Reuters: I have two questions. You referred to the problem of local government debt in your government work report. I would like to get your personal perspective on this matter. How big exactly is the local government debt at the moment? What are your thoughts about addressing this problem? Will you consider reorganizing or reshuffling the local government debt? Will the central government consider extending the payment maturity for the local government debt? The second question is about the Wang Lijun incident, which has occurred in Chongqing. I have noticed that the relevant governmental departments of China have conducted investigation into this matter after Wang Lijun entered the U.S. Consulate. How do you see this matter? Will this matter affect the trust or confidence of the central government in the leadership of Chongqing municipal Party committee and the government of Chongqing municipality?
Wen: On local government debt, I would like to make the following points: first, the debt-to-GDP and budget-deficit-to-GDP ratios in China are at a fairly low level. They are both lower than those of many developed countries and emerging market economies; second, the government debt in China is at a controllable and safe level. In 2010, we audited local government debts. The volume stood at RMB10.7 trillion. By the end of 2011, this figure only increased by RMB300 million. A total of RMB2,153.6 billion of new loans were made and a total of RMB2,153.3 billion of debt was repaid; third, in the handling of the local government debt, we will properly handle the debt stock and put a cap on the increase of government debts. We will properly handle the outstanding local government debt in a step-by-step manner by classifying the debt into different categories and managing them accordingly. For any increase in local government debt, the revenues and expenditures must be incorporated into the local governments’ budgets and final accounts subject to the supervision of people's congresses at the same level; fourth, the majority of local government debt is actually in the form of high-quality assets with stable cash flows and promising returns. The debt of some projects can actually be repaid by the returns made on those projects. For projects of public welfare, both the central and local governments will find ways to pay the debt off. As a matter of fact, last year we have been able to pay off all the debts of the schools during the compulsory education period. At the same time, we will also let the market play a role in handling the local government debt through such ways as assets disposal, transfer of projects and the selling of equity. In a word, we will take the matter of local government debt very seriously and we will not allow it to adversely affect China's development.
The Wang Lijun incident has received high attention from people in China and beyond. I would like to tell you that the central authorities have taken this matter very seriously. After this incident took place, the central authorities immediately gave the instruction that the relevant authorities should start an investigation into this matter. So far progress has been made in the investigation. We will handle this issue in strict accordance with the law and on the basis of facts. As far as the result of the investigation and how this matter will be handled are concerned, an answer must be given to the people and the results of the investigation should be able to stand the test of the law and history.
Over the years, the successive governments of Chongqing and the people in Chongqing have made tremendous efforts to promote reform and development and they have achieved remarkable progress in this regard. The current party committee and government of Chongqing must seriously reflect on the Wang Lijun incident and lessons from this incident.
Since the founding of the People's Republic of China, under the leadership of our party and the government, remarkable achievements have been made in advancing China’s modernization drive, yet at the same time, we have taken some detours and learned hard lessons. Since the 3rd plenum of the 11th CPC Central Committee, in particular, since the central authorities took the decision on the correct handling of relevant historical issues, we have established the line of thinking that we should free our minds and seek truth from facts and we have formulated the basic guideline of our party, in particular we have taken the major decision of conducting reform and opening-up in China, a decision that is crucial for China's future and destiny. What has happened shows that any practice we take must be based on the experience and lessons we have gained from history and must serve the people's interests and that any practice we take must be able to stand the test of history and the reality. I believe that the people fully recognize this point and I have full confidence in our future.
I have given serous answers to all the questions from the journalists and none of my answers is a perfunctory one. It's been three hours and I suppose we could call it the end of our press conference. Thank you.