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China's leaders to loosen control on economy

BEIJING — China's government will retreat further from running the economy, allow foreigners to buy shares in local companies and give farmers more rights to own land, Premier Zhu Rongji promised Monday.

Eventually, private citizens will be able to own all but "strategic" companies such as those involved in national security, Zhu said Monday in a speech to the National People's Congress.

The government will also focus on raising incomes for its hundreds of millions of farmers, Zhu said — underscoring concern that low and falling incomes could trigger unrest in the countryside.

Economic plans approved by the ruling Communist Party call for annual growth of about 7 percent over the next five years, Zhu said. He said the government hopes to double its 2000 annual economic output of just over $1 trillion by 2010.

Beijing also plans to step up efforts to conserve water, combat corruption and prepare for entry into the World Trade Organization, Zhu said in his speech to lawmakers at the vast Great Hall of the People.

Zhu also gave no indication that the government would ease its often brutal 19-month-old crackdown against the meditation group Falun Gong. He called Falun Gong an "anti-human" cult used by "domestic and overseas forces hostile to our socialist government."

The premier's annual report at the opening of the Communist Party-controlled legislature serves as a guide for lawmakers who traditionally approve most proposals without changes.

In the countryside, farmers will be encouraged to work with companies and produce crops on contract, Zhu said. He said the government will try to spread biotechnology, better seeds and other advanced technologies.

"Areas where conditions permit should be encouraged to explore a land operation rights transfer system," Zhu said, though he stressed that the current practice of long-term land contracts would remain widespread.

China's countryside, where reforms began two decades ago with the creation of small farmers' markets, is threatened by market-opening required by Beijing's bid to join the World Trade Organization.

China's inefficient farms are expected to suffer from competition with imported food as trade barriers drop.

Zhu said the government would maintain its network of grain-buying bureaus but would encourage private sales.

Chinese leaders had relaxed the state monopoly on grain trading in the late 1990s but reimposed it two years ago to preserve control over what they regard as a strategic resource. That set farmers back in learning to compete in a free market.

Zhu said towns and small cities have to expand to create more job opportunities for farmers.

Chinese leaders have resisted such urbanization, fearful that an influx of the rural poor would swamp crowded cities. Despite that, millions of migrants have moved into cities in what economists say is a key step in the creation of more profitable industries and higher incomes.

In the west, Beijing plans to focus on exploiting oil and gas reserves and building a railroad to Tibet to increase economic opportunities, Zhu said.

The premier said the government would sell $18 billion in bonds to finance investment.

However, he stressed that people in the region "should rely primarily on their own efforts."

Zhu also stressed conservation of water, energy and other resources. Hundreds of Chinese communities are suffering water shortages, and in some areas, long stretches of large waterways such as the Yellow River run dry each summer.

The premier said the government would encourage more state industries to become corporations with shares owned by the public. More would be encouraged to sell shares on foreign stock exchanges, he said.

That would bring China into line with its WTO commitments, which include allowing wholly foreign-owned competitors in industries that previously had been state-controlled.

Despite sweeping reforms, China's biggest companies are state-owned and the law forbids private ownership in many sectors.

Dissidents demanded that the legislature accelerate political reforms, spend more on education and abolish household registration rules used to block farmers from migrating to cities.

Veteran activist Leng Wanbao and 17 others sent a letter asking for an investigation of the bloody military quelling of the Tiananmen Square pro-democracy protests in 1989.

In another appeal, activists Yang Hai and Lu Zhongming called for tolerance toward followers of the banned Falun Gong spiritual movement.

"We believe in their right as human beings to be treated with respect," the activists wrote.