Published: March 4, 2010
BEIJING — Prime Minister Wen Jiabao of China said Friday that the nation would expand social spending, bolster lending, curb inflation and meet its traditional 8 percent economic growth target in 2010, but he cautioned that China still confronted “a very complex situation” in the wake of the global financial crisis.
Delivering his annual report to China’s unelected legislature, the National People’s Congress, Mr. Wen said that “destabilizing factors and uncertainties” in the world economy posed a challenge to China’s continued growth. But he effectively said that China’s plan to slowly ease away from last year’s enormous economic stimulus program, which spared China the worst of the recession, would continue unchanged.
“There’s no surprise here,” Tao Wang, an economist for USB Securities in Beijing, said in an interview after Mr. Wen’s address. “This has been the working assumption for a long time.”
Mr. Wen’s 35-page speech, the rough equivalent of an American State of the Union address, included a listing of statistics aimed at underscoring the government’s successful policies, swathed in boilerplate assertions of arduous struggle and glorious achievement.
While economies in most of the rest of the world struggled last year, China managed an 8.7 percent increase in its gross domestic product, capped by 10.7 percent growth in the last quarter of 2009. Many economists, including Ms. Wang, predict that China will easily beat its goal of 8 percent growth this year.
But Mr. Wen’s address also referred to problems in China’s booming economy that some experts say could hamstring future growth if they are not addressed quickly.
He pledged to clamp down on speculative real-estate purchases, which some analysts say are creating a bubble in China’s housing market. He also said the state would take measures to rein in an explosive rise in urban land prices. He warned that some Chinese industries, fed a diet of easy money and loose regulation, had developed serious overcapacity problems.
And even as he committed to expand the nation’s money supply by 17 percent this year, increasing lending by 7.5 trillion renminbi, or $1.1 trillion, Mr. Wen warned that “latent risks in the banking and public finance sectors are increasing.”
More skeptical economists have contended that China’s flood of lending during the recession will create a mountain of bad debt that will hamper future growth.
Mr. Wen said the government would run a budget deficit of $154 billion in 2010, which is in line with economists’ expectations. As a share of gross domestic product, the projected deficit is unchanged from last year.
Over all, spending will rise about 11.4 percent this year, half of the increase in spending during the recession last year.
Beyond economics, Mr. Wen’s speech laid out a familiar blueprint for raising China from a developing nation into the top ranks of the developed world. Last year, he said, the government’s stimulus measures helped increase auto sales by 46.2 percent, housing by 42.1 percent, as measured in square meters, and retail sales of consumer goods by 16 percent.
He recited a series of often-staggering numbers to highlight the country’s rapid development: 800,000 older homes were renovated in 2009; 165,000 miles of power lines were upgraded; 3,450 miles of new rail lines were laid; 2,900 miles of new freeway were opened; 35 airports were either built or renovated.
Mr. Wen said that the government had drastically increased spending on low-income housing, pensions, education and health care, and that the increases would continue this year. The government will take new steps to recruit top-level educators to China, to improve teacher training and to direct talented teachers to impoverished rural areas, he said.
Mr. Wen also said that China would pour money into strategic industries, increasing research and development and infrastructure spending to “capture the economic, scientific and technological high ground.” Among the areas he singled out were biomedicine, energy conservation, information technology and high-end manufacturing.
In a bow to China’s status as the world’s single-largest polluter, Mr. Wen also pledged to increase environmental protection measures, planting nearly 23,000 square miles of new forests, expanding sewage treatment and clean drinking-water programs, and retrofitting coal-burning power plants with advanced machinery to cut emissions.
A version of this article appeared in print on March 5, 2010, on page A7 of the New York edition.
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