China vows economic reforms with steady growth, stronger military amid regional tensions

BEIJING – China's government responded to public demands for bold leadership with vows Wednesday to press long-sought market reforms, defend against terrorism after a horrific slashing attack, and heavily boost military spending amid rising tensions with Japan.

The promises delivered by Premier Li Keqiang in his first annual policy speech also included cutting official waste, combatting persistent smog and pushing ahead with President Xi Jinping's signature campaign to fight the rampant graft that has undermined public faith in the ruling Communist Party.

Li announced an official growth target of 7.5 percent this year, signaling that the government would not let growth dip too low — or unemployment surge — while it carries out ambitious economic reforms. Li warned that reforms are at a critical stage as he pledged to open state-dominated industries to private investment.

Analysts welcomed Li's pledges to reduce government influence, saying aggressive moves would be required to shrink the entrenched benefits and power of officials and state-run industries. While seen as urgently needed to keep the economy from faltering, such changes are likely to encounter strong resistance.

"It is like snatching food from the jaws of the tiger. Very difficult," said Liu Shanying, a political scientist at the Chinese Academy of Social Sciences. "Premier Li has shown utter determination to get things done. The only uncertainty is how much of a backlash we will see in the future."

Li's speech at Wednesday's opening of China's annual ceremonial legislature comes as the government confronts ethnic unrest in the far-western region of Xinjiang that has intensified over the past year. On Saturday, China saw the first big terror attack outside Xinjiang blamed on militants from that region — a slashing attack at a train station in Kunming that killed 29 people and wounded 143.

In a rare departure from his prepared speech, Li condemned the attack and vowed a tough response. "We must firmly attack all violent terrorist crimes that blaspheme the sanctity of the country's laws and challenge the bottom line of human civilization," he said while promising to protect the Chinese people.

The meeting's nearly 3,000 delegates from across the country observed a moment of silence for the attack's victims as the session opened.

Chen Fengxiang, a delegate from Hubei, said during the session that the government would adopt stronger security steps following the attack by assailants armed with large knives. "They lost their senses, and we must crack down harshly and take strict measures in preventing the violence," Chen said.

China also announced a 12.2 percent increase in military spending to $132 billion. That followed last year's 10.7 percent increase to $114 billion, giving China the second-highest defense budget for any nation behind the United States, which spent $600.4 billion on its military last year.

Increases in China's military budget have regularly exceeded both total increases in government spending and the nation's rate of economic growth. That has allowed lavish spending on new hardware and better conditions for soldiers, raising concerns about how China intends to use its new-found power amid a rise in tensions with Japan over uninhabited islands in the East China Sea.

China's Foreign Ministry said it was reasonable for the People's Liberation Army to modernize. "Nothing to get fussy about. China's PLA aren't like scouts carrying spears," spokesman Qin Gang said.

While becoming increasingly assertive in its own territorial claims, Beijing has at the same time accused Japan of renewed militarism and dwelled on Tokyo's history as an aggressor during World War II.

"We will safeguard the victory of World War II and the postwar international order, and will not allow anyone to reverse the course of history," Li said, in an obvious dig at Tokyo.

On the domestic front, Li said the government will work harder to reduce pollution by shutting more coal-fired furnaces and controlling the tainting of rivers. He referred to the stifling smog spreading over increasing areas of China and the fouling of the country's air, water and soil as "nature's red-light warning against the model of inefficient and blind development."

More money will be spent on improving schools in underdeveloped rural areas and increasing government subsidies for health insurance, Li said, highlighting the administration's stated goals of emphasizing social wellbeing over breakneck growth.

"The essential slogan that Li gave was a declaration of war on poverty and war on pollution," said Dali Yang, a China expert at the University of Chicago. "It's part of a stronger emphasis on the social safety net."

Li also promised to cut government waste, reiterating earlier decisions to ban the building of new government offices and reduce the number of government employees. He said the administration would try to be more responsive to the people's concerns and penalize corrupt officials "without mercy."

Outside the Great Hall of the People where security was tight, two middle-aged would-be protesters broke through a police cordon and ran onto Tiananmen Square. One of them threw leaflets into the air before paramilitary police dragged them off the square.

Li emphasized that China's many ethnic groups were all "equal members of the Chinese nation," an indirect response to frequent complaints by minority Uighurs and Tibetans that they are discriminated against for jobs, passports and bank loans and unfairly subject to intense surveillance.

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Associated Press writers Didi Tang, Joe McDonald, Christopher Bodeen and Ian Mader contributed to this report.