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China targets eight per cent growth

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Skill update: Migrant farm workers take part in a computer training at Juye County, east China's Shandong Province recently.
Skill update: Migrant farm workers take part in a computer training at Juye County, east China's Shandong Province recently.

Ananth Krishnan

But we must bridge urban-rural income gap, says Wen

BEIJING: China is expected to achieve 8 per cent growth in 2010, but faces pressing challenges to ensure more equitable development and social stability, said its Premier Wen Jiabao on Friday.

In his annual address to the opening session of the National People's Congress (NPC), China's legislature, Mr. Wen called on the government to do more to close the growing income gap between urban and rural China, which last year was the widest since economic reforms were launched three decades ago.

“We will not only make the ‘pie' of social wealth bigger by developing the economy, but also distribute it well on the basis of a rational income distribution system,” he said presenting the government's “work report” to the NPC, which reviewed its progress in the past year and announced policies for the year ahead. Mr. Wen said China's outlook for 2010 was “better than last year's”, though the country faced “a very complex situation” and “increasing dilemmas” in social development. The growth target for the coming year was 8 per cent, down from the 8.7 per cent growth recorded last year, largely on the back of the government's $586-billion stimulus spending on infrastructure projects.

As a result of the financial crisis and falling demand from the West, China's export-driven economy in 2009 suffered its worst decline in years, with growth falling to 6.2 per cent in the first quarter. Mr. Wen said the financial crisis underscored the need to rebalance the economy and drive growth more from internal domestic demand. Chinese firms needed to improve their innovation capabilities, which, he said, were “not strong”.

In a two-hour speech that touched almost every aspect of China's many developmental challenges, a recurring point was the need for China to address growing inequalities between urban and rural areas to ensure social stability. Urban per capita income last year was 17,175 Yuan ($2,525), more than three times the 5,153 Yuan ($758) rural Chinese take home.

Reforms

The widening income gap has prompted scholars here to call on the government to dismantle the five-decade-old restrictions on rural to urban migration. A household-registration system denies rural citizens access to healthcare when they migrate to cities.

Mr. Wen said China would, “relax” household-registration requirements for migrant workers in towns and small cities, and “gradually ensure that [rural migrants] receive the same treatment as urban residents in areas such as pay, children's education, healthcare, housing and social security.” The government would allocate 818.2 billion Yuan ($120 billion) to improve agricultural infrastructure, a 13 per cent increase from last year. Social security spending would rise by 8.8 per cent, with 807.8 billion Yuan ($118.8 billion) going towards improving education, healthcare, social security, low-income housing and employment.

He also stressed the need for faster development in provinces inhabited by China's 55 minority groups to ensure social stability, following a year which saw the biggest ethnic unrest in the country's recent history. At least 200 people died in riots in the Muslim-majority Xinjiang region, while Tibetan-inhabited areas saw widespread unrest in 2008.

“We will focus on implementing policies for economic and social development in Xinjiang, Tibet, and Tibetan ethnic areas in Sichuan, Yunnan, Gansu and Qinghai provinces,” said Mr. Wen.


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