Chinese premier promises economic growth

BEIJING (CNN) -- The National People's Congress -- the marquee event of China's political calendar -- opened Thursday with Premier Wen Jiabao pledging economic growth amid a growing national deficit and the global financial crisis.

But Wen did not announce an increase in the nation's massive stimulus plan that many observers expected.

Wen, who delivered his Cabinet's work report to the parliament's 3,000 delegates, said China would be able to achieve 8% growth in the economy.

"As long as we adopt the right policies and appropriate measures and implement them effectively, we will be able to achieve this target," the report says.

The government deficit currently sits at 750 billion yuan ($109 billion) -- 570 billion yuan ($83 billion) more than last year, according to the report. That deficit is expected to grow.

"The global financial crisis continues to spread and get worse," Wen said.

He said the country needs to boost consumer demand, increase investments, focus on scientific innovation and promote social well-being to offset the economic slump.

"We are truly confident that we will overcome difficulties and challenges," he said.

Wen's address came just over a week after U.S. Secretary of State Hillary Clinton met with him in Beijing to discuss strategic issues, including the economy, regional security and the environment. China has the world's third-largest economy, after the United States and Japan.

Among its proposed allocations, the government plans to spend 146 billion yuan ($21 billion) on its science and technology sector, up 25% from last year; 293 billion yuan ($43 billion) in social security, up 17.6%; and 130 billion yuan ($19 billion) to speed up recovery in areas hit by the massive deadly earthquake that struck Sichuan province in August.

Relations between China and Taiwan are also expected to improve, Wen's report said.

In December, Beijing said the government would provide 130 billion yuan ($19 billion) in financing over the next two to three years to Taiwan-based companies doing business on the mainland. In recent months, regularly scheduled commercial flights, shipping and mail between Taiwan and China resumed for the first time since the 1949 revolution that brought the Communist Party to power on the Chinese mainland.

Taiwan's government separated from China after the communists' victory in the Chinese civil war in 1949. About two million Nationalists Chinese fled to Taiwan and set up a government there. Beijing has always considered the island a part of China and has threatened to go to war should Taiwan declare formal independence.

"The mainland will continue to comprehensively strengthen cross-straits economic cooperation to jointly respond to the global financial crisis," Wen's report stated.

The annual meeting comes as China confronts a global economic crisis that has sapped much of the strength from the nation's once-red hot economy.

While China is one of a handful of global economies that continue to grow, it's doing so at a declining pace. Since 2001, China had seen double-digit percentage growth as consumers worldwide bought Chinese goods.

However exports were hit hard starting in late 2008 because of the international economic crisis. In November, China announced plans to inject 4 trillion yuan ($586 billion) into its economy to offset declines in industrial and export growth.

That economic stimulus plan included the loosening of credit restrictions, tax cuts and massive infrastructure spending.

But Wen announced no increase in the headline price tag of November's pump-priming package to revive the world's third-largest economy, which has been hit by a slump in demand for its exports and a downturn in its property market.

Economists said they still expected Beijing to boost spending if need be.

"Obviously they're looking at a global economy that every day gets worse, so they might have decided to keep the extra spending in their pockets," said Stephen Green, head of China research at Standard Chartered Bank in Shanghai.

Green noted that the first investment projects to be financed under the stimulus plan were only now being rolled out. "So maybe we need to wait until the second quarter and see how it pans out. They have more ammunition if they need it," he said.

Jia Kang, a researcher at the Ministry of Finance, agreed.

"China may have to widen the fiscal deficit further if the economic situation continues to be weak in the second quarter," Jia told reporters.

Delegates to the National People's Congress represent China's central leadership, the military, populations of every province and minority groups such as Tibetans, as well as overseas Chinese.

Landmark social security legislation will be considered that would make health care, unemployment and retirement benefits universal. If implemented, it would mark a major change in the nation's social welfare system.

The congress also will debate a law that would require officials to publicly declare their assets -- part of a long-term campaign by the Communist Party to fight corruption.

Ahead of the meeting, the congress announced a 15% increase in its budget for China's quickly modernizing military.

In the past, the congress has been criticized as a political show, essentially a rubber-stamp parliament. But in recent years discussion and debate have crept in.

"The whole country is fighting the international financial crisis," Li Zhaoxing, a spokesperson for the congress, told CNN Wednesday. "We hope to turn the challenge into an opportunity."

The government has acknowledged that 2009 will be "austere and complicated." It officially says 20 million migrants are unemployed, and analysts think more jobs will be lost.

"They have a lot of work" to do, said Michael Pettis, a professor of finance at Peking University. "China needs to make the transition from a export-oriented economy to a domestic-market economy, and the historical evidence suggest that it is very, very difficult and it takes a long time."

-- CNN's Emily Chang in Beijing contributed to this report. Reuters also contributed to this report.