China aims for slower economic growth

Beijing, March 5:

Chinese premier Wen Jiabao today forecast slower economic growth for 2006 and less reliance on exports as Beijing po-urs resources into building up the long-neglected countryside.

In an address to the opening of parliament’s annual session, Wen gave no sign that China would yield to pressure to ease exchange-rate controls, which critics say contributes to its rising trade surpluses. But he said technology and resource imports would rise and that Beijing would “strive to redress the trade imbalance.”

China expects its economy to grow about eight per cent this year, Wen said, slowing sharply from the 9.9 per cent it grew last year. He gave no reason for the forecast slowdown, which contrasts with analyst’s forecasts for growth rates of up to 9.2 per cent.

However, Wen said the economy faces threats, including the loss of farmland, excess investment in showcase buildings and other unneeded projects, and shortages of key resources, such as coal. China’s leaders have been forecasting lower growth for several years, only to see those targets surpassed as the economy steamed ahead, fueled by robust growth in exports and stubbornly high growth in spending on factories, real estate and construction projects.

The shift to promoting rural growth comes amid mounting anger there over land seizures, corruption and pollution. Increasing the spending power of China’s 800 million rural citizens, the majority of its population of 1.3 billion, is seen as a crucial step in the country’s long-term development.

The 2006 budget, part of the country’s latest five-year blueprint for development, calls for shifting more resources to the countryside, where average incomes are one-third the size of those in cities.

The government plans to spend $42.3 billion this year on agriculture and rural areas, up by 14.2 per cent from the year before, Wen said. The overall deficit is forecast at $37 billion, slightly lower than in 2005.

The nearly 3,000-member parliament, which always endorses policies set by the communist leadership, is due to approve the budget, Wen’s report and other plans when its 10-day long session ends on March 14.

The challenge will be in ensuring that the blueprint is actually implemented at local levels, where officials often balk at policies that threaten their own interests. “We have huge problems to deal with,” said Zhao Xueming, a member of the government’s top advisory body, the Chinese People’s Political Consultative Conference,