Premier Wen Jiabao first introduced the vice premiers to the Chinese and foreign press.

Premier: The First Session of the Eleventh National People's Congress was just concluded and a new government was formed at the session. Now I would like to introduce to you the vice premiers who accompany me at this press conference. Sitting on my right is Li Keqiang, the youngest vice premier of this government and also a Member of the Standing Committee of the Political Bureau of the Central Committee of the Communist Party of China. This is Hui Liangyu, whom I am sure you know well. He was a vice premier of the previous government and is reelected this time. We have two other new vice premiers. They are Zhang Dejiang and Wang Qishan. Both of them served as top local leaders.

Phoenix TV: The previous government encountered two sudden disasters about which the Chinese all over the world were deeply concerned. Five years ago, you, as the newly elected premier, led the fight against the SARS epidemic. People still want to know what was on your mind at the time. Five years later, when the disaster of sleet and snowstorms hit Southern China, people once again saw you at the forefront of the fight against the disaster. What was on your mind this time? What kind of challenges do you expect in the next five years?

Premier: Five years have passed. What one did at the time will be judged by history. History is created and written by the people. A leader should look ahead, he should think about both the present and the future. And I have four goals in mind.

First, we need to ensure fast yet steady development of China's economy and effectively curb inflation at the same time. To attain this goal, we must resolve problems causing instability, and lack of coordination and unsustainability in economic development.

The biggest difficulty we face now is the excessive price rises and the inflationary pressure they have created, which pose a potential risk of drastic economic fluctuations. We need to find a way to meet both challenges and ensure a bright future.

Second, we need to make breakthroughs in the reform of political and economic systems. To attain this goal, we must free our minds. To free our minds, we need to have courage, resolve and a spirit of dedication. Only by freeing our minds can we succeed in carrying out reform and innovation. Five years ago, in front of a similar audience, I made a pledge: One should uphold his country's interests with his life. He should not do things just to pursue personal gains and he should not evade his responsibilities for fear of personal loss. Today, I would like to add one more thing: One should not fear the changes under the heaven. One should not blindly follow past conventions. And one should not be deterred by complaints of others.

Third, we need to promote social equity and justice. As truth is the first virtue of the systems of thought, equity and justice are the first virtue of the state system of a socialist country. Equity and justice mean that we need to respect everyone and protect the lawful rights and interests of all. We need to ensure that everyone has an opportunity to pursue all-round development in an environment of freedom and equality. Just as promoting economic development and increasing people's welfare is the bound duty of the government, advancing social equity and justice is the conscience of the government.

Fourth, we need to promote socialist cultural and ethical standards. In our country, we should view credibility and integrity as something more precious than gold. We should be more receptive and inclusive than the ocean. We should value fraternity rather than self-love and follow ethical standards that are even higher than the mountains. And this will make China a country of cultural and moral strength.

Dear friends, this is what I want to say to you: my goal is to make China strong and prosperous, to promote equity and justice and to ensure that our people will lead a better life, that our children can all go to school, and that our nation wins respect it deserves, and I will dedicate all my life and energy to this cause.

People's Daily: During the two Sessions of the National People's Congress and the Chinese People's Political Consultative Conference, people.com (China Daily's website) and a dozen of other websites conducted on-line surveys on the key issues of public interest and collected questions for the Premier. Several dozen million internet users took part in the survey and over one million questions were asked. The biggest public concern is about prices. In your government work report, you set a goal of holding price rise to a level of about 4.8%. What steps will the new government take to ensure that this goal will be attained?

Premier: During the two sessions, I took some time to surf the internet. Many internet users raised questions and made recommendations to me, and many wanted to share my burden. There were several million responses, and perhaps over 100 million people were involved. The fact that so many people are following with great interest the two sessions and particularly the work of the government has greatly touched me. All their comments and recommendations show the trust, support, encouragement and inspiration they have given to the government.

When I was surfing the internet, a few lines came to mind: What people are concerned about is what preoccupies my mind and what preoccupies the minds of the people is what I need to address. Our people spent so much time and energy to raise questions and make recommendations on the internet because they want the government to solve problems.

