Economy in Peril, China's Pm Warns

Discontented people without jobs and struggling farmers could threaten China's economic future, the prime minister, Zhu Rongji, said yesterday, at the opening session of the national people's congress, which is about to elect a new leadership.

"We must exert a great deal of effort to resolve the problems of back pay for workers and overburdened farmers," he told the 3,000 delegates in a 90-minute address in the great hall of the people, which was awash with red flags.

Solving rural problems was "a long-term and arduous task".

"We cannot neglect them or relax at any time," he said. "If we do not change these conditions, they will severely dampen farmers' enthusiasm, undermine the foundations of agriculture and threaten the overall health of the national economy."

Increasing farmers' incomes was the top priority, and much more should be done to reduce their tax burden, he said. Farmers faced a glut of food products, sliding prices and slowing income growth.

The warning stood out from his more than usually bland report, hailed by the media as summing up the government's "major achievements".

A reform tested in one province, which eliminated many fees and taxes on farmers, could be expanded, Mr Zhu said. He backed moves to make it easier for country people to go to the cities to seek work.

Although the number of congress delegates classified as farmers is down from 23% in the 70s to 8%, Mr Zhu's support for rural China struck a chord.

"If we don't solve the peasants' problems, we're going to be facing real problems," said Zhang Qinghai from Henan province. "If the peasants are not rich, Henan is not rich."

But Mr Zhu was less outspoken than in previous years about the dangers of corruption, and he minimised the extent of industrial unrest.

With the previous congress having ended its five-year term, Mr Zhu and other leaders who step down with him have a vested interest in claiming to have done well.

The parliament will approve the last stage of a process transferring the presidency from Jiang Zemin, 76, to Hu Jintao, 60, who, as the head of a younger generation of leaders, replaced Mr Jiang as party chief in November.

The parliament chairman, Li Peng, also retires, to be replaced by Wu Bangguo, 61. Mr Zhu's expected successor is the vice-premier Wen Jiabao, 60.

The delegates were handed a list of officially approved documents which describe the "brilliant results" of the past 13 years - since the 1989 Beijing massacre.

More than 933m of China's 1.3 billion people were classified as rural dwellers in the statistics distributed yesterday. Although many now live and work in the rapidly expanding towns, at least 500m still depend on the land.

Their incomes have risen by 3.8% annually since 1997, a modest increase compared with the 8.6% of townspeople, whose incomes are on average three times as high.

The figures conceal huge disparities between the rich and the poor rural areas. In many cases the income from growing food has fallen; millions of families survive only because they send someone to work in the big cities.

Mr Zhu referred only obliquely to the widespread strikes and demonstrations by paid-off workers, saying: "Some unexpected incidents involving mass participation were handled appropriately."

But he admitted that many of them were still not getting the welfare benefits to which they were entitled, and that they should be paid "on time and in full".

It was important to ensure that "all the eligible urban poor will receive the benefits to which they are entitled", he said.

Mr Zhu stressed that the government would continue to maintain a high rate of growth, after five years in which the GDP has increased by more than 7% a year.

High investment in infrastructure projects to create jobs and stimulate consumption would also continue.

He made only a passing reference to the industrial accidents which have shocked China during his tenure.

More than 50 miners lost their lives last month in two explosions, the latest in a spate of disasters.

The picture he presented was of a country rapidly advancing at home and abroad, in which the great majority already enjoyed "a well-off standard of living".

"The great motherland", he concluded, to prolonged applause, "is setting out on a more glorious Long March.

"No difficulties or obstacles can stop the triumphant advance of the Chinese people."

Party people

The National People's Congress is China's parliament. It is elected for a five-year term

First set up in 1954, this is the 10th NPC

Members belong to 34 delegations, representing provinces, the big cities, Hong Kong and the armed forces. They are selected by the Communist party

The NPC hears and approves reports from the prime minister and other senior ministers. No report has ever been rejected

Government policy is discussed in separate delegation meetings, almost always in private

The NPC elects the state president, vice-president, chairman of military commission and its own chairman. It also approves the PM and his cabinet

It is an open secret that Hu Jintao will succeed Jiang Zemin as president, and Wen Jiabao will take over from Zhu Rongji as the new PM

Mr Jiang is expected to continue as military chairman, and Wu Bangguo will be the new NPC chairman

Out of 2,983 delegates to the 10th NPC, 2,100 are serving for the first time

NPC members enjoy special privileges such as travel and hotels