PM Wen says China faces "unprecedented" challenges over crisis
Posted: 05 March 2009 0924 hrs

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BEIJING: Premier Wen Jiabao confidently declared Thursday that China would be able to ride out the unprecedented challenges of a worsening global crisis and achieve eight per cent economic growth this year.

In his annual "state of the nation" address to open parliament, Wen gave the most detailed blueprint yet of a four trillion yuan (585 billion dollar) stimulus plan aimed at steering China through the downturn.

However he did not unveil any new stimulus package in addition to the one outlined in November. Stock markets around the world soared Wednesday on expectations of another massive round of spending to boost China's economy.

"We are fully confident that we will overcome difficulties and challenges, and we have the conditions and ability to do so," Wen told the 3,000 delegates gathered for the Communist Party's showpiece political event of the year.

The premier made it clear China's economy, the third biggest in the world, was hurting from the crisis and that the environment was not expected to get better soon.

"We face unprecedented difficulties and challenges. The global financial crisis continues to spread and get worse," he said.

"Demand continues to shrink on international markets. The trend for global deflation is obvious and trade protectionism is resurgent."

Wen acknowledged fundamental problems in China exacerbated by the crisis, such as an inadequate social safety net and incomplete health care, as well as a wealth gap.

Nevertheless, he sought to reassure China's 1.3 billion people that major reforms were being planned and that there was no need for panic.

"Our confidence and strength comes from many sources," he said.

China's economic growth had slumped to 6.8 per cent in the final quarter of last year, worrying figures for a government long used to double-digit expansions and marking a dramatic slowdown from 13.0 per cent growth in 2007.

But he said China's gross domestic product (GDP) will grow by 8.0 per cent in 2009.

"It needs to be stressed that in projecting the economic growth target of about 8.0 per cent, we have taken into consideration both our need and ability to sustain growth," Wen said.

And amid deflation concerns, he said the government had set an inflation target of 4.0 per cent for the year.

Wen outlined a wide-ranging plan for the four trillion yuan package, which is to be spent over two years and which will contribute to a record budget deficit of 950 billion yuan (140 billion dollars) in 2009.

This included plans to boost domestic spending, improve the social safety net, raise incomes for the nation's roughly 800 million people living in the countryside and give support for key industries such as steel and auto.

China's leaders had previously indicated that improving the plight of the nation's least well off would be a top focus for the annual parliamentary session, which will last nine days.

This has become a greater concern due to the economic slowdown, as rising unemployment fuelled fears of further social unrest in a country that sees tens of thousands of protests each year.

Adding to the sense of unease are tensions surrounding China's 58-year rule of Tibet, as an ultra-sensitive 50th anniversary of a failed uprising against Chinese rule falls during the parliament sessions, on March 10.

- AFP/yt