China said on Friday that it will target economic growth of 8 per cent this year, increase spending on social programs and direct more development money at ethnic areas.
Although in recent years China has always set a goal of 8 per cent growth and usually exceeded it, the target shows Beijing aims to avoid any slip after rebounding strongly last year from the world economic crisis.
In a speech that is China's equivalent of the State of the Union address, Premier Wen Jiabao opened the annual meeting of the National People's Congress by saying the development environment is better than in 2009, although China still faces "a complicated situation."
The growth target keeps China on course to replace Japan sometime this year as the world's second-largest economy after the U.S. Beijing has been moving to revamp its economy toward domestic consumption and away from a binge on easy credit and state investment that warded off the global recession.
Wen said there are worries about the strength of the recovery in the rest of the world, as well as currency and trade protection issues.
Other countries accuse China of keeping its currency artificially low to boost exports, but Wen said the government will maintain a "basically stable" yuan exchange rate this year and keep the currency at an "appropriate and balanced" level. The Chinese economy bounced back from the economic crisis with growth accelerating to 10.7 per cent in the final quarter of 2009, according to government figures, and driving the full-year expansion to 8.7 per cent. But concerns of a property bubble also picked up, driven by a jump in food costs amid a flood of stimulus spending of $1.4 trillion in bank lending and government stimulus. Wen said the "government will resolutely curb the precipitous rise of housing prices in some cities" while trying to meet the public's needs for housing.
The country's rapid economic growth in recent years has exposed a yawning wealth gap, and Wen said the government will work to ensure the poorer parts of society also benefit from China's transformation.
Government spending will be boosted by 11.4 per cent this year _ half the rate of last year's stimulus-driven budget _ and Wen said the government will continue efforts to expand consumer demand, including extending a subsidy program for home appliance sales in rural areas, and lowering taxes to push sales of smaller cars. Infrastructure subsidies will also be boosted for rural areas, where incomes are about one-third the national average. There will be more money for better pensions in the countryside, a chronic problem where people have no safety net for their retirements, and tax breaks for job creation and more funds for low-income housing, Wen said.
"Everything we do, we do to ensure that the people live a happier life with more dignity and to make our society fairer and more harmonious," Wen said.
Wen said China, the world's biggest emitter of greenhouse gases, will cooperate internationally to fight against climate change. He said a special focus will made to further improve living standards of China's ethnic minorities. The country has been rocked over the last two years by riots in Tibet and far west Xinjiang region, where clashes between minority Turkic-speaking Uighurs and majority Han residents in Urumqi left nearly 200 people dead last summer.
"The Chinese nation's life, strength and hopes lie in promoting solidarity and achieving common progress of our ethnic groups," Wen said.
"We need to take a clear-cut stand against attempts to split the nation, safeguard national unity, and get ethnic minorities and the people of all ethnic groups who live in ethnic minority areas to feel the warmth of the motherland as one large family," he said. Wen's speech comes a day after the government announced it will propose its smallest increase in defense spending in two decades. A spokesman for the national legislature said Thursday that the Cabinet plans to raise spending on its increasingly formidable military 7.5 per cent to $77.9 billion (532.1 billion yuan). Though experts say China's true military budget is higher, the rate of increase is the lowest since the 1980s, and analysts said that was directly tied to the new fiscal priorities.
"China has not fully recovered from the sluggish foreign trade and employment, and to some extent the government has financial difficulties," said Ni Lexiong of Shanghai University of Politics and Law. "The situation requires that the defense budget not have a big rise."
Wen said China will concentrate on making the army better able to win "informationized local wars," as well as enhancing its ability to respond to multiple security threats.
The annual session of the national legislature is the most public political event that the ruling Communist Party holds, and Wen's speech was delivered in the Great Hall of the People on the edge of Tiananmen Square.
The square was under heavy security to prevent things from going awry. Police searched bags and blocked off the massive square with security tape, barring petitioners who come to Beijing during the legislative meetings in a desperate bid to seek help on various grievances. At least a dozen would-be petitioners were bundled into a police bus and driven away.