Obviously I cannot answer all the questions now. But I know price rise tops the list of many questions. In the latter half of last year, prices rose too fast and made life difficult for the people, particularly the low-income groups. To stop prices from rising too fast and curb inflation is not only a concern to the people, but also an important responsibility of the government. We have set the goal of holding CPI to a level about 4.8% this year. To be honest with you, it will not be easy to achieve the goal. Particularly in the first two months of this year, China was hit by the disaster of sleet rarely seen in history. This has made it more difficult to hold down price rises. But we are still pursuing this goal, and there are two reasons for this: First, it demonstrates the government is resolved to put controlling price rises and curbing inflation on the top of its agenda this year. Second, it stabilizes people's price expectations. When prices rise fairly rapidly, people's price expectations could create more panic than price rise itself. This goal is also solidly based. Our grain reserves now total between 150 and 200 million tons. There is still an oversupply of major industrial products. As long as we pursue right policies and take forceful measures, we have every confidence in bringing the rising prices under control.

CNN: Premier Wen, you have the biggest and toughest job in the world. I want to ask a question about two issues that begin with the English letter T. One is Tibet. There is turmoil and violence in Tibet. And China is accused of cracking down on peaceful demonstrations there. The Dalai Lama calls it a cultural genocide. In the latest development, some are advocating a boycott of the Olympics. What do you say to these?

The other question is Taiwan. You've always said that China will never tolerate independence of Taiwan. Taiwan this weekend will hold elections and referendum. If the Taiwanese voters approve a proposal in the referendum that Taiwan reapply to the United Nations as Taiwan, will you consider that a de facto declaration of independence? And if so, will China go to war to stop that? And now that Chen Shui-bian is stepping down, do you think there is any better prospect for you to sit down with the new president in Taiwan?

Premier: The two issues you have raised are both important to China's unity, sovereignty and territorial integrity.

First, I would like to address the issue of Tibet. Recently in Tibet, especially in Lhasa, there has been an incident of beating, smashing up properties, looting and arson. The detailed information about the incident was released yesterday by a leading official of the Government of the Tibet Autonomous Region at a press conference.

In this incident, a small number of violent rioters attacked or even killed innocent people with extreme cruelty. They smashed up vehicles, public facilities, and burned down private housing, stores and schools. As a result, public order in Lhasa was gravely disrupted and heavy losses of life and property were inflicted

There is ample evidence that this incident was premeditated, masterminded, incited and organized by the Dalai clique. This once again shows that the claims made by the Dalai clique over the years that they seek peaceful dialogue and not independence are nothing but lies. Their hypocritical lies cannot cover the indisputable facts.

The local government and competent authorities exercised great restraint and took prompt measures in accordance with the Constitution and laws to quell the situation and protect the interests of people of all ethnic groups in Lhasa and in Tibet.

What I would like to stress here is that since its peaceful liberation, particularly since the democratic reform was introduced, Tibet has made steady progress. The allegation that the Chinese Government is carrying out cultural genocide is totally unfounded.

We are fully capable of maintaining stability and order in Tibet. And at the same time, we will continue to support Tibet in making economic development and social progress. We will continue to improve the livelihood of people of all ethnic groups and protect the culture and natural environment in Tibet. We will never waver in this position.

Second, on the issue of Taiwan, what I am concerned is to maintain peace and stability in the Taiwan Strait and promote peaceful development of cross-Strait relations. This is our general goal in growing cross-Strait relations.

The reason why we are opposed to the referendum scheme for Taiwan joining the United Nations is that if such a scheme should succeed, it would deny the reality that both Taiwan and the mainland belong to one and the same China. And that would deal a serious blow to cross-Strait relations, harm the fundamental interests of people on both sides, cause tension in the Taiwan Strait and threaten peace in Taiwan Strait and even in the Asia Pacific region.

I would like to reiterate here that all issues that are important to China's sovereignty and territorial integrity must be decided by the entire Chinese people, including our compatriots in Taiwan. Any attempt to separate Taiwan from China is doomed to fail.

I would also like to stress that we hope to resume peaceful negotiations under the precondition of one China at an early date, and everything can be discussed, including such important issues as ending the state of hostility between the two sides.

Financial Times: I have two questions, only one of them beginning with T. The last time China suffered from high inflation was in the mid to late 90s. China tackled it by slowing the economy. Now are you willing to sacrifice some economic growth to slow the economy to bring down inflation this time, even if it means higher running unemployment and more people on the jobless queue? That is the first question.

