Wen hints at hidden risks, says economy still needs support

Wen hints at hidden risks, says economy still needs supportChinese Prime minister Wen Jiabao cautioned of "latent risk" in China's banks and called for a need to curb speculation in real estate, as a consequence of inundating the economy with currency to stimulate the economic growth.

"The domestic economy still faces some prominent problems," Wen, said in a speech in Beijing to the National People's Congress. In the address, the government also pledged to keep inflation at a modest 3 per cent for 2010 and at the same time stressed the government will continue to support the economy.

Wen said he expects the budget deficit to be 1.05 trillion yuan or $154 billion in 2010 as the country focuses on items such as low-income housing and agricultural & rural development in order to support rural-income growth.

In a major shift from earlier focus on investment, Wen now wants to shift the economy towards consumption. For 2010, the Chinese government has decided to raise social infrastructure outlays by more than 8 per cent and expand pensions that would help proper consumption in an economy that would soon overtake Japan as the second largest in the world.