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China's Wen confident of economic growth

AP - Sunday, September 28

TIANJIN, China - Premier Wen Jiabao said Saturday that China can maintain strong growth despite buffeting by global financial turmoil and pressure at home for higher prices.

China "does face considerable difficulties" from high energy costs, inflation pressures and credit market troubles, Wen said at the World Economic Forum.

"We have full confidence in our ability to overcome difficulties to ensure steady and fast growth for a long time," Wen told an audience of foreign and Chinese businesspeople.

Wen gave no growth forecast. But China's bank regulator, speaking earlier Saturday, said the annual rate should fall from last year's 11.9 percent to between 9 percent and 9.5 percent.

Wen said China has "huge potential for growth" despite global uncertainties because of its large labor pool, vast domestic market and the improved competitiveness of its companies.

The premier noted that the economy grew by 10.4 percent in the first half of the year despite paralyzing snowstorms and a devastating earthquake in May.

"China's economic fundamentals remain unchanged," Wen said.

Chinese leaders have been trying to rein in growth with investment curbs and interest rate hikes over the past three years.

But the growth rate has slowed more sharply than expected as global demand for Chinese exports weakened. That prompted Beijing to switch this year from an official goal of cooling inflation to a dual mission of ensuring rapid growth while also holding down price rises.

The central bank cut interest rates last week for the first time in six years in an apparent effort to moderate the slowdown.

"Growth is coming down from 11 percent to 9 1/2 or something like that. Nine percent," said Liu Mingkang, chairman of the China Banking Regulatory Commission. He gave no time period.

The forecast was the most specific yet offered by a senior Chinese official. It was in line with outside analysts who expect growth to fall to as low as 9 percent this year after 2007's eye-popping 11.9 percent expansion.

"I think it is good for China. China doesn't need speed first. China needs quality first," Liu said.

Even at 9 percent, China's annual growth would be the fastest of any major country. But Communist leaders need to create jobs for millions of workers entering the economy and satisfy a public that is accustomed to steadily rising living standards.

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