China will aim for slower growth of 8 percent, keep a tight grip on economic controls and push ahead with reforms to its fixed currency in 2005, Premier Wen Jiabao said in a report seen by Reuters on Friday.
The government would maintain "stable and healthy" monetary and fiscal policies, Wen said in excerpts of an annual report to be delivered to parliament on Saturday, setting the agenda for guiding the world's seventh largest economy in the coming year.
"In the light of current economic conditions, macroeconomic controls cannot be relaxed," said Wen, who is trying to shepherd the economy through challenges from overhauling ailing banks to finding jobs for millions of workers laid off from state firms.
Reflecting his role as point man on the economy, Wen said consumer price inflation would be about 4 percent, similar to last year's rate of 3.9 percent.
The 8 percent economic growth forecast contrasts with the usual 7 percent forecast issued in previous years and which is routinely exceeded. China's gross domestic product was 9.5 percent higher in 2004 than in the year before.
"The 7 percent is conservative and has been exceeded every year. The 8 percent target is in line with reality and is more appropriate," said Zhu Jianfang, an economist at China Securities in Beijing.
Wen also pledged to reform the yuan's fixed exchange rate, a goal long sought by countries such as the United States, which argue that the current rate of about 8.28 yuan, or renminbi, to the dollar is too low and gives Chinese exports an unfair trade advantage.
"We will steadily push ahead with making interest rates more market-oriented, and with reforming the exchange rate formation mechanism of the renminbi," Wen said.
That wording was a slight departure from previous government statements on the yuan, which have said
Beijing will gradually "perfect" the exchange rate mechanism.
Wen also mentioned the issue of reform before reiterating the government's long-standing mantra that it would keep the exchange rate "basically stable at a reasonable and balanced level."
He gave no indication what form any changes would take.
Beijing has said it will implement reforms gradually and only after tackling other problems like the banking system, which Wen also highlighted in his speech.
Wen did not name any banks that may receive government funds to help them recapitalize their balance sheets and write down bad loans, but China is widely expected to inject up to $50 billion into Industrial and Commercial Bank of China soon.
Beijing poured a combined $45 billion into Bank of China and China Construction Bank in late 2003 to help them clean up their balance sheets and prepare for stock listings.
Wen, who has voiced alarm over the yawning gap between urban and rural incomes, also pledged to phase out national farm taxes across the country in 2006, two years ahead of schedule, as well as continue subsidies to grain farmers.
"Solving the problems of agriculture, rural area and farmers remains the top priority of all our work," Wen says in his report, outlining the plan to scrap the taxes.
Wen also urged China to step up power conservation to relieve a energy shortage that has become a bottleneck in the economy.
Wen said China was aiming for a registered urban unemployment rate of 4.6 percent this year, up from 4.2 percent at the end of last year. The government has admitted that the official jobless rate may count only half the number of people without work.
