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China promises vigorous spending program
By CHARLES HUTZLER,Associated Press Writer AP - Thursday, March 5
BEIJING - China rolled out an aggressive government spending program Thursday, promising ramped-up outlays for infrastructure and social programs to ward off the global economic downturn and forestall unrest.
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In a two-hour speech focused on domestic affairs, Premier Wen Jiabao said government spending would soar 25 percent this year to revive the flagging economy and reach 8 percent growth.
Wen's broad-ranging address, comparable to a state-of-the-nation speech, also called for conserving energy and for trial programs to curb global warming. It also offered to hold peace and free-trade talks with rival Taiwan.
Policies target a broad range of groups the authoritarian government relies on for support: tax cuts and home-buying incentives for exporters and real estate developers who provide crucial tax revenues, job creation programs for urban Chinese and more welfare for the poor and farmers who have benefited less from recent years of torrid growth and are more prone to protest.
"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," Wen told the opening session of the national legislature inside the Great Hall of the People off central Tiananmen Square.
While the nearly 3,000 delegates to the National People's Congress met, rings of uniformed and plainclothes police sealed off Tiananmen and kept ordinary Chinese and the normal hordes of tourists away.
Police detained about two dozen people, among them a group of women from a central China village who had come to Beijing seeking redress for the murder of a family member. A middle-aged man, a petitioner from the countryside, cut his face with sharp instrument, paramedics said. Apparently unconscious, his head and shirt bloody, he was carried away.
Reinvigorating the Chinese economy, the world's third largest after the U.S. and Japan, is seen as crucial to helping the world pull out of the global downturn. Stocks rose in many markets Wednesday on expectations China would mount vigorous action.
While Wen sought to portray the government as actively responding, many of the programs were previously announced or well-telegraphed by officials. No new additions were unveiled to two centerpiece programs _ a two-year 4 trillion yuan ($586 billion) stimulus package largely for infrastructure projects and a three-year 850 billion yuan reform of the health care system.
The politically influential military was rewarded with another double-digit budget increase, 14.9 percent, but a lower rate than in recent years so that the government could divert more money to other programs.
The annual session of the congress is generally a staid, set piece of political theater. Delegates approve decisions made behind-closed-doors by the Communist Party leadership.
With the economy buckling and worries of unrest mounting, congress members are expected to put on an even greater display of unity this year, minimizing the usually low level of debate. Unlike recent years, the premier's speech made only brief mention of reforming the authoritarian political system.
Much of Wen's budget focused on using stimulus measures to prevent social unrest, underscoring the leadership's worry that economic malaise could unleash unrest among a population grown used to steadily rising standards of living. The economy, Wen said, continues to sag as demand for Chinese exports evaporates in the U.S. and Europe.
"The continuous drop in the economic growth rate due to the impact of the global financial crisis has become a major problem affecting the overall situation," Wen said. Later, he said, "We must give top priority to ensuring people's well-being and promote social harmony."
He said the government was targeting growth of "about 8 percent." The figure has been included in all budget plans in recent years, easily met by an economy that has grown for much of the past decade at double-digit rates. But officials defend the target as necessary, saying anything lower would not generate enough jobs.
Overall the central government planned to expand spending 24 percent, to 4.38 trillion yuan ($640 billion), and it raised limits for local government spending by nearly 25 percent, to 6.1 trillion yuan ($891 billion). In doing so, Wen said governments will run a deficit of 951 billion yuan ($138 billion) _ about 3 percent of China's $3.5 trillion economy and well below the 12 percent expected for the United States.
Among the promises Wen made were a 20 percent increase in spending on rural areas and a 17.6 percent boost to spending on pensions, welfare and other social insurance programs.
The emphasis on social spending was in part intended to re-gear the Chinese economy toward household consumption and away from its heavy reliance on exports and investment in factories and real estate. Economists have urged the government to focus on programs that would encourage Chinese, who generally save about 20 percent of their incomes, to spend.
Some $6 billion was being earmarked for coupons given to rural families to purchase appliances, farm machinery, cars and motorbikes, Wen said.
But for an economy that is still a mixture of free markets and state planning, industry remains an important constituency and Wen promised help. "While stressing the importance of domestic demand, we must not slacken efforts to promote exports," said Wen.
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