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BEIJING, March 5 — China will seek to heal social rifts and spur home-driven growth with more public welfare and rural spending even as the government tightens its belt after a burst of feverish spending, Premier Wen Jiabao said today.

Wen told the country’s parliament that China’s economy faced a clouded international outlook in 2010 and would stick to a steady policy course this year, shifting tack if needed to counter the lingering impact of the global credit crunch.

China would maintain an appropriately easy monetary stance and an active fiscal policy, he added, showing no sign of a break from current settings.

Wen also signalled continued caution towards the yuan, reiterating standard language that Beijing would seek to keep the currency basically steady at a reasonable and balanced level.

To the dismay of Washington and Brussels, China has frozen the yuan’s exchange rate at around 6.83 per dollar since mid-2008 to preserve the international competitiveness of its exporters.

In his annual “State of the Union”-style report to the National People’s Congress, Wen unveiled increases in spending for China’s poorer citizens and 700-million strong farming population that outstripped the planned rise in military outlays.

China wants to slow spending and bank lending after pumping out cash to counter the global downturn, but Wen said improvements in social welfare, healthcare and rural services were needed to secure the nation’s economic health and the ruling Communist Party’s hold over an increasingly fractured society.

“We can ensure that there is sustained impetus for economic development, a solid foundation for social progress, and lasting stability for the country only by working hard to ensure and improve people’s well-being,” Wen told the nearly 3,000 delegates of the Communist Party-controlled legislature.

China escaped the worst of the global slump by ramping up credit, slashing interest rates and launching a 4 trillion yuan (RM2 billion) infrastructure programme in late 2008.

The economy grew 8.7 per cent last year as a result, by far the fastest pace of any major country, but Wen played down the achievement.

More domestically-driven growth, fuelled by consumers more confident about their health, incomes and welfare protection, was needed to keep the world’s third-biggest economy growing at a solid pace, he said.

“We must not interpret the economic turnaround as a fundamental improvement in the economic situation,” Wen said in the cavernous Great Hall of the People.

“There are insufficient internal drivers of economic growth,” he added, reading aloud the 36-page report in a practiced, steady voice, occasionally pausing for effect and applause.

Wen said China was targeting 8 per cent growth in gross domestic product — the goal it traditionally sets every year — and an inflation rate of about 3 per cent.

Wen announced increases of 8.8 per cent on social spending and 12.8 per cent on rural outlays — more than the rise of 7.5 per cent in the military budget — to narrow the yawning wealth gap that economists blame for dampening domestic consumption.

China’s parliament is a party-run spectacle that affirms policy, rather than making or challenging it.

But the gathering offers an opportunity for the party leadership to sell their policies, which face growing doubts from wealthier taxpayers and from local officials who see little wrong with the country’s traditional recipe of industrial growth.

“We will continue to give preference to agriculture, farmers and rural areas, and to improving people’s well-being and developing social programmes,” said Wen, whose second and final five-year term running the Chinese government ends in 2013.

Still, the projected growth in welfare and agriculture spending is much slower than in 2009 when the financial crisis was raging.

Reflecting the conservatism of China’s financial planners, the budget deficit will again be kept below 3 per cent of national income, Wen said.

Last year the deficit was just 2.2 per cent of GDP despite massive government spending on infrastructure and job creation. — Reuters

SINGAPORE, March 5 — Singapore’s biggest sovereign wealth fund GIC and Qatar Holding LLC have committed to underwrite a significant portion of UK Prudential’s US$20 billion (RM68 billion) rights issue.

GIC is an existing shareholder, with a 0.5 per cent stake in Prudential, but Qatar does not appear to rank as an existing investor, signalling that the British insurer is inviting new investors to make the deal a success.

GIC’s potential investment comes amid news that it may be sitting on a paper loss of about US$5 billion on its investment in UBS following the conversion of its mandatory notes into shares.

It also shows how sovereign wealth funds are getting more active in global dealmaking after they turned cautious last year when they were burnt by early investments in Western banks such as Citigroup.

“The joint global co-ordinators have confirmed that syndication since the announcement has been very well received, with demand for primary underwriting well in excess of the size of the rights issue,” Prudential said in a regulatory filing in London.

Credit Suisse, HSBC and J.P. Morgan Cazenove are acting as joint global co-ordinators and joint bookrunners, it said.

Prudential said it has enlisted over 30 global and Asian banks as joint lead managers, co-lead managers and co-managers for the fund raising that will be used to finance its US$35.5 billion acquisition of AIG’s Asian unit.

In what is the insurance industry’s biggest acquisition, Prudential is buying American International Assurance in a big bet on soaring demand in Asia for personal financial services. AIA is regarded as AIG’s crown jewel because of its size, cash generation and presence in fast-growth Asia.

The latest announcement came when chief executives of Prudential CEO Tidjane Thiam and his AIG counterpart Robert Benmosche are leading a series of “town hall” meetings across Asia that aim to allay concerns among staff of both companies. [

The CEOs are reiterating they plan to keep the businesses and brands separate, with overlap mainly in back- and middle-office operations, according to people who attended the meetings.

The chief executives met employees in Malaysia and Singapore yesterday and are expected to visit Thailand today.

AIA serves more than 20 million customers in Asia. Prudential has more than 11 million life insurance customers in the region.

The deal, which AIG chose over a planned AIA initial public offering in Hong Kong, would help the bailed-out US group repay a big chunk of its taxpayer debt.

The banks that joined the syndicate are Banca IMI, Banco Santander, BofA Merrill Lynch, Citigroup, Deutsche Bank, ING Bank N.V., Morgan Stanley, RBS Hoare Govett and UBS Investment Bank as joint lead managers.

Barclays Capital, BNP Paribas, Credit Agricole CIB, Mediobanca, Natixis, Nomura International, Scotia Capital, Societe Generale, Standard Chartered, UniCredit Bank AG and United Overseas Bank are co-lead managers.

BBVA, BOC International, Commerzbank, DBS Bank, Fortis Bank Nederland, ICBC International Securities, Keefe, Bruyette & Woods, Lloyds TSB Corporate Markets, Macquarie Capital and RBC Capital Markets as co-managers. — Reuters

A MRT train travels along a track in a neighbourhood in Singapore which expects to see more tourist arrivals this year. — Reuters pic

SINGAPORE, March 5 — Visitor arrivals in Singapore are expected to rise 20-30 per cent to 11.5-12.5 million this year, helped by a pickup in the global economy and the draw of the city-state’s new casinos, the government said today.

Singapore Tourism Board (STB) CEO Aw Kah Peng told a tourism industry conference she expects tourism revenue to rise 41-50 per cent from 2009 to S$17.5-S$18.5 billion.

“This is hugely, hugely ambitious,” she acknowledged, but said she was hoping the final result could outperform the forecast.

In January, Singapore saw a 17.6 per cent rise in visitor arrivals from a year earlier. — Reuters