China Calls For Boost In Domestic Consumption

By Salon Staff

Published March 5, 2012 1:54AM (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. More tuition assistance would be provided for rural students.

Wen's report outlining priorities for 2012 is China's "state of the nation" address and opens 10 days of meetings for nearly 3,000 delegates 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.

"I wish to stress that in setting a slightly lower GDP growth rate, we hope ... to guide people in all sectors to focus their work on accelerating the transformation of the pattern of economic development and making economic development more sustainable and efficient," Wen said.

He said China was targeting an increase of central and local government spending of 14.1 percent over last year, totaling 12.4 trillion yuan ($1.97 trillion), of which slightly more than half would be central government spending.

Wen said that industrialization, urbanization and agricultural modernization will help "create huge potential demand."

He said China will target government waste by imposing limits on official overseas trips and official vehicles, both huge drains on local government budgets. In addition, leading officials will be prohibited from interfering in economic activities such as government procurement, awarding government contracts and the optioning of land and mineral rights. Government land grabs are the cause of tens of thousands of protests every year in China.

Wen alluded to the ethnic protests and violence China has been wracked with in recent years, especially in Tibetan areas and the far west Xinjiang region.

"China is a unified multiethnic country," he said. "Only when its ethnic groups are united as one and work for the development of all can China achieve prosperity."

Salon Staff

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