China will gear down its high-octane economy to a level lower than the stunning 9.5 percent registered in 2004, as Premier Wen Jiabao announced Saturday that the government targets an "appropriate" 8-percent GDP (gross domestic product) growth rate this year.

It would be a "key job" for the government to keep the world's fastest-growing economy developing on a "fast and stable" track, Wen stressed in his government work report delivered at the opening of the annual session of the National People's Congress (NPC), China's parliament.

"Neither a big up nor down in the economy is conducive to economic growth, reform and opening-up drive and social stability."

The premier reiterated governments at all levels should engineer economic growth and social progress with a scientific outlook on development, shifting the government's development philosophy from growth-centered to people-centered.

"The interests of the broad masses should be put in the first place," Wen Jiabao said through nationwide TV live broadcasting.

Twenty-six out of China's 31 provinces, municipalities and autonomous regions have so far posted the abolishment of agro-tax, a policy Wen set forth at last NPC session that benefits farmers at the cost of the central government's fiscal revenues.

The NPC deputies burst into applause when the premier announced agro-tax will be exempted across the country by 2006, two years earlier than the original timetable.

Farmers' earnings now lag behind city residents not only in amount, but in growth rate -- being 7.7 percent for city dwellers and 6.8 percent for rural people last year.

"So what for a high GDP if the ordinary people's wallets are 'shrunken' and the environment is poor?" Liang Tiecheng, a deputy from the economically less-advantaged Inner Mongolia, told Xinhua on the sidelines of the convention.

For urban residents, Wen vowed to create 9 million new jobs this year after the country saw its registered urban unemployment rate fall by an annualized one tenth of a percentage point to 4.2 percent by the end of last year, a minor but first decrease in nearly a decade.

To avert roller-coaster

China began 2004 amid serious worries that the economy was dangerously overheated, with easy credit fueling production of factory-gate goods and soaring investment in government infrastructure products.

Inflation rose at an alarming rate, hitting a peak of 5.3 percent last July and August.

Fixed asset investment, an indication of how much the government is spending on major infrastructure projects, hit ten-year highs in the January and March period, growing by 43 percent.

This prompted the central government to order energy-saving measures and tell local officials to cut spending on pointless prestige projects and unneeded factories, roads and other facilities.

A raft of market-based macro-control measures including the first bank interest rate hike in nearly a decade were taken before red-hot investment growth was effectively curbed and the consumer price index, a key barometer of inflation, slowed sharply to 1.9 percent last January from an average 3.9 percent in 2004.

Macro-control should be "consolidated and upgraded" as the outstanding problems in economic activities have yet to be "fundamentally solved", though they have been "somewhat alleviated", Wen told the 2,904 deputies present at the Great Hall of the People, the seat of China's NPC Standing Committee.

The premier reaffirmed the fiscal policy would swing from "proactive" to "prudent", resulting in a 19.8 billion yuan (2.4 billion dollars) reduction in fiscal deficit in 2005, dropping to 300 billion yuan (36.2 billion dollars).

Long-term treasury bonds to be issued will be 30 billion yuan (3.6 billion dollars) less than last year, continuing a dropping streak to stand at just 80 billion yuan (9.7 billion dollars) in 2005.

The country began issuing such bonds in 1998 in a bid to expand investment to stimulate the then slowing economic growth. But Wen said that the current investment scale was already big and private funds had started to flourish.

The parallel monetary policy would remain "prudent", the premier said. The word "prudent" is interpreted by many economists as being more adaptable to economic environment -- neither solely expansive nor contractive.

According to central bank sources earlier, new loans from banks in China should not exceed a combined 2.5 trillion yuan (301.9 billion dollars) this year.

Paired with strict approval for land use by enterprises, credit curbs would continue to a key measure to cool down the economy. Wen Jiabao noted on Saturday.

Noting that China would keep the yuan "basically stable" and maintain "basic balance" in international payments, Wen indicated that in 2005 China would not revalue the yuan, which is tightly regulated and trades only within a narrow range of around 8.28 yuan per US dollar.

Regulators, however, have been gradually lifting restrictions on foreign exchange dealings by individuals and companies on the back of booming economic and trade activities in the country.

Stepping out of the Great Hall, Xiao Zhuoji, a prestigious economist with Beijing University, said to the reporters, "The target for slower but still fast growth can definitely be achieved." He predicts that an even higher 8.5-9 percent GDP increase could be materialized this year.

Xiao noted brisk consumer spending would be a key engine to boost the economy after total retail sales hit a record high of more than 5 trillion yuan (604 billion dollars) last year. Increasingly affluent Chinese are spending more than ever on tourism, food, clothing and entertainment.

(Xinhua News Agency March 6, 2005)