BEIJING (AP) - Chinese Premier Wen Jiabao tried Sunday to reassure the public about the government's ability to control inflation, a day after China raised interest rates amid worries that rising prices could hurt social stability.
Wen's remarks underscore the government's concerns about anger over inflation - an especially sensitive topic in a society where poor families spend up to half their incomes on food. Rising incomes have helped offset price hikes, but inflation undercuts economic gains that help support the ruling Communist Party's claim to power.
"I can tell everybody, the government has complete confidence in tiding over this difficult stage together with the masses," Wen said while taking questions from callers during a visit to China National Radio's offices, according to a report on the station's website. The callers were not identified by name.
Wen expressed confidence in the government's ability to control price increases, pointing to large grain reserves as well as moves to support production by reducing and waiving taxes.
He also mentioned the government's twice raising interest rates and hiking the banks' reserve requirement ratio - meaning they have to hold more deposit funds in reserve rather than lending them out - six times this year to curb lending.
Wen also pledged to focus more efforts on easing home prices, acknowledging that measures taken this year had not been well implemented.
The government will work to increase the supply of affordable housing and will strictly control speculation in property, he said.
"I believe after a period of efforts, housing prices will be back to reasonable levels. I have such confidence," he said.
Wen, the leadership's most popular figure, also sought to demonstrate that the government recognizes the problem.
Responding to a listener's laments about rising prices, Wen said: "Your words hurt my heart. Indeed, in recent times prices have risen across the nation, and under these circumstances, the lives of middle- and low-income earners are evidently more difficult."
The State Council, China's Cabinet, has been trying to rein in food prices by launching efforts to increase production of vegetables and other basic goods. Authorities are cracking down on hoarding and speculation they say are partly to blame for the price rises.
Inflation jumped to 5.1 percent in November, a 28-month high, despite a crackdown on speculation and repeated moves to curb a flood of money circulating in the economy from massive stimulus spending and bank lending.
On Saturday, the government announced that the benchmark one-year lending rate will climb 25 basis points to 5.81 percent, while the one-year deposit rate will go up the same amount, to 2.75 percent - effective Sunday.
Chinese banks lent a total of 7.45 trillion yuan ($1.1 trillion) in January-November and are certain to overshoot the government's official 2010 lending target of 7.5 trillion yuan.
A frenzy of lending over the past two years has helped China rebound quickly from the global crisis but, combined with bad weather and rising global commodity prices, has also complicated efforts to cool inflation.