Premier Wen Jiabao said that China would not let up in its macroeconomic control efforts, which have contributed to steady and rapid economic growth and stabilization of market prices over the past year.
"We must not stop and we must not waste our previous efforts," Wen stressed.
Citing problems such as greater difficulties in raising grain output and farmers' incomes and a serious shortage of energy and transportation capacity, Wen conceded that China is now faced with "many dilemmas" in its "overstretched" economy.
He said these were actually problems with the economic growth mode and institutional problems, so would "take time to be addressed."
He also promised that his government would "treat different situations differently" in its macro-control efforts, adding "we must take both administrative and economic means to achieve our objectives."
On the Anti-Secession Law, Wen told more than 700 journalists from home and abroad that the it has been made to strengthen and advance ties across the Taiwan Straits, and is not a war mobilization order.
It does not target Taiwan compatriots, he said, adding that the law states clearly it aims to promote exchanges between the people on both sides of the Straits, encourage and facilitate economic cooperation, the three "direct links," as well as exchanges in various fields including education, science and technology and culture.
"The law aims at checking and opposing 'Taiwan Independence' secessionist forces," he said. "Only when they are checked can we maintain peace in the cross-Straits region."
Peace and stability in the region, he said, will facilitate business people from Taiwan and abroad to invest in the mainland.
"The important speech delivered recently by President Hu Jintao on the Taiwan issue stated clearly that we will protect the legitimate rights and interests of Taiwan business people on the mainland," said the premier. "We will do whatever benefits the Taiwan people."
He said China will work towards regular cross-Straits direct passenger charter flights as early as possible and will take measures to boost sales of farm produce from Taiwan, particularly from southern Taiwan, to the mainland.
On the other hand, the premier said China will seek the resumption of export of labor for fishermen from the mainland to work in Taiwan.
"We're also ready to take a series of preferential policies and suitable measures," he said.
Wen pledged that farmers' rights to manage and use their land would never change.
According to him, China's reform started in rural areas with the readjustment of the right to "manage and use land," and a household contract responsibility system for farm production was established in the late 1970s.
"Their rights have been continuously extended," said Wen.
Wen said that China is working on a plan for a more flexible exchange rate, and the government would announce any decision on specific measures at the appropriate time.
China began reforming its exchange rate in 1994 and has never stopped. The purpose is to establish a market-based, managed and floating exchange rate, Wen said.
He said a solid foundation for such reform is being lain, which include macroeconomic stability and growth, and a healthy financial situation.
Meanwhile, said Wen, China has already taken a series of measures to ease foreign exchange regulation.
Wen said there has been no agreement on what impacts the change of China's exchange rate, or the appreciation of Renminbi, will have on the Chinese economy, Chinese enterprises and neighboring countries and other countries in the world.
Although some people press for the appreciation of Renminbi, they don't fully understand the problems arising from appreciation, Wen said. China is a responsible country and is not only considering domestic interests, but the possible impact on neighboring countries and the world, he said.
Wen said that Tung's resignation has been "out of his own sincere will," and his contributions to Hong Kong will be remembered by its people and treated fairly by history.
Tung's proposal to resign from the post would win understanding from the Hong Kong people and would be respected by central government.
Wen said that he believes that the people of Hong Kong are fully capable of running the region well and central government will stick to the principle of "one country, two systems" and "a high degree of autonomy."
The election of a new chief executive of the special administrative region will be completed in accordance with the Basic Law and other laws, he said.
Despite the Asian financial crisis, Hong Kong's economy has picked up and living standards further improved, Wen said.
"Over the seven and more years," he said, "Mr. Tung has done a tremendous and creative job. He was hardworking with few complaints and showed a strong sense of responsibility."
The premier said China and Japan should make joint efforts to create conditions for an exchange of high-level visits in a bid to improve bilateral relations.
He also suggested the foreign affairs departments of the two countries should begin strategic studies on strengthening and improving relations, and that historical problems should be properly handled.
Wen said that since their normalization, China-Japan relations have made great progress. Last year, bilateral trade approached US$170 billion and the number of bilateral personnel visits exceeded four million.
However, he said that there are obstacles, particularly in how the Japanese view the past, and that the development of relations should comply with the following three principles:
First, taking history as a mirror and looking forward into the future. The year of 2005 marked the 60th anniversary of victory in the War of Resistance Against Japanese Aggression. It reminded us of the untold sufferings of the Chinese, other Asian and even Japanese people at that time. He said, "We hope that the Japanese government takes the opportunity to promote friendship between our countries."
Second, the Japanese government should stick to the "one China" principle. The Japan-America security alliance is a bilateral arrangement. The Chinese people are concerned with the alliance, because it relates to the Taiwan issue, which is an internal affair, and will never allow direct or indirect interference by any other countries.
