China's new budget to put priority on farmers, military

BEIJING -- Putting its money on stability, the Chinese government on Saturday announced a 2004 budget that sharply raises spending for the restive countryside and hands a double-digit increase to an outdated military grappling with a changing world.

China's communist leaders say they are trading blind economic expansion for a more stable model of growth as they struggle to narrow the gap that divides newly affluent city dwellers and the perennially poor farmers who feed the nation.

The new budget balanced long-overdue increases in spending on rural construction, education and health care with an 11.6 percent -- or $2.6 billion -- rise in military spending that Finance Minister Jin Renqing said was needed to improve the "defensive combat readiness of the armed forces under high-tech conditions."

China does not publicize its spending on weapons, research and development and other costs. The Pentagon puts actual outlays at up to four times the public figures. Last year's announced military budget was $22.4 billion.

The 2.5-million-member People's Liberation Army is the world's largest but lags behind U.S. and other major forces in technology despite big purchases of advanced submarines and aircraft in recent years.

Jin, the finance minister, put total revenue for the central budget at $157 billion, up 7 percent -- or $10.9 billion -- from last year. The budget also includes a 7 percent boost in overall spending from 2003.

A 'well-off' society

Announced Saturday during the annual session of the nominal legislature, the budget is a telling glimpse into what its leaders, the stewards of a once-planned but increasingly freewheeling economy, consider their top tasks. For this year-old complement of leaders, that means doing everything they can to create a "well-off" society and the stability it can bring.

"To get rich is glorious," former leader Deng Xiaoping said a generation ago when he declared the communist economic experiment over. More than 20 years of breakneck development later, the government has coined a new slogan: "Put people first."

It's a survival strategy in a country where the central authority has only a tenuous sway over vast rural regions grumbling over heavy taxes and corrupt officialdom. The preoccupation with stability dates to much earlier times, to imperial China's obsession with keeping its borders intact and citizens placated.

The government plans to raise agricultural spending by 20 percent and cut agricultural taxes that consume meager rural incomes. A plan to end those millennia-old taxes within five years went over well with congressional delegates.

"There are still many difficulties and problems in China's economic and social development that we cannot afford to ignore," Ma Kai, head of the State Development and Reform Commission, told delegates in the hulking Great Hall of the People in Beijing.

Though Jin, the finance minister, didn't mention Taiwan or other strategic concerns, the boost to the military budget comes days ahead of a March 20 Taiwan presidential election that includes an unprecedented referendum on relations with the mainland.

Beijing insists Taiwan is part of China. It has repeatedly threatened to use force to unify the two sides, separated by a bloody civil war that ended with the communist revolution in 1949. Taiwan has operated as a sovereign nation ever since.

Chinese leaders view the referendum -- about whether the democratically governed island should seek talks with Beijing and beef up defenses if China refuses to stop targeting missiles at it -- as a rehearsal for rejecting unification.

Lashing out at unnamed parties he accused of "ulterior motives," Foreign Minister Li Zhaoxing reiterated mainland China's determination to regain Taiwan and warnings against foreign meddling. China often accuses the United States, which is required by law to ensure Taiwan's security, with interference.

"China's sovereignty and territorial integrity brook no division. In the end, this is an internal affair of China," Li said. "The Chinese people love peace, but we will not allow any external force to interfere in our quest for reunification."

At the same time, he stressed the theme of the day -- Beijing's desire for stability.

"We work to create a favorable international environment for China's stable domestic economic development," Li said.