China's Wen to stress need for tight policy -sources

China will stick to its tightening stance to keep the economy in check and to achieve the central task of taming inflation, Premier Wen Jiabao will tell the opening session of parliament, political sources said on Tuesday.

Wen will deliver his "state of the nation" work report to the annual session of the National People's Congress, or parliament, on Wednesday. In it, he will lay out priorities for policymakers in the year ahead.

The sources, who have seen excerpts of Wen's prepared remarks, told Reuters that the address highlights fighting inflation as one of the government's biggest priorities.

Wen describes inflation currently as "relatively serious", especially against the backdrop of a weakening dollar and a strengthening yuan , they said.

Annual consumer inflation hit an 11-year high of 7.1 percent in January, prompting concern that it could spread from specific goods such as meat and edible oils into other sectors.

Year-average inflation last year was 4.8 percent and the government is aiming for a lower rate this year, according to a source who has seen a draft of Wen's report. Last year's government inflation target of 3 percent proved too ambitious.

The government shifted its monetary policy to a "tightening" stance from a "prudent" one in December, but some economists have warned about the danger of over-tightening, especially given the prospect of a global slowdown.

Wen's remarks assert that Beijing will not ease its macroeconomic controls, but rather will flexibly fine-tune its tightening policies so as both to curb inflation and avoid a sharp downturn in economic growth.

UNCERTAINTIES

As in the past few years, Wen will set a goal for gross domestic product growth of 8 percent, one of the sources said.

The lower figure is more of an aspiration than a firm target, aimed at signalling to local officials that pumping up growth will not lead to political preferment.

China's economy in fact expanded 11.4 percent in 2007, marking the fifth consecutive year of double-digit growth.

Most economists expect slower growth this year as external demand eases due to the global credit crunch.

Wen's report will mention the long-awaited restructuring of China's telecommunications industry, the sources said. They did not have details.

The premier also highlights the need for measures to stabilise property prices, they said.

Separately, state television cited Wen as telling an advisory body to parliament that China should be able to weather global economic uncertainties through timely policy steps.

"Uncertainties are increasing, which makes it very difficult for us to gain a clear and accurate picture of the economy and then make scientific policy decisions," it summarised Wen as saying at a meeting of the Chinese People's Political Consultative Conference (CPPCC).

China had built a solid basis for relying more on domestic demand to drive growth and had come a long way in restructuring the economy and improving living standards, Wen said.

"We still have a lot of room to manoeuvre to keep the economy growing -- all these conditions are favourable for that," Wen said. "We should also control the pace, force and focus of our macro controls so as to ensure sound and rapid economic growth."