China PM vows to reduce inflation

Wen Jiabao outlines ambitious plan to curb inflation, raise incomes and boost consumer spending.

China National People''s Congress
Wen Jiabao announced a plan that envisages a shift in Chinese economy towards consumption-led growth [EPA]

China’s government has vowed to clamp down on inflation and urgently raise incomes, as Wen Jiabao, the country’s premier, devoted most of a major national address to addressing citizens’ economic concerns.

Addressing the opening of the National People’s Congress on Saturday, Jiabao said the country’s working class and rural residents would receive more assistance from the government, in a move aimed at sharing the benefits of rapid economic growth across more sectors of society.

Living standards are rising in China, but there have been complaints about accompanying rises in prices, as well as a lack of equitability in the benefits of national economic growth.

“We must make improving the people’s lives a pivot linking reform, development and stability … and make sure people are content with their lives and jobs, society is tranquil and orderly and the country enjoys long-term peace and stability,” Wen told the legislature’s nearly 3,000 members.

He said inflation was a problem that “bears on overall interests and affects social stability”, and that the government would be imposing price controls as needed and promoting food supply. Price supports for wheat and rice are also to be raised.

The centrepiece of Wen’s economic programme is a five-year plan that outlines an ambitious target: moving the Asian giant’s economy from one dependent on state investment and exports to one that is driven by domestic consumption.

The plan envisages boosting household disposable incomes through higher wages, levelling the playing field for private companies and an end to policies that have favoured certain state-owned enterprises.

The move would also likely reduce friction with the US and other trading partners, as it would mean that China would also import more goods.

Government ‘worried’

Al Jazeera’s Melissa Chan, reporting from Beijing, said the opening day of the National People’s Congress is normally used by the government as an opportunity for “self-congratulation,” but this year, the premier addressed the nation’s problems.

“There is not much of a health system in this country and he talked about greater access to medication,” she said.

“He also talked about real estate, which is a serious, serious issue in this country. It’s very costly, both the cost of rent and of purchasing homes, and the premier promised that 20 per cent of urban housing will be low-income in the near future.

“All this suggests the government is more worried than it has been in the past.”

Wen’s programme sets the economic growth target at about the normal eight per cent for the next year, but cuts back the figure for the entire 2011-2015 period to seven per cent annually.

“We will adjust the income distribution in a reasonable manner. This is both a long-term task and an urgent issue we need to address now,” Wen said, adding that the government would steadily increase the minimum wage, pensions and welfare payments, and boost spending on healthcare.

“Through unremitting efforts, we will reverse the trend of a widening income gap as soon as possible and ensure that the people share more in the fruits of reform and development,” he said.

‘Confident and pragmatic’

Rong Ying, of the China Institute of International Studies, told Al Jazeera that the statements displayed a “resolution” and “confidence” on the part of the government to address economic challenges.

He said he saw the speech as being “very solid, very confident and also pragmatic”.

He said the Chinese government will need to ensure “sustainable economic development and social stability … [and] I think they have laid a quite clear outline to do that. So I don’t see a kind of gap or disparity between the government positions and the sort of social situation or expectation of the public.

“Rather I see a kind of confidence of the government … and a kind of resolution to push forward the necessary reforms and development programmes.”

Chinese media, meanwhile, warned citizens against attempting to emulate popular protest movements in the Middle East and North Africa, warning that any threats to Communist Party-led stability could bring “disaster”.

“Everyone knows that stability is a blessing and chaos is a calamity,” said the Beijing Daily newspaper, which is the mouthpiece of the Communist Party administration for China’s capital.

Protests had been called on Saturday for the third straight day, though the first two days only saw gatherings of onlookers, journalists and police, rather than actual demonstrators.

Source: Al Jazeera, News Agencies