Second question: I was struck by your introduction, in which you said Chinese leadership no longer blindly follows old conventions. It has always been a convention in China, as far as I remember, never to talk directly to the Dalai Lama. If you look at other countries, where they have long-running internal problems, like South Africa and Northern Ireland for example, they have only been settled by leaders of vision who agreed to talk to their enemies or their opponents. On the basis that the Dalai Lama is not seeking independence, would not Chinese leaders be showing greater vision to invite him to Beijing for direct talks?

Premier: In making the economic policy for this year, we made it our priority to do two "prevents". The first one is to prevent the fast growing economy from becoming overheated. Only by doing so will it be possible for us to better manage problems in the economy. But since China is a developing country with a population of 1.3 billion, we must ensure an appropriate rate of economic growth in order to ease pressure on employment. In other words, we need to resolve problems through development.

We must strike a balance between promoting economic growth and holding down inflation. And we have set the goals of keeping the economy growing at a rate of 8% and keeping inflation rate at 4.8%. This is our effort to strike a balance.

I know fully well how difficult this task is. I once said this year could be the most difficult year for China's economy. Why? Because there are a lot of uncertainties both internally and internationally. It is difficult to make decisions.

We must follow closely changes and trends in the economy and make prompt and flexible responses. And we need to maintain the right pace, focus and intensity of the macro economic regulation measures. We should ensure that the economy will continue to grow in a fast yet steady manner and that we will create about 10 million jobs and effectively hold down inflation.

As for whether we can meet this goal, I will give you an answer next March. But I have a firm belief that we should never shy away from difficult decisions, and that we should always have the courage to meet the difficulties head on and press forward.

As to your second question, we have reiterated in a very serious manner that as long as the Dalai Lama abandons his independence agenda, recognizes that Tibet is an inalienable part of China's territory and Taiwan is an inalienable part of China's territory, and stops separatist and sabotage activities, our door for dialogue with him will be wide open. This is what we proposed and this position has remained unchanged. However, what has happened recently has exposed Dalai's hypocrisy. Even so, I would like to use this occasion to reiterate that our original position remains unchanged and we mean what we say. What is important now is what steps Dalai takes.

Let me just ask you a question, there was an appalling incident in Lhasa and there have been attempts to create similar incidents in other places of China, and mob attacked some Chinese diplomatic and consular missions overseas. Do you believe these activities have nothing to do with Dalai? So we should not only listen to what Dalai says but also watch what he does.

CCTV: Mr. Premier, you said just now that a leader should have his eyes on the future. In your government report, you talked about what the government will do in 2008. But your government has a five-year term. So what are China's goals for economic and social development in the next five years? Given the increasing difficulty in conducting macro economic control, how will you ensure the steady growth of the economy while preventing drastic fluctuations?

Premier: I said last year that I'm always prepared for adversities. I believe that concern about adversity will lead to solution. The next five years will be a key period for China to build a moderately prosperous society in all respects. We will have a lot of opportunities and promises, but at the same time, we also face difficulties and challenges. It is true that in the report on the work of the government, I only talked about what we will do in 2008, not what we plan to do in the next five years. This is because the new government was not yet formed when I was making the report. And now is the time for me to think about what we need to do in the next five years. In the next five years, we need to make even greater progress in economic development, raise people's living standards, improve social fairness and equity, and accelerate reform and opening up.

First and foremost, we need to sustain steady and fast economic growth and keep inflation under control. This is not just for one year, but for five years. Second, we need to make new breakthroughs in adjusting the economic structure and changing the model of economic development. Priority should be given to the following two areas: expanding domestic demand and boosting innovation. Third, we must concentrate on the following three tasks. Number one, we should work vigorously to strengthen agriculture, and particularly increase input in agriculture to ensure steady increase in grain output and other agricultural products and in farmers' income. Number two, we should continue to pursue a proactive employment policy. We plan to create 50 million jobs in the next 5 years. Number three, we need to work to attain the goal set in the 11th Five-Year-Plan for energy conservation and emission reduction in order to markedly improve the ecological environment. Fourth, we need to put in place four basic systems to promote social development and improve people's well-being. They are: a system of ensuring funding for compulsory education, a medical and health care system that covers both rural and urban areas, an urban housing system that provides low-rent apartments and affordable housing, and a social security system consisting of unemployment benefits, pension, medical insurances and basic cost-of-living allowances. To attain this goal, we need to strengthen and improve macroeconomic regulation and give full play to the basic role of the market in allocating resources. We need to press ahead with reform in rural areas, enterprises, banking, public finance, and the government itself.

