Premier Wen Jiabao arrives for a press conference after the closing of the first session of the 11th National People’s Congress at the Great Hall of the People in Beijing yesterday.—Xinhua

Premier Wen Jiabao said yesterday he was deeply worried about the world economy and promised flexible and prompt measures to deal with it.

"I watch very closely the developments in the world economy and the United States economy and I'm deeply worried," Wen said.

At a Beijing press conference after the annual session of the National People's Congress, the top legislature, he attributed fluctuations in world stock markets to the US subprime crisis.

This led to the depreciation of the US dollar and interest rate cuts by the US government, as well as high international oil prices.

"What concerns me now is that the US dollar is depreciating continuously, when the US dollar will reach the bottom in this depreciation process, what kind of monetary policy the US government will adopt and where the US economy is heading," Wen said.

He said China's monetary and fiscal policies were based on the country's own reality but the government would keep a close eye on world economic trends and make flexible, prompt responses to changes.

"China's economy is already tied to the globalized economy," Wen said. "All kinds of changes and fluctuations in the international economy will inevitably be reflected in China's own economy."

China has adopted a tight monetary policy and prudent fiscal policy to address the excessive growth of investment, money supply, credit and trade surplus, Wen said.

The effects of the government's economic policies would only be seen in the mid-term and long-term, not within one or two months, he said.

This year may be the most difficult year for China's economy, largely because of growing uncertainties inside and outside the country.

China faces the potential risk of drastic economic fluctuation, while tackling the biggest challenges of soaring prices and mounting inflationary pressure, Wen said.

"We need to blaze a trail in between."

Last year, China's consumer price index, a barometer of inflation, rose 4.8 percent year-on-year, the highest since 1997 and well above the government target of three percent.

A week after Wen announced the country's goal to keep inflation about 4.8 percent, the National Bureau of Statistics said last week inflation climbed to a nearly 12-year high of 8.7 percent in February, driven by a 23.3 percent increase in food prices.

Wen, who was reappointed premier on Sunday, said the government needs the courage and determination to further free people's minds in order to make new breakthroughs in reform of the economic and political systems.

It's important, he said, for his government to strengthen social justice and equity, which means to respect everyone, protect the lawful rights and interests of all, and ensure everyone enjoys equal opportunities for development.

"If the development of the economy and improvement of the people's livelihood are the bounding duties of the government, then the promotion of social justice and equity is the conscience of the government," he said.

The premier also condemned the Dalai Lama's role in recent Lhasa riots, but said the door of dialogue remains open if he can truly renounce "Tibet independence."

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