China's economic growth was high on the agenda at this year's People's Congress. In his closing speech, Premier Wen Jiabao said on Wednesday that the country must embrace slower growth and bolder political reforms to keep its economy from faltering, while spreading wealth more evenly.

He had opened the parliamentary session on March 5 by announcing a growth target of 7.5 percent for this year compared to the 8 percent that has been the goal for the past eight years. There was a belief earlier that if growth were lower, there would not be enough jobs created to preserve social stability. But the economy has continued to boom.

Gu Xuewu from the Center for Global Studies in Bonn says that the lucky "Eight" is being dropped "to reduce overcapacities and optimize economic structures, which are China's most urgent challenges."

"Eight percent growth is not needed at all to master the social challenges and create jobs," he insists.

What is important is the quality of growth and its sustainability. Hong-Kong based political commentator Willy Lam says that the lower target is "realistic" considering unfavorable economic growth in the US and Europe, which has led to a drop in Chinese exports.

He also says that the state investment programs that have driven much of the growth since the 2008 finance crisis are not "a long-term solution." Beijing wants to boost domestic demand now.

China's defense budget has been increased by 11.2 percent for 2012. Analysts say China wants to expand its influence in Asia and to rival the US. "This is also true for military matters. The US has had to decrease its military expenditure because of its financial problems. This gives China a chance to catch up - especially regarding the navy and the air force."

Lam is worried about the fact that the budget for "preserving the country's stability, namely for the police and security forces, has been increased. He explains that 120,000 protests and riots are registered in China every year - 300 a day. He says Beijing is boosting its police apparatus to keep the situation under control.

A 'lost decade'

In Tibet and in Xinjiang, which is populated largely by Uighurs, the situation is particularly tense. However, this year's People's Congress has not revised minority policies as some intellectuals had called for.

Gu Xuewu points out that it is not so easy to solve these problems but if there are no attempts to introduce reforms the resentment will only grow. "At some point the disruption could be so great that the current system cannot cope. The system is not as strong as it seems."

It does not look as if the bold reforms that many have called for will be implemented however. Analysts do not expect many significant changes over the next months despite Wen's insistence he wants to drive forward reforms during his last year in office.

The Hong-Kong based journalist Bao Pu says the past decade has been "lost."

"There have been no real reforms - only of the bureaucratic machine, but not of the governmental system as a whole."

In any case, important decisions are not made by the People's Congress. All eyes are set on the 18th Party Congress later this year. Wen Jiabao and President Hu Jintao are due to hand over power to their successors, as are seven other members of the Politburo Standing Committee. The fight for these positions is going on behind the scenes and is particularly heated.

Author: Haiye Cao / act
Editor: Gregg Benzow