China’s leaders face major decisions on reform

China’s leaders face major decisions on reform

By William Wan, Updated: Wednesday, March 5, 9:16 AM E-mail the writer

BEIJING — China’s military spending will increase by 12.2 percent this year, officials announced Wednesday at an annual meeting of top government leaders.

The budgeted $131.56 billion in spending comes after a year in which new Chinese President Xi Jinping has consolidated considerable power domestically and adopted an aggressive posture in foreign policy, particularly in territorial conflicts with Japan and Southeast Asian countries.

On Tuesday, before the budget’s release, government spokeswoman Fu Ying rejected equating increased military spending with a more aggressive Chinese military. “China’s national defense power is defensive in nature,” she said.

Last year, China expanded its military by 10.7 percent, making clear its national priorities even in the face of slower economic growth.

Chinese leaders also unveiled their projection for China’s economy to grow 7.5 percent in 2014, unchanged from the previous two years’ targets. The relatively modest projection after decades of runaway growth suggests that Chinese leaders are continuing to focus on growth in gross domestic product but also beginning to prioritize economic sustainability, environmental concerns and social stability.

The new figures came on the first day of China’s National People’s Congress, anannual parliamentary meeting comprising highly choreographed speeches, news conferences and rubber-stamp votes for initiatives laid out by the Communist Party.

It is the first full meeting of China’s lawmakers since Xi outlined a wide-reaching plan for economic and social reforms last year. Experts are closely watching this year’s congress, which lasts until March 13, for clues about how and how far the party plans to carry out those promised reforms — to liberalize financial markets, rein in its powerful state-owned enterprises and tackle pollution, corruption and local government debt — especially in the face of considerable resistance and obstacles.

In November, China’s new leaders announced their most sweeping package of economic, social and legal reforms in decades, including a relaxation of the country’s “one-child” policy and the scrapping of the much-criticized system of labor camps.

The promised reforms suggested a new vision of China’s future as a country still firmly under the grip of the Communist Party but increasingly driven by market forces and willing to sacrifice continued breakneck economic growth for more sustainable growth and environmental concern.

While Xi has asserted himself in varied ways as the unquestioned leader, Wednesday’s reports and speeches were delivered by Premier Li Keqiang, following tradition.

All such reports, however, are “based on the consensus and compromise between the prime minister and the chairman,” said Mao Yushi, a well-known liberal economist in China. “So it is no surprise that you will see a lot of influence of Xi in Li Keqiang’s report.”

In recent months, China’s top government think tanks have debated whether the country’s economic growth target for 2014 should stay at 7.5 percent or drop to 7 percent. Manyurging a lower growth target argued that it is necessary in order to focus on executing much needed reforms.

China’s economic growth in the past year, while strong compared with that of many developed countries, is near its slowest pace since the Asian financial crisis of the 1990s.

After a year-long anti-corruption campaign launched by Xi, government organizers made this year’s gathering more austere. Delegates will eat cheaper buffet meals without any liquor, according to a government spokeswoman, in a nod to leaders’ recent emphasis on frugality and anti-corruption.

The meeting in Beijing comes on the heels of a gruesome attack at a Chinese train station in which knife-wielding assailants killed 29 people and wounded at least 140. Authorities have blamed Saturday’s attack on Uighur separatists from China’s restive Xinjiang region.