Premier: China to hold inflation at 3% this year

09:50, March 05, 2010      

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China's Premier Wen Jiabao predicted another year of rapid economic expansion Friday while his government will try to tame inflation and curb runaway loan growth to prevent risky bubbles from hurting the world's 3rd largest economy.

In an address to an annual session of National People's Congress, Wen told nearly 3,000 people's deputies that 8 percent economic growth is the goal for this year, which he called a "crucial year in the battle against the global slowdown".

"This year the main targets we have set for economic and social development are increasing GDP by approximately 8 percent... and holding the rise in consumer prices (inflation) to around 3 percent," Wen said.

Analysts said that 8 percent growth is a figure Chinese government must fulfill in order to avert worsening joblessness and social unrest in the world's most populous country. Despite the global crisis, the economy grew 8.8 percent in 2009.

With the world downturn exposing the volatility of foreign trade, the session's agenda will be topped by the government's efforts to retool the economy away from its long reliance on state investment and exports of inexpensive goods to foreign lands.

"This is a crucial year for continuing to deal with the global financial crisis, maintaining steady and rapid economic development and accelerating the transformation of the pattern of economic development," Wen said.

His speech offered a fresh pledge to boost domestic consumption and noted those left behind by China's modernization.
"We must always remember that developing the economy is inseparable from improving peoples' well-being and safeguarding social fairness and justice," Wen said.

Wen predicted that the country would run a budget deficit of 1.05 trillion yuan (US$152 billion), up 10 percent from last year, as it extends a hefty economic stimulus plan and increase investment in social security.

The prime minister also acknowledged government concern over a flood of bank lending that has caused inflation pressure to pick up, saying the authorities would slash new bank loans by about about 20 percent to 7.5 trillion yuan this year. Last year, Chinese banks approved 9.59 trillion yuan of loans.

"We are emphasizing sound development and we need to guide all sectors to focus on transforming the pattern of economic development and restructuring the economy," Wen said.

On the eve of the congress opening, China unveiled the smallest increase in its military budget for more than 20 years amid national belt-tightening, and vowed that its military modernization posed no threat to other countries.

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