Corruption and inflation could have an "adverse impact" on the stability of power in China, Premier Wen Jiabao warned in an interview on Sunday.
"I do have worry for the management of inflation expectations in China," Wen told Fareed Zakaria on CNN's GPS programme.
Wen Jiabao
"And that is something that I have been trying very hard to manage appropriately and well, because I believe corruption and inflation will have an adverse impact on stability of power in our country.
"And these two both concern the trust and support of people in the government," the Chinese premier said.
In mid-September, Beijing admitted that consumer inflation had risen at the fastest pace in nearly two years in August, as severe floods and unusually hot weather destroyed crops, driving up food prices.
The figure marked the 10th straight month that the consumer price index, a key measure of inflation, had risen, but analysts said they did not think it would be enough to prompt policymakers to raise interest rates any time soon.
Wen said the stimulus package unveiled two years ago by China had steered the country on the right course amid the global financial downturn.
"The implementation of the stimulus package has ensured the continuance of steady and relatively fast economic growth in China," Wen said, adding it had helped "avoid major fluctuations in the process of China's modernization because of a severe external shock."
But he agreed China's leaders were on "high alert" against the possibility of any economic bubble.
Beijing responded to the global recession by unleashing a four-trillion-yuan (586-billion-dollar) stimulus package in late 2008 and ordering state-owned banks to boost lending to spur economic activity.
The economy returned to double-digit growth of 10.7 percent in the fourth quarter of 2009, as concerns turned to the risks of rising inflation and a possible explosion in bad debts after lending nearly doubled to 9.6 trillion yuan last year.
Global ratings agency Fitch Ratings warned in mid-September that China faces a potential "hangover" from the government's massive spending spree.
And Wen acknowledged Sunday that the implementation of the stimulus package meant "there are fiscal and financial risks at the level of local governments. We have some financing vehicles of local governments. They have some debts."
"Now, with the financing platforms of local governments in place, they have accumulated a total debt about 7.6 trillion yuan," he warned.
And he said the "ratio of budget deficit in China's total GDP is within three percent. The total debts in China versus GDP's ratio is within 20 percent range."
One of the key challenges now facing his country was to confront its structural problems, Wen said.
"I was one of the first ones to argue that our economic development still lacks balance, coordination, and sustainability," he told CNN.
"This financial crisis has reinforced my view on this point. On the one hand, we must tackle the financial crisis; on the other, we must continue to address our own problems.
"And we must do these two tasks well at the same time, and this is a very difficult one."
AFP /ls
