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China’s Wen Jiabao Makes His Exit

Delivering his last state-of-the-union style address as prime minister, he urged the country to focus on improving the quality of Chinese people's lives.

BEIJING — Delivering his last state of the union-style address as prime minister on Tuesday, Wen Jiabao touted China’s rapid economic growth over the past decade but urged the country’s new leadership team to shift its focus to improving the quality of Chinese people’s lives.

“We must make ensuring and improving people’s well-being the starting point and goal of all the government’s work, give a higher priority to it, and strive to strengthen social development,” said Wen, addressing the opening of the National People’s Congress.

Wen urged the new central leadership team to now turn its focus to quality-of-living measures like addressing China’s widening income disparity, tackling government corruption and addressing critical areas of environmental protection.

At the same time, he said further fostering China’s domestic consumer demand is crucial to the country’s long-term, solid growth.

“We should unswervingly take expanding domestic demand as our long-term strategy for economic development,” said Wen.

The opening of the 13-day congress marks the end of Wen’s term, and that of President Hu Jintao and their central committee. President Xi Jinping and Premier Li Keqiang, as the final step of China’s once-in-a-decade power transition, will succeed the pair. Little is yet known about how Xi’s central government will handle economic affairs, so Wen’s speech was widely watched for clues.

The annual work report opening the mostly ceremonial congress meeting does not represent a personal speech by Wen, but rather a summary of achievements and goals approved by the top leadership in advance. As a result, it provides some insight into what might lie ahead for China under the new regime.

The central government expects 7.5 percent overall economic growth for this year, a slowed pace, Wen said. That was the same projection he gave last year, when the Chinese economy grew by 7.8 percent, a marked slowdown from the double-digit growth of the first decade of the century. The government also targeted a 3.5 percent inflation rate, lower than last year’s goal, but higher than the actual rate of 2.8 percent for 2012.

Although economic growth and development will continue to be the top priorities for years to come, Wen said critical issues need attention to continue China’s quick pace of economic expansion without major disruption. He called for advances in health care and education, and stressed the importance of creating and maintaining employment across the country. Still, there were few specific policy measures outlined.

Wen called China’s economic expansion over the past five years “truly extraordinary,” noting that as China continued to defy established predictions, the country’s economy rose to become the world’s second largest. Per-capita disposable income increased by 8.8 percent for urban residents over the five-year period, while the overall volume of gross domestic product nearly doubled over the term. This growth occurred in spite of the economic difficulties across the world and the resulting pressure on China’s manufacturing-dependent economy.

“In the past five years, we averted the grievous consequences of the global financial crisis, whose abruptness, rapid spread and profound impact were rarely seen in the past century,” Wen said, before detailing the spending and development plans the Chinese government used to power the economy forward during the slump.

Wen spoke of monetary police and stimulus measures, but did not specifically mention the highly contentious de facto currency peg that also helped China weather the global meltdown, but left its trade partners like the United States to complain it was an unfair competitive advantage. The value of China’s currency remains a delicate trade issue.

Today, Wen said, “The Chinese economy is stable and full of vitality.”

Over the five-year term, Wen said, China rapidly expanded domestic consumer demand and consumption, while maintaining the world’s largest manufacturing industry. Car ownership rose 15.5 percent in the past five years, property ownership skyrocketed and travel and entertainment spending have increased substantially.

“In the last five years, faced with severe challenges posed by a complex and volatile international economic environment and a sluggish global economy, the central leadership…made resolute decisions that steered China’s modernization drive clear of major pitfalls,” he said.

Among the possible problem spots, Wen discussed trade surpluses and a continued heavy dependence on manufacturing. He said China must work on innovating and developing a new kind of economy to continue to move forward.

“We should raise the quality and returns of foreign trade rather than just increase its volume, and raise its overall competitive advantages instead of relying only on cost and price advantages,” Wen said. “We should make China’s exports more competitive in terms of technology, brand, quality and service.”