DPA: A follow-up on your reaction on Tibet. Some people in the west have also raised the specter of boycott of the Olympic Games. What's your comment on that?

Premier: The Beijing Olympic Games will be a great event for people all over the world. The principle of the Olympics must be upheld, that is, the Olympic Games should not be politicized. I think that the journalist who raised the question just now has realized what the recent incident in Tibet was all about. By creating that incident, they attempted to sabotage the Beijing Olympic Games and achieve their hidden agenda. I want to reiterate that China is a country with a history of over 5,000 years. To host the Olympic Games in China is a dream shared by people of several generations in this country. We hope that by hosting the Olympic Games, we will strengthen our friendship and cooperation with people from all over the world. We hope to stage a successful Olympic Games in Beijing to the satisfaction of athletes and people of all countries. But I would also like to point out that as China is still a developing country, we may invariably encounter problems in making preparations for the Games. And I want to assure you that the Chinese people are most sincere in their desire to host a successful Olympic Games. I am sure the 1.3 billion Chinese people will greet visitors from all over the world with smile, and their goodwill will be fully reciprocated by the people from all over the world.

Taiwan Commercial Times: Despite ups and downs in cross-Strait relations in the past two years, business and trade ties between the two sides have grown significantly. Economic growth on the Mainland and its macro economic regulation measures have had an impact on the capital market in Taiwan. There will be a change in Taiwan in a few days. The people in Taiwan all hope that no matter who will be elected, Taiwan will have a better future, Taiwan's economy can grow better and Taiwan will at least no longer lag behind in regional economic competition. Mr. Premier, will the Mainland take more steps to promote its economic and trade cooperation with Taiwan after 22 March? Will the Mainland adopt more preferential trade policies towards Taiwan, such as to negotiate a trade agreement like CEPA (Closer Economic Partnership) with Taiwan, or encourage more direct investment from the Mainland to boost Taiwan's capital market?

Premier: Please give my regards to our compatriots in Taiwan. As you have rightly said, the economic and trade ties between the two sides have grown significantly over the past few years, and this has served the fundamental interests of people on both sides. And I have made it very clear in my government work report that we will continue to promote cross-Strait economic and trade exchanges and, in particular to open the three direct links (namely, direct mail, transportation and trade links) between the two sides as quickly as possible.

Our policy on developing economic and trade ties with Taiwan can be summed up as follows: To step up cooperation and seek mutual benefit and win-win outcome. This is our fundamental principle.

We are honoring our commitment. We will do everything we can to serve the interests of our Taiwan compatriots and do it well. Since 2005, we have adopted nearly 60 preferential policies that benefit our compatriots in Taiwan.

To meet the interests of our compatriots in Taiwan, we are ready to suffer some loses ourselves. For example, Taiwan has run a huge surplus in trade with the Mainland for many years. The two way trade volume in 2007 was 120 billion dollars, with Taiwan running a surplus of over 70 billion dollars.

Though more than 2,000 products from the Mainland are still denied access to Taiwan's market, the Mainland market, including our agricultural market, remains open to Taiwan. When our Taiwan compatriots had difficulties selling their products, we took the initiative to help them sell their fruits and other agricultural products.

Now, Taiwan still imposes restrictions on investment from the Mainland. However, over 70.000 Taiwan companies have entered the Mainland market with a total investment of 46 billion dollars. Such investment from Taiwan to the Mainland exceeds 70 billion dollars if Taiwan investment made through a third party is included.

I am a patriot, and I always think of lines such as "I have always longed to see a reunified China, an aspiration shared by all our people", and "we remain brothers despite all the vicissitudes and let's forgo our grudges when smiling we meet again". We will expand and upgrade our business ties and trade with Taiwan, including in the fields of investment, trade, tourism and banking and we may have consultations in all these areas on the basis of equality and mutual benefit. By doing so, we are drawing on our respective strengths.

