China is to follow a tight monetary policy to address the still-unsolved problem of excessive liquidity, and the government pledges to add another several hundred billion yuan in additional funds to boost agriculture, education, medicare and strengthen the nation's social safety network.

Wen Jiabao said the decision to follow a tight monetary policy is based on "the strong possibility of a resurgence in fixed asset investment, continued excessive supplies of money and credit, the still-unsolved problem of excess liquidity, and considerable inflationary pressure." However, Wen said a prudent fiscal policy is still needed to "promote structural adjustment and balanced development," and increased expenditures necessary "to shore up weak links, improve people's lives and deepen reform."