Wen Jiabao cautious on economic growth

China's leaders file into the Great Hall of the People. Around 3,000 delegates have taken their seats to hear the regime's ambitious plans for the New Year. The powers that be are aiming at 8 percent economic growth. But in light of the world economic and finance crisis, Prime Minister Wen cautions against too much optimism.

"Our economy was the first world wide to recover and take on a new direction," said Wen. "Though the circumstances this year will be better for economic growth than last year, we will be confronted with a very complex situation. International and domestic affairs influence each other. On an international scale, there is hope for world economic growth. But at the same time, the foundation for a recovery of the world economy is still quite weak."

Budget deficit rise

In order to stabilize the country's economy and to fight the economic crisis, China is planning to increase its deficit. It is expected the deficit will reach a record peak of more than 100 billion euros – the highest in 60 years. With that cash, Beijing is aiming to strengthen domestic demand.

The economic giant wants to reduce its dependence on exports, so the regime is planning on promoting domestic demand. Aside from the economy further plans for this year include the modernization of rural China, bridging the gap between the rich and the poor and improving the insurance system. The state has promised help to nearly all sectors. Nonetheless, Wen Jiabao suggested moderation and urged improvement to existing structures.

"There are still many issues ahead, which could slow down the growth of our economy and of our society," said Wen. "There is not enough motivation to fuel economic growth, areas of innovation are not strong enough and in some sectors there is still surplus production. It is becoming more and more difficult to control these kinds of things."

Future outlook

Beijing's underlying goals are clear: China does not want to be reduced to being the world's factory, flooding world markets with cheap goods. It wants to become an innovative nation, leading the field in research and science.

"Our Chinese nation is not only capable of working economic miracles. We are rich in culture," said Wen. "We must change our paradigm of economic growth now and create a market which will grow, nourished by Chinese innovation."

The delegates will be listening to speeches until mid March. It is unlikely there will be any controversy, as experts say, most will agree with party policy.

Author: Petra Aldenrath / sb
Editor: Grahame Lucas