China targets 8 percent economic growth for 2005

Associated Press, Beijing

China is aiming for 8 percent economic growth in 2005 and will promote robust export increases while maintaining controversial currency controls, Premier Wen Jiabao said on Saturday.

The growth target, announced by Wen in a speech to China's legislature, marks a renewed effort to slow economic expansion from 2004's torrid 9.5 percent -- China's fastest growth in eight years.

"The economy should grow rapidly, but not be allowed to overheat," Wen said in the nationally televised speech to members of the National People's Congress in the Great Hall of the People.

Foreign trade is expected to grow by 15 percent this year, the official Xinhua News Agency reported, citing a draft plan for economic and social development to be delivered at the congress.

It said imports and exports would be about equal, giving China a trade surplus close to zero.

Wen said the exchange rate of China's currency, the yuan, would remain "basically stable," apparently ruling out sweeping moves to meet demands by the United States and other trading partners to raise its value and ease exchange controls.

China's trading partners complain that Beijing's policy of fixing the yuan at a rate of 8.28 to the U.S. dollar gives Chinese exporters an unfair price advantage.

Chinese leaders say they plan eventually to let the yuan trade freely on world markets. But they say that doing so now would damage China's weak banks and cause economic turmoil.

Wen said Beijing will "push forward the reform of the exchange rate determination mechanism step by step" -- echoing comments by other officials who have refused to set a timetable for reform.

China's economy ballooned in 2004 despite efforts to avert inflation by putting many projects on hold and reining in lending.

The government says the economy should grow at an annual rate of 8 percent over the next five years, driven by abundant labor and its enormous domestic market.

Despite high growth, China still faces problems from unemployment, gaps in income between city and countryside, social welfare burdens and a large population of migrant laborers.

Wen said China would create 9 million new jobs while holding urban unemployment to 4.6 percent, a major concern in cities where millions have lost jobs due to the closure of decrepit state industries.

He said consumer inflation would be held to 4 percent. Urban unemployment stood at 4.2 percent at the end of last year, with inflation running at 3.9 percent.

"This is a period of important strategic opportunities for China," Wen said.