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China’s Prime Minister Wen Jiabao promised stable growth, anti-corruption efforts and better welfare provision as he opened an annual session of parliament.

Wen Jiabao, whose work report traditionally begins the session, also called for more balanced development in a lengthy speech on both achievements and plans.

This National People’s Congress will see the final stage of the country’s once-in-a-decade leadership change.

Communist Party chief Xi Jinping will become president, replacing Hu Jintao.

The event will be keenly watched to see who secures other top government posts.

This work report – a 29-page consensus document approved by the leadership – is Wen Jiabao’s last. He is expected to be replaced by Li Keqiang as premier later in the parliament session.

The report set a target of 7.5% for economic growth, unchanged from 2012, with an inflation target of 3.5%, and promised to create more than nine million new urban jobs.

PM Wen Jiabao said boosting domestic consumption was key, calling it a “long-term strategy for economic development”.

Noting that dramatic changes to Chinese society had led to a marked increase in social problems, Wen Jiabao said livelihood issues should be addressed.

“We must make ensuring and improving people’s well-being the starting point and goal of all the government’s work, give entire priority to it, and strive to strengthen social development,” the PM said.

He spoke of improving pension provision for the poor and also focused on the adverse effects of development on the environment, saying: “The state of the ecological environment affects the level of the people’s well-being and also posterity and the future of our nation.”

Corruption – the focus of Xi Jinping’s speech after he was formally appointed to lead the Communist Party in November – was also on the agenda, with Wen Jiabao calling for strengthened “political integrity” and better checks on power.

“We should ensure that the powers of policy making, implementation and oversight both constrain each other and function in concert,” he said.

China's Prime Minister Wen Jiabao promised stable growth, anti-corruption efforts and better welfare provision as he opened an annual session of parliament

China’s Prime Minister Wen Jiabao promised stable growth, anti-corruption efforts and better welfare provision as he opened an annual session of parliament

State media also reported that defence spending would rise by 10.7% to 720.2 billion yuan ($115.7 billion), a slight drop from the rise of 11.2% in 2012.

China’s military spending has seen several years of double-digit growth – and observers say actual expenditure is believed to be far higher. But the figure falls well short of US military spending.

Nonetheless, increases to China’s military budget are keenly watched both by the US and neighboring countries with whom Beijing is currently engaged in a raft of territorial disputes.

In his speech, Wen Jiabao promised to “resolutely uphold China’s sovereignty, security and territorial integrity”, drawing applause from delegates.

Around 3,000 delegates are attending the Congress, including members of the military, monks, ethnic minority representatives and business leaders. The majority are members of China’s Communist Party.

Rather than debate policy, the role of the delegates is to ratify decisions already made by party officials behind closed doors, making the Congress essentially a rubber stamp parliament.

They are expected to approve plans to restructure several government departments as well as to amend some long-standing policies on the military, the virtual monopoly of some state enterprises and on individual freedoms.

While the exact schedule has not yet been made public, towards the end of the two-week-long event, Xi Jinping will formally become the country’s new president.

Since his party promotion in November, Xi Jinping has been feted in Chinese media as a man of the people who shuns the usual trappings of his position, as well as a staunch nationalist.

He has also been quoted speaking firmly of the need to stamp out corruption at all levels, warning of civil unrest if party privilege is not tackled.

Also set for promotion is Li Keqiang who, as the replacement for Wen Jiabao, is expected to give a press conference at the end of the gathering.

Security has been tightened for the NPC, with police and other security personnel patrolling in increased numbers around the Great Hall of the People.

China’s new leaders are set to inherit a far more vocal public than their predecessors faced, with social media now forcing them to address public concerns more than they ever have before.

On the eve of the Congress, the country’s media reflected high public expectations, reporting demands for action on corruption, education, social care, the environment and inequality.

And after Wen Jiabao’s speech, many internet users posting on Weibo, Chinese versions of Twitter, appeared frustrated that the premier failed to present specific solutions to looming challenges.