Third, strengthening cooperation and pursuing common development. There are tremendous potentials in friendly cooperation, especially in economy and trade, Wen said.
The year 2005 is not only a year of reform, but a year of fighting its impediments, Wen said.
Removing unhealthy and destabilizing factors in the economy and strengthening the achievements of macro-controls hinges on reform, he said. To solve deeply-rooted "contradictions and problems" in economic development, adjust the industrial structure and change the patterns of economic growth relies on it.
Wen said that to realize social fairness and justice and build a harmonious society also needs reform.
China's reform is a long-term target. It would be better to solve some problems at an earlier date, or they will become bigger, Wen warned. He set five tasks for reform this year:
-- To restructure government bodies and change government functions;
-- To promote reform of state-owned enterprises, focusing on building corporate governance and joint-stock reform;
-- To push forward financial reform. We need to exert great efforts for reform since finance is a "very important and problematic" part of the economy;
-- To push forward rural reform focusing on reform of tax and fees administration; and,
-- To advance social security reform.
Wen also announced that he will visit India soon at the invitation of his Indian counterpart.
He said that, as the two most populous nations in the world, China and India are not rivals but friends, and that both shall work together to tap the potential of cooperation and find a "fair, reasonable and mutually acceptable plan" to solve border disputes.
"I hope you can send my message back to the great Indian people, that we're not competitors, we are friends," said Wen.
Acknowledging that China and India will celebrate next month the 55th anniversary of the establishment of diplomatic ties, Wen expressed hope that it would "become a new starting point for friendly cooperation".
Stating that the development of Sino-Indian relations has "entered a new stage," Wen said that during his visit he would seek consensus mainly on three issues.
"Both China and India should fully recognize the great significance of Sino-Indian friendship, not only to Asia, but to the entire world," said Wen.
Though the annual trade volume between the two countries has reached US$13.6 billion, there remains great potential for the two sides to expand cooperation and seek common development, he added.
On the boundary issue, he suggested that they first establish a principle for its resolution on the basis of equal consultation and mutual understanding with both respect for history and accommodation for reality.
The premier ended his comments by quoting from an ancient Indian poem: "May we not hate anyone. Let there be peace, let there be peace, let there be peace!"
Wen said that he would discuss trade and economic cooperation with his Russian counterpart Mikhail Fradkov, particularly that in oil and gas exploration, when they meet in the second half of the year.
China and Russia have reached a consensus on energy cooperation, Wen said, citing Russia's promise to enlarge oil exports to China to 10 million tons in 2005 and 15 million tons in 2006, based on last year's 9 million tons.
Russian President Vladimir Putin has made it clear that Russia would give first consideration to China in building an oil-gas pipeline in Siberia, he said, adding that the two countries would also strengthen cooperation in oil and gas exploration and development.
Energy cooperation is an important part of the bilateral cooperative friendship and is based on equality and mutual benefit, Wen said.
Describing the relationship over the last few years as being "the best period" since the settlement of historical border issues, Wen said the two countries had set a goal to expand trade to US$60-80 million by 2010.
The premier confirmed that measures are being taken to reform the country's judicial system including the possible return of powers to review death penalties to the Supreme People's Court.
However, he said that, based on China's "national conditions," it is impossible to rescind the penalty, citing the fact that half the nations of the world still adopt the death penalty.
Wen also vowed to improve judicial mechanisms to ensure the "death penalty to be given carefully and fairly."
Wen said rural reform and development has entered its second phase, with industry expected to nurture agriculture and cities to support rural areas. "We should give more, take less and further liberalize rural productivity," he said, listing four central tasks.
Firstly, efforts should be made to promote rural reforms with a focus on rural tax and administrative fee reform.
Secondly, productivity in rural areas should be improved by building more water conservation projects and promoting wider application of agriculture-related science and technologies.
Thirdly, "we should also further develop education, science and technology, culture as well as other social undertakings in rural areas," Wen said.
And finally, grassroots democracy should be promoted by enhancing self-governance among villagers, implementing direct elections at village level and giving greater transparency in administration affairs at village and county level, he added.
In the first phase for rural reform and development, China introduced to rural areas the family contract responsibility system, which granted farmers greater autonomy in land use, production and management. "As a result, it has greatly liberalized productivity in rural areas," Wen said.
The premier said China will continue its policy of developing the capital market and expanding direct financing.
He listed some specific measures to achieve it, including enhancing efforts to improve the quality of listed firms, which he said is "fundamental" to the country's endeavors in developing the securities market.
The country will also build an open, fair and transparent securities market, intensify supervision and crack down on any behaviors in violation of laws and regulations, he added.
(Xinhua News Agency March 14, 2005)
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