Wen Says Economy Improving, Not Yet Solid

China’s top economic official said Wednesday the economy is showing positive changes but the basis of a recovery is not stable and the country should prepare for long-term difficulties, a state news agency reported.

Premier Wen Jiabao’s comments at a Cabinet meeting reflected government efforts to reassure its public and encourage consumers and companies to stimulate growth by spending more while also warning against complacency.

Wen cited rising investment, consumption and industrial production but also noted that exports are sluggish, the Xinhua News Agency reported. The report gave no new details about economic performance and mentioned no new initiatives.

Beijing is pouring money into a 4 trillion yuan ($586 billion) stimulus aimed at shielding China from the global slump by boosting domestic consumption through spending on construction and other projects.

Wen said “economic performance had started to show positive changes, favorable factors were increasing, the overall situation had stabilized and was moving upwards,” Xinhua said. It said Beijing’s measures were “correct and effective.”

Domestic investment in factories, real estate and other fixed assets surged 32.9 percent in the first five months of the year while May retail sales rose 15.2 percent from the same period last year. But May exports plunged 26.4 percent from a year earlier.

“It should also be noted that the foundation for economic recovery was not stable and many uncertainties remained,” Xinhua said, paraphrasing Wen.

It said the premier “called for clear-headed judgment and readiness for difficulties and complexities that might occur in the long term.”

6/17/2009 6:54 AM BEIJING (AP)