BEIJING (The WSJ) —Chinese Premier Wen Jiabao said Sunday that the country’s economic policies “face increasing dilemmas” as the impact of the global financial crisis is more serious than expected, but he reiterated that China won’t hold back its steps to restructure the economy for long-term growth.

The remarks were made after two purchasing managers’ indexes issued last week showed China’s manufacturing economy slowed in June and China on Friday revised upward its gross domestic product growth for 2009. The GDP revision means China’s year-to-year growth will have a higher comparison base for the second and following quarters, so the growth may be lower than economists’ expectations.
Despite the widely expected slowdown, Mr. Wen reiterated that China will keep continuity and stability of its economic policies while increasing their flexibility, to “solve current significant and urgent problems” while “laying foundations for stable and relatively fast economic growth of 2011 and in a longer term,” when speaking at a economic forum held Saturday in the central Chinese city of Changsha, according to a statement posted on the central government’s website.
“China’s current economic situation is sound, but the domestic and global economic environment is extremely complicated,” Mr. Wen said. He reiterated that Beijing will try to maintain stable and relatively fast economic development while restructuring the economy and managing inflation expectations.
The statistics bureau on Friday revised upward economic growth for 2009 to 9.1% from 8.7%. The revision was due to higher contributions from secondary and tertiary industries. Secondary industries include the mining, manufacturing and power sectors, while tertiary industries cover services. Primary industries cover farming, forestry and fishing.
In 2008, China’s economy expanded 9.6%.
The bureau said China’s nominal GDP, evaluated at current market prices without adjustment for inflation, reached 34 trillion yuan ($5.02 trillion) in 2009. At last year’s average exchange rate, China remained the world’s third-largest economy, behind Japan with a 2009 GDP of just over $5 trillion.
Fast-growing China still is expected to surpass Japan as the world’s second-largest national economy after the U.S.—in terms of annual output measured in U.S. dollars at market exchange rates—but it will likely have to wait until the end of 2010 to pass that milestone.
There are other ways of ranking economies that would produce different results: In terms of purchasing power parity, China has been the second-largest economy for a long time. And if the European Union is counted as a single economy, it is the world’s largest already, pushing the U.S. to second place.
China is due to release its second-quarter GDP data July 15. Some economists expected the growth had slowed to just over 10% from the first quarter’s 11.9% year-to-year growth due to Beijing’s tightening measures this year.
Beijing has this year gradually withdrawn stimulus policies adopted last year amid the global financial crisis. In particular, China decided last month to loosen the yuan’s peg to the dollar and allowed the currency to rise and adopted restrictive policies on the housing market that have been crimping sales since being put in place in mid-April.