Reuters: Today a young man named Hu Jia goes on trial in Beijing, charged with inciting subversion of state power. In relation to this issue, how China can defend itself against critics who say that the arrest of Hu Jia is part of a crackdown ahead of the Olympics, especially in light of the fact that China has not ratified the United Nation's Convention on Civil and Political Rights. Does China have any intention to ratify the UN Convention on Civil and Political Rights ahead of the Olympics?

Premier: You have raised an individual case. Let me make it clear that China is a country under the rule of law. Such issues will be dealt with in accordance with the law. The allegation that China is cracking down on dissidents before the Olympic Games is totally unfounded. There is no such a thing at all. We are working actively to advance reform in the political system, including reform of the judicial system. The basic goal in advancing the judicial system reform is to achieve judicial justice. In this process, it is important to ensure judicial independence. Major steps have been taken in the reform of the judicial system in China. For example, the Supreme People's Court has taken back the power to examine and approve death penalty, and its use is strictly restricted. As for the International Covenant on Civil and Political Rights that you have just mentioned, we are conducting inter-agency coordination to address the issue of compatibility between China's domestic laws and international law so as to ratify the Covenant as soon as possible.

China National Radio: This round of reform of the State Council bodies is the sixth one since 1982, and the reform plan has been approved by the NPC during the current session. Premier Wen, how will the government implement the reform plan? What will the central government and the local governments do to improve their performance and build a service-oriented government?

Premier: We have said a lot about the reform of government and its offices. To answer your question, I would like to make three points.

First, the government and all its institutions belong to the people. To abide by the constitution and laws is the fundamental principle that guides the government in its work. The mission of the government is to protect the freedom, property and safety of the people. We provide public services to meet the fundamental interests of the people. We will pay greater attention to enhancing public administration and providing public services as we further strengthen economic regulation and market oversight.

Second, the government should operate in the open. This calls for transparency and openness. Only when a government knows what happens in the communities and what the people want can it improve its work. And only when people know what the government is doing can they give it strong support and make fair criticism. All my colleagues present here and I myself know very well that only when you have the people in your heart will the people support you in your office.

Third, I would like to turn to public finance, an issue that has not been fully addressed.

We will continue to press ahead with the reform of public finance system and make it better structured so as to accelerate the change of model of the economic development and improve the people's lives and the environment.

The history of a country's public finance is quite a revealing one. If you read it, you will not only learn about economic development of that country, but also its social structure and level of social justice.

In the next five years, we will resolutely advance the reform of the public finance system, so that people's money will be better spent to meet their needs.

AFP: Many of the people in this room would like to get on an airplane to Lhasa right now to see what's going on up there. We are hearing that foreigners are not being allowed into Tibet and some journalists have already been expelled. This comes despite increasing calls overseas for foreign media and independent observers to be allowed in there to assess what has really happened. What's your response to these calls to let independent eyes in there? And if China is so sure of its version of events there, why not let the outside world in to see what has happened?

Premier: We know the international news media are following the situation in Lhasa. What I want to tell you is that the incident in Lhasa has been basically resolved and Lhasa will be open. We will consider organizing visit to Lhasa by foreign media to find out how things are there.

Bloomberg News: This morning, the stock markets in the Asian region all plummeted. Shanghai Stock Exchange witnessed a 3% decline and Hong Kong 1.7% decline. The exchange rate of the US dollar against the Japanese yen hit a 12 year low, and the RMB exchange rate against the US dollar has reached a historical high since 2005. China needs to seek a balance in its economic development this year. What kind of monetary policy and foreign exchange rate policy will you adopt to get this balance so that China can maintain economic growth at an appropriate rate and at the same time take its due responsibilities when the world economy is in a downturn? We recall that during the Asian financial crisis in 1997-1998, China was quite a reassuring force for Asia by not devaluing the RMB. Now that the world economy is again in a downturn, will China take even more significant steps to liberalize the RMB exchange rate?

Premier: The recent sub-prime crisis in the United States has led to the devaluation of the dollar. The Federal Reserve has lowered interest rate on several occasions. The oil price remains high, hitting 110 dollar per barrel. All these factors have adversely affected the stock markets across the world, causing major fluctuations in these markets. I have been following closely development in the world economy, particularly the US economy, and I am deeply concerned.

