China surges domestic spending amid slow economic growth

China’s premier outlined plans to fuel domestic consumption, including subsidies for social programmes and higher spending for businesses, as the government grapples with a slowing economy and rising public demands for greater fairness.In a speech that is Chinas equivalent of the state-of-the-nation, Premier Wen Jiabao offered increased assistance and programmes to benefit a wide array of groups: higher minimum wages, heftier subsidies for education and farmers, more loans for strapped private businesses and added help for troubled exporters. He called for more paid vacations for workers and expanded consumer credit.The aim, Wen said, is to help China weather a shift as it looks for new engines of domestic growth while its main markets in Europe and the United States struggle and an investment binge at home flags while demand for jobs persists.Internationally, the road to global economic recovery will be tortuous, Wen said at the opening of the national legislatures annual session in the Great Hall of the People.Domestically, it has become more urgent but also more difficult to solve institutional and structural problems and alleviate the problem of unbalanced, uncoordinated and unsustainable development.In a sign of the governments downshift, Wen set the economys growth target at 7.5 percent, lower than the 8 percent it has stood at for years. Though forecasts project higher than 8 percent growth for the year, the lower target underscores Beijings emphasis on better, not faster growth.While the National Peoples Congress is a largely pro forma affair its nearly 3,000 delegates are mostly members of the ruling Communist Party this years 10-day session is likely to see more intense back-channel politicking as the leadership negotiates a delicate political transition. President Hu Jintao, Wen and most others in the senior leadership are due to begin stepping aside for a younger generation of leaders.The programme Wen outlined bore all the hallmarks of his and Hus nearly decade-old administration. Their leadership has built out a social safety net, trying to redistribute growth away from the prosperous coastal cities toward rural and inland areas and to raise working-class and rural incomes.Their slow, gradualist approach to policymaking, however, has drawn criticism in recent months as too piecemeal and risk-averse to take on entrenched interests, particularly the powerful state enterprises that dominate the economy and their backers in the bureaucracy. Such a restructuring is needed, the World Bank and outside economists say, if China wants to rise from a middle-income to rich country.Political reforms that will cause fundamental changes to the power and interests of different social groups are not going to happen because the government will not give way to allow public participation, said Yang Fengchun, a professor of government administration at Peking University.At home, many analysts and political critics have gone further, calling on the leadership to begin reforms to a more open, democratic political system and stop stifling dissent. Squelching protests by farmers dispossessed of their land, migrant workers angry over unfair treatment and even middle-class homeowners upset over pollution and falling home prices consume ever greater government resources.