China leader warns of inequality

Prime Minister Wen Jiabao of China entered his final days in power today with a warning that the nation remained troubled by divisions between the urban rich and rural poor and unbalanced economic growth.

He vowed that the government would continue building up its military, which received a 10.7 per cent increase in spending for 2013.

Mr Wen delivered his sometimes gloomy assessment of the state of Chinese society in his final annual work report to the national legislature, the National People's Congress, which will elect a new prime minister and government leadership at the end of the annual meeting.

Since Mr Wen and President Hu Jintao took office, they have repeatedly pledged to narrow income inequality and spread China's expanding wealth more evenly.

But in his penultimate state of the nation report, Mr Wen gave his administration mixed marks and detailed some of the problems that will be bequeathed to the new leadership under Xi Jinping, the incoming president, and Li Keqiang, who will succeed Mr Wen as prime minister.

Mr Xi already succeeded Mr Hu as Communist Party secretary in November.

"We are keenly aware that we still face many difficulties and problems in our economic and social development," Mr Wen said in the report, which was distributed to reporters before he read it to nearly 3,000 congress delegates in the Great Hall of the People.

He singled out as particular ills "unbalanced" economic development, income disparity, and inequalities dividing urban and rural residents. "Social strains are clearly increasing," he said.

But even as the Communist Party has said it wants to focus on curing domestic ills, it has backed rapid military modernization, and a budget report released at the same time as Mr Wen's speech showed the expansion will continue.

China's official defense budget this year will grow to 720 billion renminbi, or about $116 billion, a rise of 10.7 per cent over last year, according to a Ministry of Finance report. By comparison, the nation's defense budget was just $20 billion in 2002.

"We should accelerate modernization of national defense and the armed forces so as to strengthen China's defense and military capabilities," Mr Wen said. "We should resolutely uphold China's sovereignty, security and territorial integrity, and ensure its peaceful development."

The government also announced major increases in spending on social welfare and health care.

The prime minister's report, broadcast live on national television, is a highlight of two weeks of tightly controlled political theatre that rarely strays from a stolid procession of speeches, news conferences and invariably pro-government votes - all of it intended to give a united and untroubled public face to a reliably secretive party leadership.

Last year, however, the script was challenged by a divisive scandal surrounding Bo Xilai, the combative party chief of Chongqing, whose fall unleashed months of revelations about murder, corruption and political infighting.

Mr Bo pilloried his foes during a news conference at the congress, was publicly censured by Mr Wen at the end of the meeting and then, a day after the congress ended, was dismissed from his Chongqing post.

Most analysts agree that the proceedings this year will ignore the plight of Bo, who is being detained awaiting prosecution on charges of corruption, abuse of power and obstruction of justice.

This year, the party's new top leaders, Mr Xi and Mr Li, have paved the way for the 13-day session with vows to end flagrant privileges and self-enrichment by officials and their families.

They have also vowed to create a more efficient government, and reduce the acrid smog that has enveloped Beijing and other northern Chinese cities for weeks this winter.

This congress will be the last for Mr Hu and Mr Wen, who both retire at its end after a decade in their jobs.

On the final day of the congress, delegates will vote in a new government leadership dominated by Mr Xi as president and Mr Li as prime minister. The transfer of party leadership posts took place in November.

New York Times