Reining in prices is China's 'top priority': Wen

BEIJING: Reining in prices is China's "top priority" in 2011, as it strives for more balanced eight percent economic growth, Premier Wen Jiabao said in a speech Saturday to open the annual session of parliament.

Wen laid out China's economic and fiscal priorities for both the coming year and the next five years in his "state of the nation" speech, cautioning that the country's situation would be complicated due to a slow global recovery.

The premier also said Beijing would work to curb an influx of cross-border capital flows that have fanned inflation and increased the likelihood of asset bubbles, especially in the red-hot property sector.

"Recent prices have risen fairly quickly and inflation expectations have increased," Wen told the nearly 3,000 delegates to the National People's Congress, which convened at the Great Hall of the People in central Beijing.

"This problem concerns the people's well-being, bears on overall interests and affects social stability. We must therefore make it our top priority in macroeconomic control to keep overall price levels stable."

Wen said the government was aiming for eight percent growth in 2011 a figure seen as key to staving off social unrest and for slower-paced seven percent growth over the 2011-2015 period, but warned the task was difficult.

"This year, our country still faces an extremely complex situation for development.

The world economy will continue to recover slowly, but the foundation for recovery is not solid," the premier said.

"Economic growth in developed economies is weak, their unemployment rates are and will remain high, and some countries are still under the threat of their sovereign debt crises."

China's economy grew 10.3 percent in 2010, marking the fastest annual pace since the onset of the global crisis.

Unlike other countries struggling to spur growth, Beijing has been trying to slow its economy amid fears of overheating and stem a flood of liquidity that is fanning inflation and driving up property prices.

Soaring prices of food, housing and other essentials have become the top public concern in China and Wen pledged new efforts to contain the problem in his address to the rubber-stamp parliament, which will meet for 10 days.

"We will resolutely regulate the housing market," the premier said, vowing to "firmly curb the excessively rapid rise of housing prices in some cities" and crack down on property speculators.

China aims to "generally stabilise housing prices and meet the reasonable demands of residents for housing," he said, adding that 103 billion yuan ($15.7 billion) had been earmarked in the 2011 budget for low-income home subsidies.

China announced last month that January inflation remained stubbornly high at 4.9 percent despite a series of measures taken to dampen price rises, including three interest rate hikes in the past four months.

The consumer price index, the main inflation gauge, had hit a more than two-year high of 5.1 in November.

The urgency of addressing key social issues has been underlined in the past two weeks by mysterious Internet calls for weekly Sunday "strolling" rallies in major cities, which have largely fizzled under a smothering security presence.

Wen noted the "large income gap" dividing rich and poor, as well as the need to increase minimum wages to help boost domestic consumption. He said the government planned to raise the income tax threshold to aid wage-earners.

Shanghai's municipal government said earlier this week it would raise the minimum wage 14 percent, taking the figure in the financial hub to 1,280 yuan ($194) per month from 1,120 yuan.