China's Wen seeks peace with Taiwan

China's premier vowed yesterday to work for peaceful reunification with self-ruled Taiwan, seeking to dispel alarm at an anti-secession law that could heighten regional tensions.

In his annual address to the National People's Congress (NPC) in Beijing's Soviet-era Great Hall of the People, Wen Jiabao also pledged to keep the world's seventh-largest economy growing without overheating.

The 3,000 NPC delegates peppered Wen's two-hour speech with applause, clapping loudest when he appealed for national unity, signalling their approval for the law that could prove the legal basis for an attack on Taiwan.

"This law represents the common will and strong determination of the entire Chinese people to safeguard the sovereignty and territorial integrity of the country and never allow secessionist forces working for 'Taiwan independence' to separate Taiwan from China under any name or by any means," Wen said.

Beijing has claimed sovereignty over the offshore island of 23 million since the end of China's civil war in 1949, when the defeated Nationalists fled there from the Communist-held mainland.

China has threatened to attack if Taiwan formally declares independence, and will boost debence spending by more than 12 per cent this year in order to back up that pledge.

But Wen tempered his comments: "We will make the greatest possible effort to do anything conducive to the development of cross-Straits relations and the country's peaceful reunification."

Details of the law will be unveiled in parliament on Tuesday, and NPC delegates are thought likely to approve the measure, which is being closely watched around the region and in the United States, on March 14.

US Secretary of State Condoleezza Rice is also expected to visit China soon and, while her focus will be North Korea's nuclear programme, Washington has pledged to help Taiwan defend itself and thus has a keen interest in the potential flashpoint.

Wen stressed to parliament that it was too early to end measures to control overheating sectors of the economy, and outlined steps aimed at bridging a yawning wealth gap between China's booming cities and rural hinterland.

"This is a period of important strategic opportunities for China and the economy should go rapidly but not be allowed to overheat," Wen said.

China, aiming for slower growth of 8 per cent in 2005, would push ahead with reforms to its yuan currency, fixed at about 8.28 per dollar, he said.

"In the light of current economic conditions, macroeconomic controls cannot be relaxed," said Wen, who is trying to shepherd the economy through challenges from overhauling ailing bank to finding jobs for millions of workers laid off from state firms.

The 8 per cent growth forecast contrasts with the 7 per cent forecast issued in previous years and routinely exceeded. China's gross domestic product grew by 9.5 per cent in 2004.

Wen said farmers would be exempted from agricultural tax in 2006, two years ahead of schedule, and pledged to prioritise health and education in rural areas, a sign the leadership is all too aware that the wealth gap threatens unrest.

In separate reports to parliament, development chief Ma Kai pledged to keep economic cooling measures in place, saying he expected fixed-asset investment growth to slow sharply this year. Finance Minister Jin Renqing projected a lower budget deficit as Beijing scales back stimulus spending.

Security was tight around the Great Hall, with police vans parked on the vast Tiananmen Square to the east. Delegates passed through metal detectors before clustering inside the main foyer, sipping tea, chatting and snapping pictures of each other.