Chinese Premier Wen Jiabao (溫家寶) yesterday cut the Asian giant’s growth target to 7.5 percent for this year in a key annual speech focused on economic expansion, stability and military might ahead of a leadership change.
Wen, who will step down as prime minister next year, said China faced “many difficulties and challenges” as he delivered his opening address to the annual session of the National People’s Congress (NPC).
Wen also said China’s military needed to be better prepared to fight “local wars,” a day after the Asian powerhouse announced its defense spending would top US$100 billion this year — an 11.2 percent increase on last year.
He said China should enhance the ability of its military to “win local wars under information age conditions,” amid concern about Beijing’s growing assertiveness over its territorial claims.
China’s military budget has seen double-digit increases every year for much of the last decade, worrying other countries in the region as well as the US, which is expanding its own military power in Asia.
This year’s NPC session is the last before a handover of power that begins later this year, and leaders are anxious to ensure the world’s second-largest economy grows at a steady pace, while keeping a lid on social unrest.
The lower growth target, down from 8 percent last year, is an official acknowledgment that China’s export-driven economy is slowing as Europe’s debt crisis and the sluggish recovery in the US hurt demand for its goods.
China’s economy expanded by 9.2 percent last year, slowing from a blistering 10.4 percent in 2010, as global turbulence and efforts to tame high inflation put the brakes on growth.
“We are keenly aware that China still faces many difficulties and challenges in economic and social development,” Wen said in his annual speech at the opening of the 10-day gathering in Beijing’s Great Hall of the People. “There is downward pressure on economic growth. Prices remain high. Regulation of the real estate market is in a crucial stage.”
Expanding domestic demand was a key focus this year, Wen said, announcing increased investment in low-cost housing, social security, education and higher wages as Beijing seeks to reverse “the trend of a widening income gap.”
China typically exceeds the annual growth target unveiled every March and most economists are predicting GDP growth between 8 percent and 8.5 percent this year.
Wen vowed to maintain property restrictions introduced in the past two years to rein in surging real estate prices that had risen out of the reach of many ordinary Chinese.
The inflation target was set at 4 percent for this year, unchanged from last year, after consumer prices rose 5.4 percent last year, causing concern about the prospect of social unrest.
Wen also highlighted the sensitive issue of government land grabs, a major cause of public unrest in China, where almost 50 percent of the population still lives in the countryside.
Speaking a day after landmark elections in the southern village of Wukan, where a revolt last year put the growing public anger over land seizures in the spotlight, Wen said farmers’ rights to land “must not be violated.”