China Calls For Boost In Domestic Consumption

Published March 5, 2012 1:45AM (EST)

BEIJING (AP) — China's premier on Monday called for a boost in domestic consumption to keep China's economy expanding while overseas markets remain weak.

In a speech to open the annual National People's Congress, Premier Wen Jiabao said the government planned growth of 7.5 percent this year — a target below previous goals. The government wants a slightly slower pace of growth as it tries to rebalance the world's second-largest economy.

Wen said boosting domestic consumption is "crucial" to China's future.

He said the government will boost spending on social services and raise incomes for middle- and low-income groups, as well as expand consumer credit.

He also said subsidies for agriculture would be boosted. Just under 50 percent of China's 1.3 billion people live in rural areas that are dependent on agriculture.

Wen's report outlining priorities for 2012 is China's "state of the nation" address and opens 10 days of meetings in the Great Hall of the People in central Beijing.

The meeting comes amid not only economic concerns but a challenging leadership transition. The congress is expected to be the scene of behind-the-scenes political bargaining as President Hu Jintao and the most senior Communist Party leaders begin stepping aside this fall — after a decade in power — to make way for a younger generation.

The United States' efforts to expand its influence in Beijing's Asia-Pacific backyard also has China's attention. The country announced a defense spending boost Sunday.

China's economy grew by 9.2 percent last year, down from 10.3 percent in 2010, and many local governments are wracked with debt. In addition, with Europe in crisis and the U.S. recovery fragile, demand for Chinese exports is weakening.

By Salon Staff

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