Beijing Targets Slower Growth in '07, Boosts Education and Health Spending

China's Premier Wen Jiabao said in a speech at today's annual meeting of the National People's Congress in Beijing that economic growth in 2007 is forecast to be 8%. This is the same target set last year, but missed as the economy grew 10.7%, its fastest clip in 11 years. Beijing has been trying to slow growth and over-investment but has mostly failed so far. According to Bloomberg, Premier Wen said, 'The government will control excess liquidity and further boost domestic consumption.' Despite two rate hikes last year and raising reserve requirements at banks, the economy is still hot with foreign reserves having topped $1 trillion, its trade surplus at record levels and lending exceeding the People's Bank of China target by 27%. Premier Wen also spoke of the need to control housing prices, reduce the rich-poor gap and reduce pollution, among other things. Separately, 2007 budget plans were announced, with increases of 42% set for education, 87% for medical care, 15% for rural areas and 14% for social security, for a grand total increase of 14.4% to $335 billion.