State media says China expects economy to grow 8 percent this year

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Xinhua: China expects 8 percent growth this year

BEIJING — China said Friday it will target economic growth of 8 percent this year, avoiding any slip after it rebounded last year from the world economic crisis.

The Xinhua News Agency said Premier Wen Jiabao will announce the figure during a speech Friday that is China’s equivalent of the State of the Union.

The growth target keeps China on a course to replace Japan sometime later this year as the world’s second-largest economy after the U.S.

Beijing has been moving to re-gear its economy toward domestic consumption and away from the binge on easy credit and state investment that warded off the global recession.

In recent years China has always set a growth target of 8 percent and usually exceeded it. The Chinese economy bounced back from the economic crisis with growth accelerating to 10.7 percent in the final quarter of 2009, according to government figures, and driving the full-year expansion to 8.7 percent. But concerns of a property bubble also picked up, driven by a jump in food costs amid a torrent of stimulus spending and bank lending.

Xinhua said Wen would talk about those worries, and the “government will resolutely curb the precipitous rise of housing prices in some cities and satisfy people’s basic need for housing.”

The country’s rapid economic growth in recent years has exposed a yawning wealth gap, and Wen was to say the government will work to make sure the poorer parts of society also benefit from China’s transformation.

Wen’s speech opens the annual meeting of the National People’s Congress, and comes a day after the government announced it will propose its smallest increase in defense spending in two decades — a symbolic down payment on efforts to lift public spending, boost consumers and even out a persisting rich-poor gap that’s stoking social tensions.

A spokesman for the national legislature said Thursday that the Cabinet plans to raise spending on its increasingly formidable military 7.5 percent to $77.9 billion (532.1 billion yuan). Though experts say China’s true military budget is higher, the rate of increase is the lowest since the 1980s, and analysts said that was directly tied to the new fiscal priorities.

“China has not fully recovered from the sluggish foreign trade and employment, and to some extent the government has financial difficulties,” said Ni Lexiong of Shanghai University of Politics and Law. “The situation requires that the defense budget not have a big rise.”

Wen’s outline of government policies opens the annual session of the national legislature, the most public political event that the ruling Communist Party holds and that this year comes at a time of triumphalism and anxiety for the leadership and ordinary Chinese.

With China having escaped the worst of the global downturn by ordering a flood of $1.4 trillion in bank lending and government stimulus, Chinese leaders see their model of heavy state intervention as having outperformed the capitalist West. China is now the world’s largest auto market and its Internet users outnumber the U.S. population.