Beijing: Premier Wen Jiabao assured on Thursday that China will achieve 8% growth this year despite a deepening financial crisis, setting out export support and spending programmes to shore up the economy.
In the text of his annual work report to the National People’s Congress, the nation’s largely ceremonial parliament, Wen said the 8% goal was a realistic one.
“It needs to be stressed that in projecting the GDP growth target at 8%, we have taken into consideration both our need and ability to sustain development in China,” he said.
Global markets soared on Wednesday on speculation that Wen would add to a 4 trillion yuan ($585 billion) stimulus plan unveiled in November to head off a rise in unemployment that could threaten the social stability prized by the ruling Communist party.
But while he projected a leap in China’s budget deficit this year to 950 billion yuan, Wen announced no increase in the headline cost of the pump-priming package to revive the world’s third largest economy, which has been hit by a slump in demand for its exports.
The expected 2009 budget deficit would be less than 3% of national income - a quarter of what the United States is planning for.
Balancing optimism with caution, Wen said China faced unprecedented difficulties and challenges due to the worldwide financial crisis.
“Demand continues to shrink on international markets; the trend toward global deflation is obvious; and trade protectionism is resurging. The external economic environment has become more serious, and uncertainties have increased significantly.”
Deepening global crisis
Wen said the government would use tax incentives and fiscal policies to support exports, while reaffirming Beijing’s long-standing policy if keeping the exchange rate of the yuan, China’s currency, “basically stable”.
Wen has said he is encouraged by the economy’s response to the blueprint, which envisages massive spending on infrastructure, affordable housing and the environment.
Bank lending has surged - Wen set an ambitious target of 5 trillion yuan in new loans this year, just above last year’s level - and surveys of manufacturers have perked up.
But exports have collapsed and a recovery in steel prices that was triggered by the stimulus plan has gone into reverse, suggesting to many economists that China is not out of the woods yet.
“The global financial crisis continues to spread and get worse,” Wen said in his speech.
He said his government would seek to prevent any threats from social unrest, which officials have warned could flare up as workers and farmers confront unemployment and income cuts.
Officials estimate about 20 million migrant workers have already lost their jobs due to the closure of export-dependent factories and a downturn in the construction industry.
“We will improve the early warning system for social stability to actively prevent and properly handle all types of mass incidents,” he said, using the government’s euphemism for riots, protests and demonstrations.