen Jiabao said on Saturday.

In an online chat, Wen took an emollient line towards Washington, saying China wanted 2010 to be a peaceful year for two-way trade and economic relations.

The two-hour question-and-answer session did not broach the yuan’s exchange rate.

“We still need to implement an appropriately loose monetary policy currently to be able to keep stable and relatively fast economic growth, on the one hand, and to manage inflationary pressure, on the other hand,” Wen said.

China’s central bank has already ordered banks twice this year to keep a greater proportion of their deposits in reserve, prompting global market fears of an aggressive tightening that could slow the world’s fastest-growing major economy.

Capping inflation was an important task, but Wen said he was confident China could succeed without stalling growth.

“I believe we can keep stable and relatively fast economic growth while controlling prices at a reasonable level,” he said.

“Last year was the most difficult year for China’s economic development in the 21st century, while this year will be the most complicated,” Wen said.

Wen was answering questions through the websites of the central government, www.gov.cn, and of the official Xinhua news agency, www.xinhuanet.com, ahead of next week’s session of the National People’s Congress, the largely ceremonial parliament.

The questions touched on a range of issues preoccupying ordinary Chinese, including corruption, unemployment and fast-rising property prices.

The government would take steps to curb speculative demand for property and punish developers who hoard land and completed houses in anticipation of price gains, Wen said.

He admitted to doubts as to whether measures already taken to rein in property prices, including tighter curbs on second mortgages, would succeed.

But Wen added: “I am determined to manage this issue well during the government’s term of office, to make sure the property market develops healthily and to keep property prices at a reasonable level.”

Turning to the yawning gap between rich and poor, Wen said Beijing would strive to boost wages and make it easier for migrant workers to settle with their families in smaller cities.

“If the wealth of a society is concentrated in the hands of a few people, then that’s unfair and that society is doomed to be unstable,” Wen said.

Asked about the United States, Wen chose not to dwell on several incidents that have strained ties in recent weeks such as hacking attacks, linked to China, on foreign firms including the Internet search company Google Inc (GOOG.O).

Washington angered China in late January by saying it would sell $6.4 billion of arms to Taiwan, the self-ruled island Beijing claims as its own.

And Beijing bristled last week after U.S. President Barack Obama met the Dalai Lama, the exiled Tibetan leader whom China reviles as a separatist for demanding self-rule for his homeland.

Instead, Wen expressed hope that trade frictions would ease and said China was not deliberately seeking a trade surplus with the United States.

Wen renewed his call for Washington to drop restrictions on sales of high-technology products so China can buy more than just soybeans and aircraft — two of its main imports from the United States. Doing so would cut China’s trade surplus, he argued.

“You should not let Chinese always eat beans on airplanes,” Wen joked. (Reporting by Langi Chiang and Alan Wheatley; Editing by Ron Askew)

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