THE CHINESE PREMIER Wen Jiabao has formally opened the annual sitting of the country’s parliament with some warnings about the national economy, and announcing plans to tackle faltering growth.

Wen announced plans to boost domestic consumption, including subsidies for social programmes and higher spending for businesses, as the government grapples with a slowing economy and rising public demands for greater fairness.

In a speech that is China’s equivalent of the state-of-the-nation, Wen offered increased assistance and programs to benefit a wide array of groups: higher minimum wages, heftier subsidies for education and farmers, more loans for strapped private businesses and added help for troubled exporters. He called for more paid vacations for workers and expanded consumer credit.

The aim, Wen said, is to help China weather a shift as it looks for new engines of domestic growth while its main markets in Europe and the United States struggle and an investment binge at home flags while demand for jobs persists.

“Internationally, the road to global economic recovery will be tortuous,” Wen said at the opening of the National People’s Congress’s annual session in the Great Hall of the People.

“Domestically, it has become more urgent but also more difficult to solve institutional and structural problems and alleviate the problem of unbalanced, uncoordinated and unsustainable development.”

Transition

In a sign of the government’s downshift, Wen set the economy’s growth target at 7.5 per cent, lower than the 8 per cent it has stood at for years. Though forecasts project higher than 8 per cent growth for the year, the lower target underscores Beijing’s emphasis on better, not faster growth.

While the National People’s Congress is a largely pro forma affair — its nearly 3,000 delegates are either members of the ruling Communist Party, or allied to similarly-minded parties — this year’s 10-day session is likely to see more intense back-channel politicking as the leadership negotiates a delicate political transition.

President Hu Jintao, Wen and most others in the senior leadership are due to begin stepping aside for a younger generation of leaders – including Xi Jinping, who visited Ireland last month.

The program Wen outlined bore all the hallmarks of his and Hu’s nearly decade-old administration. Their leadership has built out a social safety net, trying to redistribute growth away from the prosperous coastal cities toward rural and inland areas and to raise working-class and rural incomes.

Their slow, gradualist approach to policymaking, however, has drawn criticism in recent months as too piecemeal and risk-averse to take on entrenched interests, particularly the powerful state enterprises that dominate the economy and their backers in the bureaucracy.

Such a restructuring is needed, the World Bank and outside economists say, if China wants to rise from a middle-income to rich country.

- Charles Hutzler