China has pursued a tight monetary policy and a prudent fiscal policy in light of its actual condition. The main problems we face now are the excessive investment in fixed assets, excess money and credit supply, and a large trade surplus.

As China's economy is increasingly tied to the global economy, it is inevitably affected by changes in the global economy. That's why in pursuing these two policies, we need to keep a close eye on the latest trends and developments in the world economy and make prompt and proactive policy adjustments. The effect of our policies can only become clear over a mid-term or long-term period, not in just one or two months.

What concerns me now is when the US dollar will stop depreciation, what kind of monetary policy will the US pursue and what will happen to the US economy?

As for the reform of the RMB exchange rate system, the exchange rate of the RMB is determined by market supply and demand and with reference to a basket of currencies. Over the past two years and more, the RMB has appreciated by 15% against the US dollar, and it has appreciated at a faster pace recently.

When we use various monetary tools, we need to weigh up their costs and benefits and take a comprehensive approach, because changes in the interest rate or the exchange rate will have both advantages and disadvantages. I am fully aware that this is a major test for China. But I also want to assure you that the fundamentals of the Chinese economy are sound. China has vast market potentials, particularly in rural areas and there is much we can do to ensure China's continued development. This is where our strength lies, and we are confident about the prospects of China's economic development.

Xinhua News Agency: In your report on the work of the government, you drew six conclusions about what you gained over the past five years, and you put "continue to free our minds" as the first one. What is the significance of this conclusion to China's current economic and social development? Also, this year marks the 30th anniversary of China's reform and opening-up program. During the two Sessions, both Chinese and overseas media have shown a lot of interest in the process of reform and opening-up and its future direction. You just talked about the need to press ahead with the reform of the pubic finance system in the next five years. Do you plan to make new breakthroughs in pursuing reform and opening-up during your next five-year term? What will you do to advance the political reform?

Premier: Let me say something more about the question of freeing our minds. We all know why this is important. I would like to talk about it from the perspective of Chinese culture, tradition and history. I am always fascinated by the following two lines from the Book of Songs and a book by the name of the Character of Poems. One is that although Zhou was an ancient state, it had a reform mission. The other is that only innovation could sustain the growth and vitality of a nation.

China is an ancient country but is full of vitality. China's progress in the past 5,000 years would not have been possible without continued reform and innovation.

Exactly 30 years ago, Mr. Deng Xiaoping put forward the principle of freeing our minds, seeking truth from facts and being united and forward-looking and inaugurated China's reform and opening-up program.

People may ask how much longer China should continue to free its mind and pursue reform and opening-up. I can tell you explicitly that we will never stop this endeavour. We will continue to free our minds even after China achieves the goal of modernization.

What should be the focus in freeing our minds in this new era? We will focus on three things:

First, we need to continue to say no to blindly following conventions or book worship. Only by doing so can we maintain the vigour and vitality of our nation.

Second, we need to remain committed to the principle that practice is the sole criterion for testing truth. We must encourage boldly exploring new things, experiment and innovation.

Third, we need to free the minds of everyone, particularly the minds of leading officials so that everyone can have independent and critical thinking and make innovation.

This will ensure continued progress in our cause.

Times of India: India-China relationship has improved a lot in recent years. What is your expectation from India with regard to the Dalai Lama and the Tibet issue? Are you satisfied with the role and action of India with regard to protesters in Dharamsala who try to enter Tibet and march into Tibet? Also please draw some light on China-India border discussions and talks.

Premier: As you rightly said, China-India relations have experienced marked improvement and development in recent years. We appreciate the position and measures taken by the Indian government regarding the "Tibet independence" activities masterminded by the Dalai clique. The Tibet issue is a sensitive one in China-India relations and I have reached broad agreement with Prime Minister Vajpayee and Prime Minister Manmohan Singh on this issue. I hope the Indian government will correctly handle the issue in accordance with the agreement reached between the two countries.

As for the boundary issue, the two sides have laid down the guiding principles and have had several rounds of negotiations. It is not easy to resolve such a complex issue left from the past and we cannot expect it to be resolved overnight. However, I believe that as long as China and India show sincerity and follow the principles of equality, mutual understanding and mutual accommodation, new progress will be made in the negotiations.