* New premier says economic reform top priority
* Li Keqiang says reform means having to "navigate uncharted
* Vows to fight graft, wants end to cyber-hacking bickering
* Li stresses own humble origins in bid to fight poverty
By Benjamin Kang Lim and Nick Edwards
BEIJING, March 17 Chinese Premier Li Keqiang
said on Sunday ensuring economic growth was the top priority for
his government, pledging to fight graft, tackle vested interests
and calling for an end to a cyber-hacking row with the United
Li's first news conference as premier, at the close of the
annual meeting of China's rubber-stamp parliament that confirmed
his appointment, covered topics that have been the principal
focus of recent government rhetoric, with a strong emphasis on
the necessity of reform to deliver long-term economic stability.
"The highest priority will be to maintain sustainable
economic growth," Li said at the start of the conference that
lasted almost two hours and in which he repeatedly stressed the
need for economic, social and government reform.
"The key is to have economic transformation. We need to
combine the dividends of reform, the potential of domestic
demand and the vitality of creativity so that these together
will form new drivers of economic growth," he added.
"We said that in pursing reform we now have to navigate
uncharted waters. We may also have to confront some protracted
problems. This is because we will have to shake up vested
interests," said Li, looking relaxed and repeatedly gesturing
with his hands.
"Sometimes stirring vested interests may be more difficult
that stirring the soul, but however deep the water may be, we
will wade into the water. This is because we have no
alternative. Reform concerns the destiny of our country and the
future of our nation."
Ting Lu, chief China economist at Bank of America/Merrill
Lynch in Hong Kong, said in a note to clients that the
pro-reform tone of the speech would go down well with investors.
"He understood very well that key barriers for reforms are
vested interests rather than ideology," Lu said.
But beyond a specific pledge to cut administrative red tape
on some 1,700 processes needing government approval by at least
a third, Li's answers to the 11 pre-arranged questions he took
from journalists offered no new policy initiatives.
However, he said that planned reform of the controversial
system of forced labour camps would come by the end of the year.
The premier pledged to reform capital markets, the currency
and fight China's pervasive corruption crisis, saying that
government officials, having chosen public life, should give up
thoughts of riches.
Li said China's broad reform effort would also lead to
improvements in environmental controls, cutting pollution in the
atmosphere and raising food and water safety standards.
A growing environmental awareness and willingness of urban
people to voice concern about industrial pollution have led the
ruling Communist Party to worry about the risk of yet more
protests that could undermine social order.
Similar worries exist in the leadership about growing
discontent over inequality in China, which has one of the
world's widest gaps between rich and poor and which has now
reached levels which the government fears could spark unrest.
Li reiterated commitments to reform income distribution,
improve access to social security and health care and allow
welfare benefits to be paid nationwide, regardless of the
official residence of the claimant.
China's rigid residence registration, or hukou, system
broadly classifies citizens as urbanites or farmers and
precludes people from access to basic welfare services outside
their official residence area.
Economists say it is a crucial obstacle to rebalancing
China's economy away from the investment-heavy, export-oriented
model that has lifted hundreds of millions of people from
poverty, turned China into the world's biggest trading economy
and has been a policy priority for much of the last decade.
Despite its ranking as the second-largest economy globally
after three decades of stellar growth, China remains an aspiring
middle-income country riven with inequality and dependent on
About 13 percent of China's population still live on less
than $1.25 per day, the United Nations Development Programme
says. Average urban disposable income is just 21,810 yuan
($3,500) a year.
On the other hand, according to the latest reckoning by
Forbes, China has 122 dollar billionaires. A rival list in the
Hurun Report says China has 317 billionaires - a fifth of the
total number in the world.
Li shrugged off an assertion from one questioner that China
was responsible for hacking into U.S. computer systems, restated
Beijing's complaint that it too had been under cyber-attack.
"I think we should not make groundless accusations against
each other, and spend more time doing practical things that will
contribute to cyber-security," Li said.
President Barack Obama also raised U.S. concerns about
computer hacking in a phone call with Chinese President Xi
Jinping last week on the day Xi took office.
U.S. Treasury Secretary Jack Lew will likely press China to
investigate and stop cyber-attacks on U.S. companies and other
entities when he visit China this week for discussions on a
range of economic issues.
Li, 57, officially took over as premier on March 15 from Wen
Jiabao whose 10 years in charge is increasingly regarded by
analysts as a lost decade in which economic reform slowed and
state-backed businesses tightened their grip on the country's
Li, as head of the State Council, or cabinet, is charged
with executing government policy and overseeing an economy in
which growth slowed to a 13-year low in 2012, albeit at a 7.8
percent rate that is the envy of other major economies.
More than any other Chinese party leader until now, Li was
immersed in the intellectual and political ferment of the
decade of reform under Deng Xiaoping, which ended in the 1989
Tiananmen Square protests that were crushed by troops.
As a student at the elite Peking University, Li befriended
ardent pro-democracy advocates, some of whom later became
outright challengers to party control. His friends included
activists who went into exile after the June 1989 crackdown.
Li drew on his own experiences of rural poverty in the
aftermath of Mao Zedong's Cultural Revolution, which forced
intellectuals, industrialists and urbanites to leave cities to
work on farms, to explain his drive to deliver a better economic
deal to China's 1.3 billion people, most of whom are poor.
"I was a sent-down youth in Anhui province's Fengyang County
and I will not forget the hard times I spent with the local
farmers," Li said.
"Reform and opening up have changed the destiny of our
country and lifted hundreds of million of farmers out from
poverty. It has also changed the life course of many people,
including me. Now the heavy responsibility of reform has fallen
on the shoulders of our generation."