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China's Outgoing PM Praises Economic Gains

China's prime minister says his government has boosted the economy over the past five years, but still faces serious problems. Zhu Rongji gave himself mixed grades in his last speech to China's legislature before he retires from politics.

Prime Minister Zhu Rongji says China's government overcame the Asian financial crisis, a stagnant global economy, catastrophic floods, and the nation's backward infrastructure to achieve robust economic growth.

Mr. Zhu says the economy grew at a yearly average of 7.7 percent during his tenure, and made good progress in shifting from a planned to a market economy. He says the growth will help solve China's many problems.

But economic reform has been painful, as many inefficient state-owned companies have collapsed, throwing 27 million people out of work.

Mr. Zhu told the delegates at the National People's Congress Wednesday that the framework of a social security system has been established to help the needy. He made clear, however, the legislators must do more.

He told delegates Chinese peoples' lives "improved notably" and that most are now "well off."

He said per capita urban incomes grew more than eight percent a year to a bit over $900.

But rural incomes are one-third the urban level and are growing much more slowly. That is a problem because 800 million Chinese live on farms.

Economists say China's stagnant banking system is slowing investments that could help create badly needed jobs in both rural and urban areas.

Mr. Zhu says a more modern banking system, which that will lend money to the most skillful businesses rather than those with the best political connections, has begun to take shape.

But some private businesses complain that they still cannot borrow the money they need to expand and create new jobs.

Mr. Zhu says his government made progress on the Taiwan issue. Beijing regards the self-governing island as a rebellious province that should be returned to central government control. The prime minister urged the government to expand contacts with Taiwan's political parties and to cooperate more on economic and cultural matters as steps toward peaceful reunification.

Mr. Zhu ends his five-year term as prime minister during the NPC's two-week session, which began Wednesday. He is expected to be replaced by Vice Premier, Wen Jiabao.

President Jiang Zemin will pass his job to Hu Jintao, as part of a generational change in leadership that is replacing men in their mid 70s with much younger leaders.