China on Thursday promised a vigorous government spending programme, with increased money for infrastructure, social programmes and tax cuts to overcome the country’s brewing economic crisis.
The massive cash outlays will allow the government to aim for economic growth of “about 8 per cent”, Premier Wen Jiabao said in a speech to open the National People’s Congress, China’s annual legislative session.
The government hoped to create 9 million new urban jobs, Wen said. Rising unemployment is a major concern of the government as a drop in worldwide demand for Chinese products has forced thousands of factories to close.
“In China, a developing country with a population of 1.3 billion, maintaining a certain growth rate for the economy is essential for expanding employment for urban and rural residents, increasing people’s incomes and ensuring social stability,” he said.
China’s leadership believes that maintaining a strong rate of growth is essential to creating jobs, raising incomes and staving off unrest in a society that has grown used to steadily rising standards of living. Economic growth of anything less than 7 per cent or 8 per cent, some officials say, would strain stability.
China has the world’s third-largest economy after the United States and Japan and its plans are being closely watched, with stocks up around the world on Wednesday on hopes it will take convincing action to restart its economy.