In 2009, China succeeded in tiding over the impact of the worst global financial crisis in decades thanks to the government economic stimulus package, which included a 4 trillion yuan (¥52 trillion) two-year investment. But Premier Wen Jiabao’s government work report to China’s Parliament shows that a crucial time has come for the country to make serious efforts to realize a “harmonious society” by solving such problems as an increasing gap between the rich and the poor, soaring property prices and ethnic tensions.
As Mr. Wen said in his report to the annual session of the National People’s Congress, which started March 5, China was the first country to emerge from the global economic downturn. In 2009, China’s gross domestic product grew 8.7 percent. The rate was lower than the 9.6 percent growth in 2008 and the annual double-digit growth from 2003 to 2007.
For this year, Mr. Wen set the economic growth target at “around 8 percent.” Economic growth at this pace is needed to absorb surplus labor, primarily new graduates and people who move from rural to urban areas. The government will try to create more than 9 million jobs in cities, keep urban unemployment rate at no higher than 4.6 percent and hold the rise in the consumer price index to about 3 percent. Social security and employment-related spending will increase by 8.7 percent.
Mr. Wen said that China will continue to pursue a proactive fiscal policy and a moderately easy monetary policy. China’s fiscal deficit this year will be 1.05 trillion yuan (about ¥13.7 trillion), up from last year’s 950 billion yuan, and its bank lending is targeted at 7.5 trillion yuan (about ¥98 trillion), some 2 trillion yuan less than last year. Mr. Wen said that China will keep the exchange rate of the yuan “basically stable.”
Mr. Wen described China’s overall economic goals by saying, “This is a crucial year for the country to continue fighting against the global financial crisis while maintaining a steady and comparatively fast economic development and accelerating the transformation of economic growth pattern.”
Pointing out the need for structural change, he called for better energy conservation especially in manufacturing, transport and construction, nurturing of new energy and new materials industries and bio-industry, support for medium-size and small enterprises, and development of financial, distribution and information services.
It is remarkable that Mr. Wen vowed to reform the income distribution system and to “resolutely reverse a widening income gap.” He said that the government “will not only make the pie of social wealth bigger by developing the economy but also distribute it well on the basis of a rational income distribution system.”
Mr. Wen’s remarks show that the economic gap between the rich and the poor, and rural and urban areas have become urgent problems that need to be solved quickly. In addition, the stimulus package to cope with the global financial crisis has caused a steep rise in property prices.
While some Chinese have become affluent enough to own cars and travel abroad, rural residents who come to cities to find jobs are languishing in poverty. They cannot receive basic administrative services because they cannot be registered as city residents under the household registration system. Mr. Wen promised to reform the system, expand housing projects for low-income people and deal with practices like hoarding property and property price rigging.
He also vowed to vigorously push policies to achieve social and economic development in the Tibet Autonomous Region, other areas with a large Tibetan population and the Xinjiang Uyghur Autonomous Region. China also has such problems as environmental disruption, frequent labor accidents and corruption. It is high time that China paid serious attention to the quality of economic growth — a difficult task because at the same time it has to create enough jobs for growing labor force. It must be remembered that in 2007 President Hu Jintao called the realization of a “harmonious society” a “long-term historic task” for the Communist Party of China.
China’s 2010 budget includes a defense budget that marks a 7.5 percent rise from actual spending in 2009. China’s defense spending has undergone double-digit increase for 21 straight years since 1988. The 2010 defense budget is still a 10.7 percent increase from the initial budget of 2009.
Some observers believe that military crackdowns against ethnic riots in Urumqi in the Xinjiang Uyghur Autonomous Region increased actual defense spending in 2009, thus making the growth in the 2010 defense budget growth appear to have slowed. Western analysts think that China’s real defense spending is two to three times the disclosed figure. China’s poor defense budget transparency will continue to fuel neighboring countries’ distrust and fear of China.
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