President Hu Jintao (second from right) joins National People's Congress deputies from the Tibet Autonomous Region in a panel discussion of Premier Wen Jiabao's work report, delivered to 2,890 lawmakers at the opening of the annual meeting of China's legislature in Beijing yesterday.- Xinhua

Premier Wen Jiabao announced a series of measures to promote social harmony by raising income levels, and he outlined a plan to hold economic growth to eight percent this year as China's legislature began its annual session yesterday.

"Social harmony and stability as well as a better life are the aspirations of all people and an important goal for the government," Wen said in his annual work report, delivered to 2,890 lawmakers at the National People's Congress in Beijing.

In his report, Wen extolled the government's great achievements in 2006 but also admitted that "a number of serious problems affecting the people's interests have not been properly addressed" and that "life remains difficult for many low-income people."

China's rapid economic growth has brought nearly 200 million people out of poverty over the past two decades, but the unbalanced development has also left millions of the poor struggling with rising education, medical and housing costs.

Wen promised that the government will invest heavily this year to address problems concerning people's daily lives, especially in the rural areas.

"This year, we will completely stop collecting tuition and miscellaneous fees from all rural students receiving compulsory education," Wen said, adding that the policy will ease the financial burden of 150 million rural families with schoolchildren.

Wen also announced a plan to set up "a nationwide basic minimum cost of living allowance system" for rural residents, who usually have no access to social security coverage.

Other major spending plans include a 201.9 billion yuan (US$26 billion) investment from the central government to improve the social security network and a 10.1 billion yuan subsidy from the central budget to expand medical care coverage in rural areas.

In response to mounting public complaints about a widening wealth gap, Wen promised that the government will take measures to increase people's earnings, especially those in the low and middle-income range.

Urban residents' average annual income reached 11,759 yuan in 2006, while incomes for rural residents were only 3,587 yuan.

In Wen's report, the Chinese government vows to further reduce urban unemployment to below 4.6 percent by creating at least nine million new jobs, while the overall increase of consumer prices shall be checked under three percent.

Outlining the government's major tasks in 2007, Wen said the government expects to hold economic growth to about eight percent while reducing energy consumption and improving environmental protection.

Last year, China failed to reach its pollution control targets, and experts attributed the failure to a faster-than-expected 10.7 percent growth in gross domestic product and higher energy use.

"We need to greatly improve the quality and efficiency of economic growth," Wen said.

Monetary policy will remain "prudent," said the premier, noting that the credit structure will be adjusted to guide banks to increase support for agriculture, rural areas, farmers, small and medium-sized enterprises, energy conservation, environmental protection and independent innovation.

The deficit in the central government budget was set at 245 billion yuan this year, down 50 billion yuan from last year. Around 50 billion yuan worth of long-term development treasury bonds will be issued, down 10 billion yuan from 2006.

Wen also said steady reform of interest rates should be promoted to better reflect market conditions, the mechanism for setting the yuan exchange rate should be improved, and a variety of measures should be adopted to gradually ease the imbalance in international payments.