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. Last Updated: 07/27/2016

Wen Says China Must Reduce Pollution and Sustain Growth

BEIJING -- China will crack down on polluting factories and boost spending on farmers and low-income earners as the government seeks a more balanced expansion of the world's fastest-growing major economy, Chinese Premier Wen Jiabao said Monday.

"We need to adjust the balance between investment and consumption,'' Wen said in his annual policy speech to the National People's Congress in Beijing. China must curb loans to "highly polluting'' enterprises, the premier said.

Wen's speech highlights the shift in government priorities from pursuing economic growth targets to addressing the costs of expansion, including environmental damage and a widening income gap.

Excessive investment fueled by cash from China's record trade surplus may spur the construction of too many factories, leaving the economy vulnerable to a slowdown in demand.

The premier set an 8 percent economic growth target for 2007, unchanged from last year, and said the government would seek to cap inflation at 3 percent. The economy has grown faster than government targets for at least the past five years.

Cash from a $177.5 billion trade surplus last year is flooding the financial system, increasing the risk of asset bubbles and accelerating inflation.

China's stocks have reached record highs this year, and also had their biggest fall in a decade. The country is trying to rein in property prices.

The export boom has pushed foreign-exchange reserves to $1 trillion and created tension with trading partners. China's products are cheap because the yuan is kept weak, U.S. and European manufacturers and lawmakers say.