SHANGHAI — China's annual legislative session opened today with the premier, Wen Jiabao, outlining an aggressive plan of increased stimulus measures to keep the economy growing rapidly and maintain social stability.
In addressing the nearly 3,000 delegates of the Communist Party-controlled National People's Congress, Wen said the central government would boost spending on healthcare and other social programs, and take additional steps to offset the rising unemployment resulting from the global financial crisis. But he did not specify new spending on top of the $586-billion stimulus package announced in November.
China's economy, the largest after those of the U.S. and Japan, has slowed sharply amid plunging exports, putting about 20 million laborers out of work and raising the risk of massive social unrest.
"We are facing unprecedented difficulties and challenges," he said in delivering a 44-page text of his working report.
As expected, Wen set a target economic growth rate of 8% for this year, a figure that economists see as a minimum to create enough jobs. China's economy expanded 9% last year, down from 13% in 2007. But growth in the latest fourth quarter slid to 6.8% year over year, and some analysts project a similar rate for all of 2009.
In recent days there have been rays of hope, as measures of China's industrial production such as power generation have moved in a positive direction. Those reports, plus expectations that the two-week legislative session would yield more stimulus measures, triggered a 6.1% surge in Chinese stocks Wednesday, the biggest gain in nearly four months.
But investors apparently expected Wen to reveal a ramp-up in the economic stimulus package. After Wen's speech, Shanghai's composite index fell into negative territory early Thursday afternoon, after rising nearly 2% in the morning.
Zhang Hanya, a researcher at an institute under the National Development and Reform Commission, the government's top economic planning agency, said after listening to Wen's remarks that it was still possible that the stimulus plan would been enhanced.
China, unlike the U.S., has the wherewithal to increase its fiscal spending. Wen said the government's budget deficit this year would be about 3% of China's economy, compared with more than 12% for the U.S.
"It's a clear signal that government will increase investment in construction and people's livelihood," Zhang said of China's increased budget deficit from a year earlier.