Some highlighted particular concerns, such as reform of the household registration system, or water and air pollution, while others spoke out on the wealth gap.

“Whatever (economic) increase there has been has only benefitted corrupt officials; ordinary people are still poor,” wrote one internet user on Tencent Weibo.

Wen Jiabao’s report on 2013 policy targets:

  • Chinese economy to grow by 7.5% in 2013, with inflation kept to 3.5%
  • More than 9 million jobs to be created in towns and cities, while urban unemployment to be kept below 4.6%
  • Boost consumer spending to make economy less dependent on exports
  • Implement a “proactive fiscal policy” giving priority to education, healthcare and social security
  • Complete 4.7 million subsidized urban homes and begin construction on another 6.3 million

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China’s economy has grown at its slowest pace in three years as investment slowed and demand fell in key markets such as the US and Europe.

Gross domestic product rose by 7.6% in the second quarter, compared with the same period a year ago. That is down from 8.1% in the previous three months.

In March, Beijing cut its growth target for the whole of 2012 to 7.5%.

China accounts for about a fifth of the world’s total economic output and any slowdown may hamper a global recovery.

At the same time, many of Asia’s biggest and emerging economies are becoming increasingly reliant on China as a trading partner.

“China has been a big factor for the slowdown in Asia this year,” said Tai Hui from Standard Chartered Bank in Singapore.

He added that if China’s growth does not pick up in the second half of the year then “that’s going to mean a very difficult second half for a lot of the manufacturers in this region”.

China's economy has grown at its slowest pace in three years as investment slowed and demand fell in key markets such as the US and Europe

China's economy has grown at its slowest pace in three years as investment slowed and demand fell in key markets such as the US and Europe

However, despite Friday’s slower growth figures many analysts tried to allay fears of a so-called hard landing in China’s economy and its subsequent impact on the rest of the world.

“If you get a drop in the growth rate of 1 percentage point per annum, that’s not a lot in terms of the world gross domestic product,” said Edmund Phelps, a professor of political economy at Columbia University and a Nobel prize winner.

He added that China had a lot of ammunition to counter the slowdown, some of which it has already started using because of the patchy recovery in the US, and the ongoing debt and economic issues in the eurozone.

China’s central bank has cut the amount of money banks must keep in reserve in order to boost lending, and it recently cut the cost of borrowing twice in one month.

Earlier this week, Premier Wen Jiabao said that boosting investment would also be crucial for stabilizing growth, fuelling expectation that more state-driven stimulus measures would be on the way.

“Now that China’s growth is slowing, there are calls for yet another stimulus,” said Edward Chancellor, global Strategist at investment management firm GMO.

But analysts warned that China’s growth problems may not be solved by a simple injection of capital and a new round of government spending. Especially as many of today’s issues can be traced back to the way the country tried to kick start growth after the global financial crisis in 2008-2009.

At the time the central government began pumping huge amounts of money into the economy, mainly on infrastructure and construction spending.

This led to excess capacity, a surge in property prices and an increase in consumer costs and inflation.

Faced with these problems and amid fears that the economy may be overheating, policy makers decided to implement measures to curb lending and slow inflation.

Those steps, along with a drop in demand for Chinese goods from key markets such as Europe and the US, have caused the most recent cycle of slowing growth.

In 2011, China’s economy grew by 9.2%, down from 2010’s figure of 10.4% growth.

But while the longer-term trend is of a slowdown, China also released a number of other figures on Friday and they painted a more nuanced and mixed picture of the economy.

According to the official figures, retail sales increased by 13.7% in June, little changed from May’s 13.8% figure.

At the same time, electricity output, an indicator that many analysts use to calculate current business and consumer activity, was also flat in June at 393 billion kilowatt-hours.

Optimists, however, would have been buoyed by news that new bank loans increased to $144.4 billion in June, up from $124.4 billion in May.

The data will do nothing to stop the economic squabbling over whether China is heading for a hard or soft landing.