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China’s premier says economy better than expected

BOAO, China - China’s Premier Wen Jiabao said Saturday that the country’s stimulus package is working and the economy is 'better than expected.'

He also vowed to expand the country’s domestic demand and pull China out of the global economic slump.

Wen spoke at the Boao Forum, an annual gathering of government and business leaders on the southern island province of Hainan.

Wen said he was confident China could overcome the crisis but cautioned that global economic recovery will be a “long and torturous process.”

“We should not lose sight of the fact that the international financial crisis is still spreading, the basic trend of world economic recession is not reversed,” he said.

The country has sufficient capital and rich labor resources, as well as institutional advantages to overcome the crisis, he said.

The country’s industrial output has gradually stabilized and there is “sufficient liquidity in the banking industry,” he said. Investment growth is gaining speed, and consumption is growing “fairly fast,” he said.

Wen’s comments came just days after China announced its economy expanded at its slowest pace 6.1 percent in at least a decade in the first quarter.

But the sluggish growth figure was paired with numbers that may show the economy may be bouncing back from the slump. Industrial output, consumer spending and investment in factories were on the rise, the government said.

“China’s package plan is already paying off and positive changes have taken place in the economy,” Wen said. “The situation is better than expected.”

Some economists said the possible rebound was a sign that the government’s 4 trillion yuan ($586 billion) in stimulus spending was beginning to kick in. But others are skeptical that a recovery has begun and say that sustained growth is impossible until consumer demand in the United States and other Western markets rebounds.

Wen said China is also taking measures to improve its social safety net, expand domestic consumption and to develop the poorer west of the country. The government is also “doing everything in our power” to create jobs for college students and migrant workers, he said.

He said 2.7 million jobs were created in urban areas in the first quarter.

“All the measures will help expand domestic demand,” Wen said.

Organizers said this year’s Boao forum attracted more than 800 people, including Pakistani President Asif Ali Zardari and Finnish Prime Minister Matti Vanhanen.