Wen declares China can ride out economic storm

Premier Wen Jiabao said Thursday that China was facing unprecedented challenges from the global crisis but he was confident the country would still achieve growth of about eight percent this year.

In his annual "state of the nation" address to open parliament, Wen gave the most detailed blueprint yet of a four-trillion-yuan 585-billion-dollar stimulus plan aimed at steering China through the downturn.

The premier acknowledged the Chinese economy, the third biggest in the world, was hurting and the climate was not expected to get better soon in the face of a global recession that has weakened demand for Chinese goods.

"We face unprecedented difficulties and challenges. The global financial crisis continues to spread and get worse," Wen told the 3,000 delegates gathered for the Communist Party's showpiece political event of the year.

"Demand continues to shrink on international markets. The trend for global deflation is obvious and trade protectionism is resurgent," he told the lawmakers, who will be gathered for nine days.

But Wen said the economy was still expected to grow by about 8.0 percent this year -- a rate officials have stressed is needed to prevent social unrest triggered by widescale unemployment.

"We are fully confident that we will overcome difficulties and challenges, and we have the conditions and ability to do so," Wen said. "Our confidence and strength comes from many sources."

China's economic growth dipped to 6.8 percent in the final quarter of last year, worrying figures for a government long used to double-digit expansions and marking a dramatic slowdown from 13.0 percent growth in 2007.

The slowdown in China's economy, which is reliant on exports to developed economies that are now in recession, has seen 20 million rural migrant workers left jobless in recent months and countless factory closures.

China typically sees tens of thousands of protests each year even in economic boom times, and rising unemployment has fuelled fears among the communist leadership of social unrest.

Wen also acknowledged problems that could fuel tensions and had been exacerbated by the crisis, such as an inadequate social safety net and health care system, as well as a wealth gap.

But he said the 8.0-percent target was achievable, providing a sound platform for creating millions of jobs and soothing social tensions.

"Maintaining a certain growth rate for the economy is essential for expanding employment for both urban and rural residents, increasing people's incomes and ensuring social stability," he said.

"As long as we adopt the right policies and appropriate measures, and implement them effectively, we will be able to achieve this target."

And amid deflation worries, he said the government had set an inflation target of 4.0 percent for the year.

Highlighting unrest concerns, security was tight around the Great Hall of the People, where parliament was sitting, and dissidents told AFP that authorities had placed new restrictions on their movements.

Adding to the sense of unease are tensions surrounding China's 58-year rule of Tibet, as a sensitive 50th anniversary of a failed uprising against Chinese rule falls on March 10.

The budget for medical and health care will rise 38.2 percent to 118.06 billion yuan, according to budget papers, with Wen pledging that health insurance would cover 90 percent of the population in three years.









March 4. REUTERS/Hannibal Hanschke