China's Premier Continues to Push Market Changes

By KATHY CHEN and SHAI OSTER
March 14, 2006; Page A8

BEIJING – Chinese Premier Wen Jiabao urged China to press ahead with market changes despite the many difficulties ahead, amid growing questions from critics about such a policy's costs.

Speaking at a rare news conference at the close of the national legislature's annual meeting today, Mr. Wen -- who has cultivated an image as a populist leader -- directed his exhortations to Chinese people watching the event, which was broadcast live on national television.

"We've taken the first step in our modernization drive, but the future road is longer and more arduous," he said. "We must consistently and unwaveringly press ahead on the road of reform, ... to retrogress or backpedal offers no way out."

While few are predicting any major rollback of China's market system, problems arising amid the transition from a centrally planned economy -- such as corruption, a growing wealth gap and the loss of state assets -- are sparking criticism from some academics and policy makers. Unrest is growing among farmers and others who have been left behind. Debate over how China should proceed with market changes was fierce among delegates during the 10-day session.

Nearly 3,000 delegates of the traditionally rubber-stamp National People's Congress approved in nearly unanimous votes Mr. Wen's work report setting priorities for the year and the country's five-year economic-development plan up to 2010. Mr. Wen's report set a target for economic expansion of 8% for 2006, less than last year's 9.9% but a figure that economists predict China will easily surpass.

Reflecting top leaders' shifting priorities, both Mr. Wen's report and the plan emphasized policies aimed at achieving more balanced, efficient development following a quarter century of economic expansion that has left a legacy of pollution and a yawning wealth gap.

Mr. Wen told reporters that helping increase farmers' production and livelihoods could help promote domestic demand and consumption, putting economic expansion on more solid ground. China's expansion has been largely driven by investments.

Mr. Wen fired a warning at Taiwan President Chen Shui-bian, who suspended operations of a unification agency among other moves seen by Beijing as an effort to seek independence. Mr. Wen described such moves as "extremely dangerous and deceptive"; Beijing views Taiwan as part of the mainland and opposes any efforts by the island to split from China. The Chinese premier held out an olive branch, saying China was willing to hold talks with any parties in Taiwan, including Mr. Chen's Democratic Progressive Party, as long as they abided by the one-China policy.

In an apparent sign of disapproval of rampant corruption, work reports from the Supreme People's Court and the Supreme People's Procuratorate, or prosecutor's office, were approved by lower voting totals than in the past. Traditionally, such voting has been viewed as a protest against the judiciary's failure to crack down on corruption.

Discontent about this and other issues such as the forced seizure of farmland without adequate compensation have quickly escalated into large-scale, violent protests. A top Chinese police official said the number of public protests nationwide soared to 74,000 in 2004 from 10,000 in 1994. The growing income gap between the wealthy coastal areas and less-developed inland, where the majority of China's 800 million farmers live, is stoking discontent.

Among measures approved today by the legislature to narrow the income gap were free education for every rural child and the abolition of a 2,600-year-old agricultural tax. The government has pledged to invest more in rural health care.