President Bush told a conservative crowd on Thursday that he indeed believes in the free markets, despite his recent support for federal bailouts of the auto industry and financial sector.

"I have been a firm believer in markets," he said during a speech in front of the American Enterprise Institute in Washington.

"That may sound contradictory to some of the policies that I have been making recently, which I'll be glad to discuss with you," the president added, drawing laughter.

"But I strongly believe in the principle that markets really do represent the -- a free society. I mean, after all, people produce goods and services based upon the demand of the individual."

Bush said he saw the positive impact of markets in China, where he lived when his father, George H.W. Bush, had served as U.S. ambassador.

"I can remember going to China when my dad was the envoy there, and everybody had the same clothes on," the younger Bush said. "It was like -- there was no demand. And then, having gone back at the Olympics and saw a society in which the marketplace is beginning to function. It's just a vastly different society.

"And I -- I happen to believe it's a society -- a society that's based upon the marketplace will be not only more free, but more hopeful."