Chinese Premier To Balance Economy, Cut Loans To Polluting Factories

In a speech to the National People’s Congress, Premier Wen Jiabao said he intends to help rural incomes, increase social program spending and fund high-tech military programs.

BEIJING (AP) – Chinese Premier Wen Jiabao reached out to key interest groups in a speech to the legislature Monday, pledging to boost rural incomes, raise spending on social programs and fund high-tech programs for the influential military.

The Premier said the country plans to reduce the economic growth rate to 8 percent from the 10.7 percent rate in 2006, according to the People’s Daily Online.

The spending binge follows commitments by Wen and Chinese President Hu Jintao to spread wealth more evenly, but also comes ahead of a major year-end Communist Party congress at which the pair are expected to entrench their five-year rule by appointing allies to top posts.

“We must put people first…and ensure that all of the people share in the fruits of reform and development,” Wen said in an address to the 2,890 members of the legislature, formally known as the National People’s Congress.

Along with the national budget, delegates at this year’s 12-day session are expected to approve property rights and corporate tax bills. The various meetings on the congress’ sidelines also allow crucial face-time between delegates and leaders, permitting Hu and Wen to communicate their priorities directly.

While the two face no electoral tests, China’s authoritarian communist system is based on obtaining broad consensus and Hu and Wen want to project the image that they enjoy wide-ranging support in the months ahead of the party congress, said Steve Tsang, an expert on Chinese politics at Britain’s Oxford University.

“They’re not electioneering in the normal sense, but they do want to carry the support of the constituencies,” Tsang said.

In 2007 budget plans unveiled to the legislature, Wen called for spending increases of 42 percent in education, 87 percent for medical care, 15 percent for rural areas and 14 percent for social security.

Tuition and other fees for all rural students will be eliminated, easing financial burdens on 150 million rural households, the premier said. The expanded spending on education and rural health insurance would complete in two years projects originally scheduled to be phased in over five years.

Wen announced an economic growth target of 8 percent, well below last year's rate of 10.7 percent, the fourth straight year of double-digit growth.

In the countryside, where most Chinese live, spending on agriculture, schools, medical clinics and other programs will rise 15 percent to $51 billion, Wen announced.

Another $27 billion is earmarked for a ''social safety net'' to protect China's elderly and migrant workers. That will include old-age pensions, experimental pension accounts and basic medical and other social insurance.

Wen's speech dwelt at length on China's fouled rivers and polluted air, calling on banks to limit lending to energy-guzzling and highly polluting industries and pledging to shut small coal-burning plants and ''backward iron foundries and steel mills.''

According to the People’s Daily Online, sulfur dioxide emissions rose to 463,000 tons, up 1.8 percent. The Chemical Oxygen Demand water pollution index was up 1.2 percent to 14.31 million tons.

Wen also said the government would speed up the transformation of China's 2.3 million armed forces into a high-tech fighting force.

On Sunday, China announced it will boost military spending by 17.8 percent in 2007 to $44.94 billion, the biggest jump in more than a decade.

Yet military officers, more than 200 of whom are members of the legislature, said the increase was only incremental and would mainly be spent on boosting salaries.

''I really don't think it's much compared to other countries. We have a real need to improve living conditions and raise our technological level,'' Maj. Gen. Yuan Jiaxin said following Wen's speech.

Wen drew his biggest applause when renewing Beijing's pledge not to tolerate moves by self-governing Taiwan toward formal independence in defiance of China's claims over the island.

''We firmly believe that with the efforts of all Chinese people, including our Taiwan compatriots, complete reunification of China will definitely be realized,'' Wen said near the end of his 2 hour, 15 minute speech in the cavernous Great Hall of the People.