Beijing, March 5:

China’s government announced hefty spending increases on Monday to boost incomes and improve social services to urban poor and the lagging, restive countryside while guiding the booming economy to more stable growth.

In 2007 budget plans unveiled to the national legislature, the government called for increases of 42 per cent in education, 87 per cent for medical care, 15 per cent for rural areas and 14 per cent for social security. To limit harmful side-affects of torrid economic growth on ordinary Chinese, Premier Wen Jiabao called for controls to be imposed to rein in soaring housing prices, reduce pollution and limit confiscation of farm land for real estate development.

The social-spending binge underscores commitments by Wen and Chinese President Hu Jintao to spread the fruits of China’s stunning economic growth more evenly. The communist leadership faces a growing and politically volatile rich-poor gap. Protests have erupted over pension shortfalls, unemployment and land seizures.

It is imperative to “narrow the increasing gaps in income levels and expand consumer demand,” Wen said in a more than two-hour speech to the 2,890 delegates to the National People’s Congress.

“We will take a variety of measures to increase the incomes of both urban and rural residents, especially low- and middle-income persons.” Beyond social fairness, the emphasis on raising incomes is intended to help boost domestic demand, thereby reducing the economy’s dependence on investment and the surging exports that have touched off trade friction with the United States and Europe.

“There are still serious structural problems in the economy,” Wen said, citing the trade imbalance and its byproducts, swollen foreign exchange reserves and a banking system awash in credit.

Total spending by the central government is scheduled to rise 14.4 per cent to 2.7 trillion yuan ($335 billion), according to a budget outline released by the Finance Ministry. It projected an annual deficit of 245 billion yuan ($31 billion, euro24 billion), nearly 17 per cent less than 2006 due to robust tax revenue collections.

Wen announced the government’s usual, low economic growth target of 8 per cent, well below last year’s rate of 10.7 per cent, the fourth straight year of double-digit growth.