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China outlines economic reforms, increased defense spending

China is targeting economic growth of around 7.5 percent in 2014, Premier Li Keqiang has said. The announcement is part of sweeping reforms, including increased defense spending, aiming for a more sustainable economy.

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In his first annual policy speech on Wednesday, Li outlined his plan to transform China's economy by opening up state-dominated markets to private investment and promote consumer spending.

"We must keep economic development as the central task and maintain a proper growth rate," he told the National People's Congress, which gathers to approve policies decided by the ruling Communist party. "On the basis of careful comparison and repeatedly weighing various factors, as well as considering what is needed and what is possible, we set a growth target of around 7.5 percent.

China, the world's second-largest economy, grew 7.7 percent in 2013, the same as in 2012. The government frequently sets conservative economic growth targets that it often exceeds.

Increased defense spending

Li announced China's biggest increase to military spending in three years. He the government would "strengthen research on national defense and the development of new- and high-technology weapons and equipment" and "enhance border, coastal and air defenses."

The defense budget is set to rise 12.2 percent this year to 808.23 billion yuan ($131.57 billion, 95.90 billion euros).

"We will comprehensively enhance the revolutionary nature of the Chinese armed forces, further modernize them and upgrade their performance, and continue to raise their deterrence and combat capabilities in the information age," Li said.

'War' on pollution

Li also promised to "declare war" on pollution. The country's rapid shift towards industrialization has transformed the country's economy, but had lasting adverse environmental consequences.

China accounts for around half the world's fossil fuel consumption. Last month, a severe winter smog covered some 15 percent of the country.

"We will declare war against pollution and fight it with the same determination we battled poverty," Li said, adding pollution was a "red-light warning" to inefficiency.

Private investment

Li outlined a number of changes in banking and finance reform. Banks will be given more control over lending and interest rates, he said. The move could open up money for entrepreneurs who may not otherwise receive a state –funded loan to generate jobs and wealth. Li also said China would back the "healthy development" of Internet-based banking services.

The premier vowed to open up state control industries. In addition to banking, he said oil, power generation, railways and telecommunications would see more private investment to "level the playing field" for Chinese and foreign companies.

dr/hc (AFP, AP, Reuters, dpa)

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