TIANJIN, China, Sept 13, (AFP): China’s economy helped power the world’s recovery from the devastating financial crisis that erupted two years ago, but risks remained for the Asian country, Premier Wen Jiabao said Monday.
Speaking at the start of the World Economic Forum’s three-day “Summer Davos” in the northern port city of Tianjin, Wen also pledged to ensure an open and fair environment for foreign businesses operating in the Asian powerhouse.
“China’s economic growth has provided major development opportunities for the multinationals and created huge demand for major economies and neighbouring countries,” Wen said.

“It has become an important engine for the world economic recovery,” the premier said, praising his country’s massive stimulus package as “timely, fruitful, effective and suited to China’s realities”.
“China’s economy is now in good shape, featuring fast growth, gradual structural improvement, rising employment and basic price stability,” he said.
But Wen warned that China lacked “balance, coordination and sustainability in economic development” and said government policies needed to be “more targeted and flexible” to maintain the fast-growing economy’s momentum.
Beijing responded swiftly to the global recession, unleashing a four-trillion-yuan ($586-billion) stimulus package in late 2008 and ordering state-owned banks to boost lending to spur economic activity.
The economy returned to double-digit growth of 10.7 percent in the fourth quarter of 2009, as concerns turned to the risks of rising inflation and a possible explosion in bad debts after lending nearly doubled to 9.6 trillion yuan last year.

China’s economy slowed in the second quarter of 2010, growing 10.3 percent compared with a blistering 11.9 percent in the first three months, after Beijing introduced a slew of measures designed to avoid overheating.
But it outpaced its neighbour Japan in the second quarter, putting it on course to officially confirm its position as the world’s number two economy, a title Japan held for 40 years.
Japanese government data issued last month showed that its second quarter GDP on a nominal basis came in at $1.288 trillion, below China’s $1.336 trillion, although Japan remained stronger over the first half.
Wen expressed concerns about the dangers posed by the heavy debt burden of local government financing vehicles, and pledged to intensify a crackdown on lending practices.
“This is not a new problem, yet the risks have somewhat increased in recent months,” he said.
“We have formulated measures to strengthen the regulation of those financing platforms and implementation is well under way.”

Capital
But Wen insisted levels of capital adequacy and non-performing loans of state-owned banks were “in safe territory”.
State media said in July that 23 percent of the 7.66 trillion yuan extended to local government financing vehicles was in danger of turning sour.
Chinese banks lent huge amounts to provincial financing vehicles for construction projects last year after Beijing called for nationwide efforts to spur the economy.
Local governments are barred by law from borrowing directly from banks.
Last month, policymakers attempted to ease concerns about the dangers of a new crop of bad debts emerging from local government lending, saying there was no systemic risk.
Premier Wen Jiabao on Monday promised China would keep the welcome mat out for foreign companies, following complaints that Beijing’s policies increasingly favoured domestic firms.
“China is committed to creating an open and fair environment for foreign-invested enterprises,” Wen said in a speech to open the World Economic Forum’s “Summer Davos” meeting in the northern city of Tianjin.

“I wish to reiterate here that all enterprises registered in China according to Chinese laws are Chinese enterprises. Their products are ‘made in China’ products.”
China has faced a growing chorus of accusations by foreign companies, business groups and governments that overseas enterprises were encountering an increasingly skewed playing field in the country’s huge market.
The European Union Chamber of Commerce said earlier this month that uneven enforcement of laws and unfair restrictions on foreign investment were deterring overseas companies from expanding their operations in China.
In July, the US Chamber of Commerce accused China of abusing the allure of its 1.3-billion-strong market to push foreign companies to transfer their latest technologies to Chinese competitors.
It called the practice a “blueprint for technology theft on a scale the world has never seen before”.
Foreign critics have been particularly concerned about rules issued by Beijing late last year under a campaign to promote innovation that were widely seen as squeezing foreign firms out of the government’s multi-billion-dollar procurement market.
Wen offered assurances this would not happen but he conceded that the government’s policies were not clear.

“In government procurement, China gives equal treatment to all products made in China by foreign-invested enterprises and Chinese-invested enterprises alike,” he said.
Wen said the complaints about indigenous innovation, protection of intellectual property rights and government procurement policies were not only due to the misunderstandings of foreign businesses.
“It also has something to do with the not-so-clearly defined policies on our part,” he admitted.
While noting that foreign companies had “reaped good returns in China”, Wen also pledged that Beijing would continue to “improve” laws and policies related to foreign enterprises, but did not outline any specific measures.
Beijing in July submitted a revised offer to join the World Trade Organisation’s government procurement agreement, which deputy US trade representative Demetrios Marantis said included “significant improvements”.
The agreement regulates trade in public-sector purchases. Western nations are keen for China to join, as its accession would open up its multi-billion-dollar state contracts market to foreign bidders.