China, charting a course of more modest economic growth and mild inflation, on Saturday forecast a $38.6 billion budget deficit this year as it shifts resources to help an impoverished countryside catch up with wealthier cities.
China's development chief, Ma Kai, told the National People's Congress he aimed to keep the world's sixth-biggest economy from being roiled by "big ups and downs".
Ma, who heads the State Development and Reform Commission, a powerful ministry in charge of steering China's breakneck economy, targeted economic growth of around seven percent in 2004, a more modest pace than the 9.1 percent of last year.
There was no hint China would move soon to revalue its fixed currency, a source of friction with big trade partners like the United States who say it gives China an unfair trade advantage.
In laying out the annual budget, Finance Minister Jin Renqing said spending would rise seven percent and that stimulus bonds once used for public works would be shifted to boost health care, education and other services in the vast countryside.
The rural aid was welcomed with open relief by some of the nearly 3,000 delegates at the 10-day congress, like Lin Dongchi, a teacher from the impoverished southern region of Guangxi.
"We really need this money," Lin, her voice cracking with emotion, said after Jin delivered his speech in the cavernous Great Hall of the People bordering Tiananmen Square.
WEALTH GAP WORRIES: China, which has issued special bonds every year since the 1997 Asian financial crisis, planned to issue 110 billion yuan worth in 2004, down 20 percent from last year, Jin said.
The ruling Communist Party fears a wealth gap, yawning as cities and coastal areas race ahead of the backward hinterland, could undermine its authority over China's 1.3 billion people.
"The government is now stressing a balance between growth and social development. The countryside has developed more slowly and they need more subsidies," said Xie Weihe, a Beijing professor who is a member of an advisory body to parliament.
The session has seen a string of officials signal an easing of an economy that has become a source of global fascination as it suctions up materials and spews out cheap exports.
Premier Wen Jiabao on Friday vowed to cool off the economy and help hundreds of millions of farmers who are angry at stagnant living standards, corruption and lack of basic services.
But the airing of grievances in China goes only so far.
Plainclothes police dragged one man away from the hall's east gate on Saturday after he tried to unveil a placard. Petitioners come to the capital each year to air grievances.
MILITARY GETS MORE: Jin predicted government expenditure of 2.68 trillion yuan, up seven percent from last year. That would be nearly 320 billion yuan more than expected revenue, but also mark the first time in several years the deficit has not widened.
"Currently there is a certain uncertainty in global economic development, and the foundation for the sustained development of China's economy is not too stable," Jin said, explaining more deficit spending by the world's fastest-growing major economy.
To help fund this year's budget shortfall and repay old debt, Jin outlined plans to issue 702 billion yuan in treasury bonds in 2004, about 14 percent more than last year's planned issue.
Jin also proposed an 11.6 percent increase in the defence budget as the country backs up its threats to political rival Taiwan, which has been under democratic self-rule since the end of the Chinese civil war in 1949.
"We want a peaceful reunification with Taiwan but if anyone tries to declare independence or meddle in our affairs, we need to be prepared with our military might," said Tan Rifei, another Guangxi delegate.
Foreign Minister Li Zhaoxing warned against anyone taking steps to split the island from the mainland, an apparent reference to Taiwan President Chen Shui-bian's plan to hold a contentious referendum alongside presidential polls this month.
But in a news conference peppered with poetry, French literary references and Confucius, Li toed a milder line ahead of the vote - highlighting the cultural bonds between the two sides and not reiterating threats to retake the island by force.
Ma's outline highlighted the peculiarities of China, where torrid economic growth sits alongside rising unemployment.
Ma said he expected joblessness to rise this year, to 4.7 percent from 4.3 percent last year. Millions in China have been thrown out of work each year as inefficient state companies shed excess workers.
Ma said China aims to check inflation at three percent and cap money supply growth at around 17 percent, a move meant to staunch a flood of money that helped push annual inflation to 3.2 percent in January, the highest level in nearly seven years.
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