Top Chinese officials say they will run a record budget deficit next year to cope with global economic problems, trade competition, and unemployment.
Finance Minister Xiang Huaicheng says China must spend billions of dollars to boost social security for the elderly and disabled, help laid-off workers and build new infrastructure. In his annual speech to the national legislature, Mr. Xiang says the spending will create a record $37 billion deficit over the next year.
The deficit is nearly three percent of the gross national product, a level some experts say can hurt a nation's economy. But Chinese officials say the economy is strong and growing, and the rising deficit is manageable.
Mr Xiang says China faces new difficulties, including growing unemployment. There already are concerns that the country's millions of jobless workers could cause social instability.
The unemployment concerns are sharpened by the global economic slowdown, which may hurt Chinese exporters, and growing competition from foreign companies now that China is in the World Trade Organization.
Mr. Xiang says China will cope with those problems by boosting domestic demand. In addition, China is spending billions of dollars on infrastructure projects to provide jobs.
Development Minister Zeng Peiyan says the economy must grow at a robust seven percent a year to create enough new jobs to absorb unemployed workers. To achieve that growth, Chinese officials say they will push economic reforms and work to improve the skills of workers.
Finance Minister Xiang also projects a nearly 18 percent increase in defense spending. China has been increasing military spending annually for the past dozen years, as officials try to transform a huge, lumbering, low-technology army into a more modern and agile force.