China's Premier Wen Lays Out Future

BEIJING, China, March 5, 2010— -- In a marathon speech lasting almost two hours, Chinese Premier Wen Jiabao laid out China's policy plans for this year, announcing a target of 8 percent growth for 2010 and pledging to reverse the country's yawning wealth gap.

There were 33 rounds of applause as Wen waded through the 36 page "State of the Union" style report. He said that the government aims to create more than 9 million jobs this year and keep unemployment down to 4.6 percent.

Wen opened the annual parliamentary session by acknowledging that, in spite of its impressive economic recovery, China continues to face a "complicated situation" as the government now pushes to rein in lending and boost domestic consumption.

Logan Wright, a China analyst with Medley Global Advisors, told ABC News that the speech "broadly indicated greater confidence than last year, but revealed concerns about emerging risks in the property market and the banking system. The [government lending] target is lower this year, clearly indicating that the excesses of 2009 cannot continue."

China's economy grew by a whopping 10.7 percent in the last quarter of 2009, driving the year's total growth to 8.7 percent, but there have been growing concerns of a property bubble with land prices tripling in at least seven Chinese cities, according to a report by Standard Chartered.

Wen vowed that "the government will resolutely curb the precipitous rise of housing prices in some cities while satisfying the public's need for housing."

On the subject of currency, Wen showed no signs of budging, vowing to keep the yuan at "an appropriate and balanced level." Other countries have accused China of artificially lowering its currency to keep exports cheap, but Beijing has consistently resisted pleas to loosen controls on the yuan.

Wright explained, "The currency rhetoric was basically the same as it has been for several years. There was no signal that a change in policy is pending but there's still market expectation of an end to the de facto dollar peg in the near future."

Fair Distribution of Wealth

During the wide-ranging speech Wen also focused on China's need to become a fairer society and of the government's commitment to improve education and healthcare while narrowing the income gap.

"We will not only make the 'pie' of social wealth bigger by developing the economy, but also distribute it well," Wen told some 3,000 delegates.

The speech comes one day after Beijing announced its intention to increase defence spending by 7.5 percent this year, the smallest ever increase in two decades. Li Zhaoxing, spokesman for China's parliament, said that the $77.95 billion budget is a reflection of the country's commitment to peaceful development, but analysts say the actual spending could be as much as two and a half times the official budget.