China Power

Wen Notes Inflation, Corruption

China’s Premier Wen Jiabao pledges in his annual parliamentary address to tackle corruption and inflation.

Premier Wen Jiabao’s annual address to China’s parliament has probably come at as good a time as any for the Chinese Communist Party.

With a careful, perhaps slightly nervous, eye on the ongoing unrest in the Arab world, China’s leadership will undoubtedly be aware of the need to reassure the public that it is on top of the challenges the country faces. The Jasmine rallies called for in Beijing and other cities have so far been small (although as I said earlier this week, tomorrow will be particularly crucial as a guide to whether this effort has run out of steam). But officials will know that as much as they’d like – and have tried – to stifle awareness of what’s been unfolding in Egypt and elsewhere, the non-official take eventually filters down.

The Chinese equivalent of the US State of the Union, in which the premier discusses the various challenges for the next 12 months, has therefore come at an opportune time, giving Wen the chance to explain how his government will address Chinese concerns.

Outlining plans for the next five years earlier today, Wen stated that for 2011, the main focus would be on containing average inflation to 4 percent, at a time when the rate has been running close to a two-year high of more than 5 percent.
Wen has frequently spoken of his desire to create a fairer society, yet inequality has grown since he took office in 2003. With this in mind, and with house prices soaring to the point that many are being priced out of the housing market altogether, Wen pledged increased spending on public housing, as well as on health care and education – all no doubt aimed at quelling dissatisfaction that could be aimed at an elite that in many cases appears to be doing perfectly well for itself. 
Indeed, tied to this effort to head off any perception of complacency among the leadership was Wen’s pledge to tackle corruption. ‘We have not yet fundamentally solved a number of issues that the masses felt strongly about,’ he said, noting ‘significant problems concerning food safety and rampant corruption in some areas.’
Worries over corruption loom large in the minds of many Chinese, as noted in a Legatum Institute survey over in our China special – more than three-quarters of Chinese cited corruption as a concern (although perhaps more reassuringly for the CCP, the government still got the nod of approval from 72 percent of respondents).
I’ll be following up on Wen’s speech tomorrow with Alistair Thornton, China analyst with IHS Global Insight, who will be giving his take on some of the economic figures mentioned.