Lionel Barber (Editor of the Financial Times): Premier, when you were in Davos, everybody was talking about how to restore confidence. There was also some talking about shooting bankers, which certainly will not restore confidence. What can China do today to restore confidence in this global financial crisis?

Wen Jiabao: I attended the Davos World Economic Forum Annual Meeting and paid a visit to European countries. I want to call this trip a "journey of confidence." I have brought with me confidence in tiding over difficulties caused by the financial crisis. I have brought with me the confidence that China will work closely with European countries to push forward our strategic partnership. And I have brought with me the confidence that China will work with the international community to get through the difficult times together.

I'm confident that the Chinese economy will be able to get through difficult times caused by the financial crisis. This confidence has been based on a scientific approach, as well as realities in today's world and in China. The source of my confidence is based on the correct judgment we have made of the current situation.

I feel confident, because over the past 30 years of reform and opening up, China has put in place a solid material foundation, and we have now put in place good institutions and mechanisms.

I'm confident because China has a stable financial system and it has a big market potential and a large room for maneuver.

Most importantly, my confidence is based on the decisive and firm decisions that the Chinese Government has adopted. We took these decisions with great intensity and at a proper pace.

Is China's stimulus package big enough? Or do you believe further measures will be needed?

In meeting the financial crisis, it is imperative that governments must adopt a big enough package plan to stimulate the economic development. Such a plan must be comprehensive and complete. It must target both root causes and symptoms of the issues, and also take into account both immediate difficulties and long-term development.

Our package plan has five key components. First, we want to boost domestic demand that will be mainly supported by massive government spending. Second, we are making adjustment to and revitalizing 10 key industries. Third, we will take steps to advance technological upgrading. Fourth, we aim to put in place a fairly comprehensive social security network. And fifth, we aim to maintain financial stability to support economic development.

We have an investment program worth 4 trillion yuan within two years to stimulate domestic demand, especially consumer spending.

We will spend 600 billion yuan on scientific and technological innovation and technological upgrading.

We will make an investment of 850 billion yuan for the improvement of the medical and health care system.

The financial crisis has not yet ended, and we will continue to follow very closely the development of the situation. We may take new, timely and decisive measures. All these measures have to be taken preemptively before an economic recession, so as to maximize desirable effects, otherwise our efforts will be wasted.

Did you see, as many economists in Asia witnessed, a very sharp decline in the gross domestic product (GDP) in the fourth quarter in China, like falling off a cliff?

China's GDP growth was at 9 percent as a whole last year. But in the fourth quarter of 2008, we also had a big decline and it fell to 6.8 percent. As a result of the international financial crisis, we are seeing shrinkage in external demand.

Chinese businesses are now experiencing difficulties. We now have overcapacity in some industries and also see rising unemployment. Our economy is under growing downward pressure. All of them mean that we are now facing great difficulties. Maybe you will ask how can you still feel confident under such circumstances.

How can you be so confident that you can magically hit the 8-percent GDP growth target in 2009? And how can you stop all those statistical experts from feeling suspicious of it?

It is around 8 percent. I think this is dependent on four factors. First, we must ensure that all policy measures we have adopted are the right ones as well as the effective ones. So far all these policy measures we have adopted are aimed at stimulating the real economy and also stimulating spending. Well, actually the major impact of the financial crisis on China has been on its real economy.

Second, we must act fast. In December last year, the Central Government took the decision of making an investment of 100 billion, and now this investment has been put in place in terms of real funds and on what projects the money will be spent. Before the Spring Festival we also made available another investment of 130 billion yuan and the funds were disbursed to necessary projects.

Third, we must take forceful steps. Under special circumstances, necessary and extraordinary measures are required. We should not be restricted by conventions. Success or failure depends on the pace and intensity of those measures.

Fourth, we must make sure that these measures are effective ones. Around the end of last year and early this year, we took steps to make household appliances, agricultural machinery and automobiles more available in rural areas of China.

From the beginning of January this year, we started to carry out the reform of the value-added tax in China, which saved businesses in China 120 billion yuan. All these measures have already been implemented.

Consumer spending is crucial. Do you agree with the proposition that consumer spending is patriotic?

We would not put it as simply as that. But we do believe that consumer spending is vital in boosting economic development. I don't think we can know how much a consumer will spend eventually, and whether he/she wants to spend is not dependent on what kind of slogan we have. But it is really dependent on how much money he has in his pocket and whether we have those marketable products available.

We have actually taken some steps to address this issue. At the beginning of this year, we gave lump sum subsidies to 74 million people. On average each recipient received 100 yuan to 150 yuan. For the fourth time we have raised the monthly pension benefits for enterprise retirees by 10 percent or 110 yuan per capita on average.