At the same time, Wen said that China needed to focus on shifting away from a growth model built on exports and government investment to one fueled instead by Chinese consumers — a shift that economists have said will take time — and could be wrenching for the world’s second-largest economy.
“Expanding domestic demand, particularly consumer demand, which is essential to ensuring China's long-term, steady and robust economic development, is the focus of our economic work this year,” Wen said.
Some of the measures aimed at boosting consumer demand include strengthening the country’s social safety net by expanding pensions, health care and unemployment insurance; increasing the income of farmers; expanding consumer credit; and implementing a system of paid vacation time.
“China's economy is encountering new problems,” the prime minister said. “There is downward pressure on economic growth. Prices remain high. Regulation of the real-estate market is at a crucial stage.”
And acknowledging the difficulties China will face as the United States and, particularly, Europe still struggle to right their economies, Wen said, “The global financial crisis is still evolving. Some countries will find it hard to resolve the sovereign debt crisis anytime soon.
“The unemployment rate remains high in major developed economies, and they lack impetus for growth,” Wen said. “The exchange rate of some currencies and the prices of many commodities are experiencing sharp fluctuations.”
Wen, 69, was delivering the government’s “work report,” a speech akin to the U.S. State of the Union address, to the National People’s Congress, a largely rubber-stamp body that essentially gives pro forma approval to all legislation put forward by the leadership. His speech, delivered in the Great Hall of the People facing Tiananmen Square, was broadcast live on government-run television.
Wen conceded some “inefficiencies and shortcomings” in the government’s work over the past year, and he cited the problem of illegal expropriation of rural land, which has sparked unrest in the countryside and late last year led villagers in the fishing hamlet of Wukan, in Guangdong province, to evict local Communist Party officials in a dramatic act of rebellion that turned violent.
The Wukan incident was defused when provincial leaders, under Guangdong party chief Wang Yang, intervened and negotiated a set of concessions rare for China’s ruling Communist stalwarts — releasing detained villagers from police custody, promising to return the land and ordering new elections in the village.