China's Wen Puts Emphasis on Green Growth
Date: 05-Mar-07
Country: CHINA
Author: Benjamin Kang Lim and Chris Buckley
In his annual report to the National People's Congress, China's parliament, Wen reaffirms that Beijing will actively explore ways of investing the country's US$1.07 trillion in foreign currency reserves but offers no hints as to how it will do so.
The speech, excerpts of which were seen by Reuters, is light on politics and foreign policy.
But it underscores that Wen has made narrowing the chasm between the nation's bustling coastal cities and struggling inland villages a task that will define his administration's legacy.
"Protect social equity and justice, and let all the people together enjoy the fruits of reform and development," Wen says in his report, excerpts of which were seen by Reuters.
China will lift spending on its restless countryside by 15.3 percent to 391.7 billion yuan in 2007, aiming to improve rural schools, hospitals and incomes as it seeks to ease social imbalances, Wen is due to say.
The need to shun growth for growth's sake and to make China's economy greener and leaner is a recurring theme in the speech.
China managed to reduce the amount of energy it used per unit of output by just 1.23 percent last year, well short of its 4 percent goal, and could overtake the United States as the biggest emitter of greenhouse gases as early as 2009.
"We must advance even knowing the difficulties, adopting more effective measures and making even greater efforts," according to a separate report to parliament by the National Development and Reform Commission, the top planning agency.
The commission urges industry to harness advanced technology and says energy-intensive companies that cause a lot of pollution should "retreat from the marketplace".
Wen says the government is working on the assumption that GDP will grow by about 8 percent this year, the same target it set last year, when GDP actually rose 10.7 percent.
Wen acknowledges that this year's growth outcome might also be wide of the mark.
But he says the target has been set deliberately to signal the importance of increasing efficiency, saving energy, cutting pollution and avoiding the blind pursuit of growth.
STICKING WITH EXPORTS, STRESSING EQUALITY
The overall tone of Wen's report suggests policy makers are more relaxed about the state of the economy than this time last year, when breakneck growth in credit and investment raised the spectre of supply gluts and a new crop of non-performing loans.
While the government will keep a tight grip on capital spending and bank lending, the risk of overheating has been successfully averted, Wen says.
He says the government, its tax revenues swelling thanks to strong growth, will cut its budget deficit this year to just 1.1 percent of GDP from 1.3 percent in 2006 -- well below the original goal of a shortfall of 1.5 percent.
Wen promises to spend more to raise lagging incomes in the countryside, which is home to more than 60 percent of the 1.3 billion population.
In past years, protests and riots have flared across China's countryside as aggrieved farmers protested corrupt land grabs, lawless officials and stagnating incomes.
Among further steps Wen spells out in his report are expanding rural cooperative medical insurance intended to offer farmers basic healthcare, which is now beyond the reach of many.
A drive to abolish most school fees for rural children will spread nationwide, Wen's report says.
"We can certainy achieve the goal of making all children able to afford to go to school," the report states.
China is also determined to boost domestic consumption as part of a volley of measures to reduce its record trade surplus, which is sparking growing anger in Washington.
But the premier, speaking ahead of a visit to Beijing on Wednesday by U.S. Treasury Secretary Henry Paulson, says China is not about to abandon the export-driven growth that has helped it become the world's fourth-largest economy.
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