BEIJING, 6 March 2007 — Premier Wen Jiabao called yesterday for more efforts to balance China’s roaring economy and vowed to strengthen the Asian giant’s military muscle.

Opening the annual session of China’s parliament in front of nearly 3,000 delegates at the Great Hall of the People here, Wen warned that the fast pace of development was exacting too great a social and environmental toll.

He urged more sustainable economic growth in an annual report focusing on rebalancing China’s economy, which has stormed ahead at double-digit pace over the past four years.

He also pledged to bolster China’s armed forces, a day after the government said military spending would be up nearly 18 percent this year.

“We should... avoid seeking only faster growth and competing for faster growth,” Wen said, setting the tone for the 12-day session of the National People’s Congress.

He said more should be done to protect the environment, after China missed its targets to improve energy efficiency and pollution emissions last year.

“The pattern of economic growth is inefficient. This can be seen most clearly in excessive energy consumption and serious environmental pollution,” he said.

“We must attach greater importance to saving energy and resources, protecting the environment and using land intensively.” Wen acknowledged that ordinary people’s interests were being sacrificed in the race for riches, and outlined measures to bridge the fast-widening wealth gap, particularly between modernizing cities and undeveloped rural areas.

“We must put people first... and ensure that all of the people share in the fruits of reform and development.” The premier said the government would endeavor to boost farmers’ incomes and improve the social safety net, such as through expanding a rural medicare system, as well as pump more money into the agricultural industry.

Wen also addressed corruption, which President Hu Jintao has warned is one of the greatest threats to the Communist Party’s legitimacy as a governing body.

“Quite a few local governments, government offices and organizations compete with one another for lavishness and spend money hand over foot, which arouses strong public resentment,” Wen said.

“We must put a resolute stop to these unhealthy practices.” He projected the economy, the world’s fourth biggest, would grow by “about” eight percent in 2007. But in recent years Wen has announced similar targets, only for them to be exceeded, and he said the forecast may again prove inaccurate this year.

Analysts said economic growth was likely to come in near 10 percent this year. In one of the most concrete reforms to be addressed at the congress — which has never rejected a proposal put forward by the Communist Party elite —Wen said preferential tax rates for foreign companies would be ended.

Foreign companies have up until now paid an income tax rate of 15 percent, compared with 33 percent for local enterprises. Under the new law, a tax rate of 25 percent will apply to all companies.

Another law widely expected to pass, but not mentioned by Wen, would give unprecedented protection for private property rights.

The Property Law aims to offer protection for both private and public ownership, a move that has been fiercely resisted by Communist Party hard-liners in recent years.

A day after the government announced that the nation’s military budget would rise 17.8 percent from last year to 350.9 billion yuan (about $45 billion) in 2007, Wen said China would continue to strengthen its military.

Meanwhile, China is likely to allow foreign companies to issue yuan-denominated bonds on domestic markets this year, state media said Monday, citing a top central bank official.

Wu Xiaoling, the vice governor of the People’s Bank of China, said the central bank was in favor of foreign companies and international organizations issuing yuan-denominated bonds in China.

the China Securities Journal reported.

Supervisory authorities would not reject such applications from institutions registered in China as long as the companies were engaging in legitimate business operations, Wu said.

Foreign companies and international organizations currently must transfer foreign exchange into China from abroad when they need capital for domestic investment purposes.

Currently the World Bank’s International Finance Corp and the Asian Development Bank are the only foreign entities allowed to issue yuan-denominated bonds in China.

By allowing foreign companies to raise funds within China would also benefit the development of China’s economy, Wu added.

She confirmed that preparations were under way to set up the State Foreign Exchange Investment Company, a company that is expected to be in charge of investing some of China’s enormous foreign exchange reserves.

She said that Central Huijin, the central bank’s investment arm, would be part of the new company.

She also downplayed market concerns that the new company would exert a large impact on the US Treasury market, while acknowledging that part of China’s increased forex reserves would be invested in non-US-dollar assets.

Analysts estimated the share of US-dollar Treasury bonds is now 60 percent of China’s forex reserves.