Chinese premier promises corruption crackdown

Premier Zhu Rongji warned of "signficant challenges" posed by membership of the WTO

BEIJING, China (CNN) -- Chinese Premier Zhu Rongji has opened the annual meeting of China's parliament promising to stamp out corruption and warning of an "arduous" year ahead as Chinese industry adapts to increased foreign competition.

Speaking to nearly 3,000 delegates attending the National People's Congress (NPC) in Beijing's Great Hall of the People Zhu launched a stinging attack on corrupt officials he said were wasting state money while failing to pay wages on time.

"Deception, extravagance and waste are serious problems," he said.

Addressing an issue which polls have shown to be consistently the top public concern he said some officials repeatedly used public funds for "wining and dining, extravagant entertainment and private travel abroad."

"This misconduct invariably consumes large sums of money, so we must resolutely stop this tendency," he told assembled delegates.

EXTRA INFORMATION IN-DEPTH: China's National People's Congress    AUDIO CNN's Jaime FlorCruz reports on Zhu's opening speech 1.87 MB / 2 min 58 sec WAV sound

The premier's opening speech is the traditional launch pad for the 10-day meeting of the NPC, laying out the government's broad economic plan for the future, reporting on the government's achievements and promising improvements to the lives of ordinary Chinese.

WTO challenge

Aside from the challenge of corruption, much of his wide-ranging address focused on the problems posed in China's first full year as a member of the World Trade Organization.

Zhu said membership of the WTO and the opening up of China's markets to cheaper imports would be a significant challenge for "less competitive industries and enterprises."

However, he said one of the government's priorities would be ensuring that the jobs of Chinese workers and farmers would not be hurt by the influx of overseas goods.

The NPC meeting is regarded as China's parliament, but delegates have little actual power

China's leaders have acknowledged that in the short term millions of Chinese are likely to suffer at first from the impact of changes brought about by membership of the WTO.

However, in the longer term they argue the move will create jobs, boost investment and force state companies resisting reform to shape up or face bankruptcy.

In the coming year Zhu said the key to China's continued growth would be boosting domestic demand by raising the incomes of millions of rural and urban poor.

The most pressing task he said was to ensure that pensions and welfare payments to former workers at state-owned enterprises (SOEs) were paid on time and in full.

China's pensioners and massed ranks of unemployed from downsized SOEs have staged increasingly frequent protests over what they say is inadequate state support.

Zhu said a large chunk of additional state spending in 2002 would be used to beef up the social security system, including unemployment and medical benefits.

Farming under pressure

Tight security surrounds the congress venue in the heart of Beijing

He also devoted a sizeable part of his speech to the challenges facing China's 800 million farmers whose income has lagged far behind earning levels of urban residents.

Zhu pledged that financial burdens on farmers, including taxes and other levies, would be lowered while electricity and other costs would also be reduced.

On a broader level he said the "success or failure of China's modernization" would rest on regulating its often-chaotic economy, mixing communist central planning and market forces.

Such increased oversight he said was essential to ensure China's rapidly changing economy was ready to face the challenges of global competition.

Zhu said the government would ensure a continued growth rate of around 7 percent during 2002.

Much of this he said would rest on continued heavy spending on public infrastructure construction programs financed by more than $18 billion of long-term treasury bonds.

That would make 2002 the fifth year in a row that the central government has undertaken massive borrowing to stimulate spending, but Zhu said despite this China's national debt was "still within safe limits."

The Chinese premier said a continued growth rate of 7 percent was essential to ensure employment, raise standards of living, preserve social stability, and facilitate economic restructuring.