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China targets 7% growth in 2004; pledges stable yuan
(chinadaily.com.cn/agencies)
Updated: 2004-03-05 16:07

Chinese Premier Wen Jiabao said his government is targeting an economic growth of seven percent this year but urged a more equitable distribution of wealth and better controls on haphazard and redundant investment.

Speaking before some 3,000 delegates to the annual session of the National People's Congress, Wen also pledged Friday to keep the Chinese yuan "basically stable".

"In setting strategy for this year's economic growth, of around seven percent, the central government has taken into consideration both the need for continuity in marco-control and the relationship between the pace of economic growth and supply and demand," Wen said.

China grew at a blistering 9.1 percent in 2003 for its best performance since 1997 amid alarm bells that the economy was overheating.

Still, Wen's forecast was widely believed to be a conservative estimate as China needs a minimum of seven percent growth in order to create more jobs for a growing army of unemployed and redundant workers. Since the 1997 Asian financial crisis, the government has maintained an annual growth target of "around seven percent."

To this end, China will continue its expansive fiscal policy but channel more expenditures and investment into the rural sector, Wen said.

"We must adhere to the policy of expanding domestic demand and continue to implement a pro-active fiscal policy and a prudent monetary policy," Wen said.

"We will work to basically balance international payments and keep the exchange rate for the renminbi (yuan) basically stable at a proper and balanced level."

***Taming Economy

In an effort to rein in fixed asset investment, Wen further announced that funding in the form of special construction treasury bonds will be reduced from last year's 140 billion yuan ($US16.9 billion) to 110 billion yuan this year.

"One important task for macro-control this year is to appropriately control the scale of investment in fixed assets and firmly halt haphazard investment and low-level, redundant construction in some industries and regions," he said.

Wen also said that "long-standing and deep seated problems" in the economy that "our people are not satisfied with" would take a long time to eradicate.

"Rural incomes have grown too slowly, the task of increasing employment and improving social security is arduous, development in different regions of the country is not balanced, the income gap is too wide among some members of society and pressure on resources and the environment is mounting."

Wen pledged to make the economy in the rural areas the "top priority of all our work," while "the funds from treasury bonds will be directed toward rural areas, social undertakings (and) western regions."

This year the government will severely restrict land requisition in rural areas, reduce the financial burden on farms by 4.8 billion yuan and increase investment in rural areas by 20 percent, he added.

***Developing Non-State Sector

Meanwhile, the government will continue to deepen ongoing restructuring in the banking, finance and state enterprise sections, including improvements to the state assets management system, Wen said.

"We need to accelerate the reform of the wholly state-owned commercial banks, focusing on the pilot project to transform the Bank of China and the China Construction Bank into stock enterprises," Wen said.

He also called on governments at all levels to eliminate or revise regulations that restrict the development of the non-State sector.

"We will take measures to ensure that non-public enterprises receive the same treatment as other enterprises in investment, financing, taxation, land use and foreign trade," Wen said. 
"We will protect their legitimate rights and interests and improve government service to and oversight over them."

**Getting Rid of Agriculture Tax

Looking to boost farmers' incomes, China plans to get rid of the agriculture tax in five years, said Wen Jiabao in his government work report. The premier announced that the government will press ahead with the reform of rural taxes and administrative charges.

Wen said beginning this year, the agricultural tax rate will be reduced by more than one percentage point per year on average, and agricultural taxes will be rescinded in five years.
All taxes on special agricultural products will be repealed except for tobacco, thus reducing the financial burden on farmers by 4.8 billion yuan annually, he added. This year, the agricultural tax burden on farmers will be reduced by 7 billion yuan.

He called for consolidating and strengthening the position of agriculture as the foundation of the national economy and increasing rural incomes and agricultural production.

"Once again, China's agriculture is in a crucial period of its development," Wen stressed. This year China must take more direct and effective policies and measures to strengthen, support and protect agriculture and increase rural incomes in line with the need to balance urban and rural development.

"Solving problems facing agriculture, rural areas and farmers is a top priority in all government work this year", he said.

The state will appropriate 10 billion yuan this year from its grain risk fund to directly subsidize these producers in order to stimulate their enthusiasm for grain production. The prices of the means of agricultural production will be better monitored and controlled to protect farmers' interests.

**Never allow anyone to split Taiwan

"We stand firmly opposed to any form of separatist activities aimed at 'Taiwan independence' and will never allow anyone to split Taiwan from China by any means," Premier Wen Jiabao said.

"With the utmost sincerity, we will do everything possible to bring about the peaceful reunification of the motherland," Wen said.

The Chinese mainland will adhere to the basic principle of "peaceful reunification and one country, two systems" and, during this current stage, to the eight-point proposal for developing relations across the Taiwan Straits and promoting the peaceful reunification of the motherland, the report notes.

"We will vigorously expand visits of individuals across the Straits and economic and cultural exchanges and energetically promote establishment of the 'three direct links' between the two sides."

The Chinese mainland will protect the legitimate rights and interests of the Taiwan compatriots on the mainland in accordance with the law and continue to pursue the resumption of dialogue and negotiations between the two sides on the basis of the one-China principle, it says.

The report reiterates the "unshakable goal" to maintain the long-term stability and prosperity of Hong Kong and Macao and the "full support" to the chief executives and governments of the two regions.

The Chinese mainland will act in strict accordance with the basic laws of the Hong Kong and Macao special administrative regions, the report says.

"We will unite as broadly as possible people from all walks of life in Hong Kong and Macao and effectively implement the Closer Economic Partnership Arrangement between the mainland and Hong Kong and the mainland and Macao."

 
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