China has undertaken several reforms related to the safety net, healthcare reform, pension reform, education reform in the hope to reduce precautionary savings.

What the premier said means that China would continue to increase the flexibility of the RMB exchange rate in a gradual manner.

I think it's very clear that China is introducing a new exchange rate mechanism. It is not a one-time adjustment.

instead of transferring various risks to the government, as they did under the fixed-exchange regime.

Otherwise, in two or three years' time, once domestic consumption loses steam, there will then be a lot of pressure around issues such as the exchange rate and trade friction.

but the important thing is that it has started to float and over time market forces will play a more and more important role.