Plan for more flexible exchange rate

    On the question concerning yuan's rate, Premier Wen said that China is working on a plan for a more flexible exchange rate of its currency, but the specific measures might come around unexpected.

    China started to reform its exchange rate in 1994 and the work has never stopped. The purpose is to establish a market-based, managed and floating exchange rate, Wen said.

    China is doing now is to lay a solid foundation for such a reform. The necessary prerequisites for the reform include, first, macroeconomic stability and growth and second, a healthy financial situation, Wen added.

    Meanwhile, said Wen, China has already taken a series of measures to ease foreign exchange regulation.

    There has been no agreement on what impacts the change of China's exchange rate, or the appreciation of Renminbi, will have on the Chinese economy, Chinese enterprises and neighboring countries and other countries in the world.

    Although some people strongly ask for the appreciation of Renminbi, they don't fully understand the problems arising from the appreciation, Wen said.

    China is a responsible country. On the issue of the appreciation of Renminbi and the exchange rate system, China not only considers the domestic interests, but also its possible impacts on neighboring countries and the world, he said.

Tung's contribution to Hong Kong to be remembered

    Answering question concerning Mr. Tung Chee Hwa's resignation, Premier Wen said that Tung's resignation has been "out of his own sincere will", and his contributions to Hong Kong will be remembered by the Hong Kong people and treated fairly by history.

    Tung's proposal to resign from the post would win understanding from the Hong Kong people and would be respected by the Central Government.

    Wen said that he believes that the Hong Kong people are fully capable of running Hong Kong well and the central government will unswervingly stick to the principle of "one country, two systems" and "the Hong Kong people governing Hong Kong" and "a high degree of autonomy".

    The election of a new chief executive of the Hong Kong Special Administrative Region (HKSAR) will be done fully in accordance with the Basic Law and other laws, he said.

    "The central government will always strictly follow the Basic Law," Wen added.  

    Despite the Asian financial crisis, Hong Kong's economy has picked up and living standard of its people has further been improved, Wen said.

    "Over the seven and more years, Mr. Tung has done a tremendous and creative job," "He was hardworking with few complaints and showed his strong sense of responsibility," Wen said.

Efforts for high-level visits between China, Japan

    Commenting on the issue of bilateral ties between China and Japan, the Premier said China and Japan should make joint efforts to create conditions for high-level exchange of visits in a bid to improve bilateral relations.

    He also suggested the foreign affairs departments of the two countries should begin strategic study and research on strengthening and improving China-Japan relations. And problems left over from history should be properly handled.

    Since the normalization of bilateral relationship, the China-Japan relations have made great progress. Last year, bilateral trade approached to 170 billion US dollars and the number of bilateral personnel visits exceeded four million.

    However, there are obstacles to China-Japan relations. They are particularly in the political sector and the fundamental issueis how the Japanese side views correctly the issues left over from history, the Premier said. 

    He said the development of China-Japan relations should comply with the following three principles:

    First, taking history as a mirror and looking forward into the future. The year of 2005 marked the 60th anniversary of the victory on the War of Resistance Against Japanese Aggression won by the Chinese people. It reminded us untold sufferings of the Chinese people, Asian people and even Japanese people at that time. Therefore, "We hope that the Japanese government could take opportunities to promote friendship between the two countries."

    Second, the Japanese government should stick to the "one China" principle. The Japan-America security alliance is a bilateral arrangement. The Chinese people are concerned with the alliance, because it is related to the Taiwan issue, which is China's internal affair and never allows any direct or indirect interference by any other countries.

    Third, strengthening cooperation and pursuing common development. There are tremendous potentials in China-Japan friendly cooperation, especially in the economy and trade sectors,Wen said.