AP
A vendor watches the live telecast of the annual government work report by outgoing Premier Wen Jiabao on a television in a vegetable market in Fuyang in central China's Anhui province on Tuesday.
By Eric Baculinao, Bureau Chief, NBC News
BEIJING ? China pledged to tackle problems which threaten to alienate the country's growing middle class and aspirational masses as?its once-in-a-decade changing of the guard at the top of the country?s government got under way.
"We should unwaveringly combat corruption, strengthen political integrity, establish institutions to end the excessive concentration of power and lack of checks on power and ensure that officials are honest, government is clean and political affairs are handled with integrity,"said China's outgoing premier Wen Jiabao at the China?s National People?s Congress (NPC).
Wen on Tuesday enumerated major domestic challenges that have caused public discontent in recent years ? air pollution, toxic factories, tainted food and abuses of power ? and pledged more resources to environmental protection and public welfare. His speech was a tacit admission that quality of life had been sidelined by a focus on breakneck economic growth.
"We are keenly aware we still face many difficulties and problems in our economic and social development," said the premier, whose family was accused in a New York Times report late last year of amassing billions of dollars in assets.?
While the Chinese leadership also announced a boost in defense spending, the focus of this year?s Congress appeared to be decidedly domestic.
Widening inequality and a more discontented middle class were the big issues facing new leaders, said Damien Ma, analyst at the Paulson Institute, an independent think-tank.
"The problem is whether China can address the costs of that growth and seriously face the growing social cleavages that such growth has wrought,"?he said. ?
The rhetoric about improving the quality of life was not new, said Susan Shirk, an expert on Chinese politics and former Deputy Assistant Secretary of State during the Clinton administration.
Reuters, file
An elderly exercises in the morning as he faces chimneys emitting smoke behind buildings across the Songhua river in Jilin, Jilin province, on Feb. 24. China's new rulers will focus on consumer-led growth to narrow the gap between rich and poor while taking steps to curb pollution and graft, the government has said.
"The ... government talked about it every year at the NPC for the past 10 years," she said.
It was also unclear how far the government could go to address worries over extraordinary high levels of pollution and food safety, experts said.
A boost in budget for forces tasked with maintaining the peace at home was worth note, said Jeffrey Wasserstrom, author of "China in the 21st?Century."
China's public security budget will reach $32.6 billion, an increase of 7.9 percent, which will "improve the mechanism for ensuring funding for primary-level ... judicial and public security departments," according to a Ministry of Finance report.
A big challenge for the government, and a possible impediment to addressing environmental concerns, will be the need to maintain high rates of economic growth, according to experts.?
"The government will struggle to reconcile its environmental agenda with the resource-intensive urbanization program that is set to underpin economic growth," said Nicholas Consonery of political-risk consulting firm Eurasia.
To boost domestic consumption and mitigate the widening rich-poor divide, China plans to migrate hundreds of millions of farmers to the cities in the next ten years. With higher incomes, the urban middle class will boost domestic consumption which will underpin future economic growth.?
In addition to promising to grapple with environmental and social welfare issues, the government announced a 10.7 percent increase to its military budget, continuing the double digit increases seen in the last two decades, even as the country appeared set to see its lowest economic growth in years.?
A new aircraft carrier and stealth fighter bombers would be added to the military amid escalating maritime disputes with Japan and other Asian neighbors, the NPC announced.
The defense modernization will help to ?resolutely uphold China?s sovereignty, security and territorial integrity,? Wen said during his last work report after ten years at the helm of China?s Cabinet.
The move is seen as attempt of the new leadership headed by Party chief and incoming President Xi Jinping to project strength and forge strong ties with China?s military, a major base of support. China is now the world?s second biggest military spender with $114 billion, after the United States which spent $633 billion last year.
The ongoing military buildup was not cause for alarm, Shirk said.
?The increase is consistent with past budgets... Roughly in line with economic growth. Not a massive military buildup,? she said.
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