(Refiles to fix headline)

  * Top economic planner says China's inflation under control

  * Says ample grain reserves to put a lid on food prices

  * Says to curb bank lending to help combat inflation

 

  (Adds details)

  By Aileen Wang and Kevin Yao

  BEIJING, March 6 (Reuters) - China's efforts to keep inflation under control are working, the head of the country's state planning agency said on Sunday, forecasting prices will remain steady for the rest of the year.

  Zhang Ping, chairman of the National Development and Reform Commission said inflation in February was likely to ease.

  To stabilise prices, the government will " appropriately" control money supply and bank lending, which have been rising at a fast clip over the past two years, Zhang told reporters on the sidelines of a meeting of the National People's Congress in Beijing.

  Zhang said efforts to increase grain supplies, improve " market order" as well as provide subsidies to the poor have already had an impact on inflation.

  China's grain reserves now account for 40 percent of annual consumption, higher than the normal international level of 17-18 percent, Zhang noted.

  However, he warned that China should not lower its guard against price rise pressures.

  Annual inflation has been running near a two-year high of more than 5 percent in recent months, driven by soaring food prices.

  The government aims to keep annual average inflation to 4 percent in 2011.

  (Editing by Don Durfee and Miral Fahmy)

CAIRO (Reuters) - Libyan leader Muammar Gaddafi has sent in new forces towards the western town of Zawiyah after rebels repelled an attack by his soldiers on Saturday, al-Jazeera reported, citing rebels in Zawiyah.

  The rebels had captured 3 APCs, two tanks and one pick-up after an hour-and-a-half of fighting, a rebel force spokesman had told Reuters earlier.

  (Reporting by Shaimaa Fayed Editing by Jon Hemming)

* Curbing inflation top priority for 2011 - Premier Wen

  * Says China's long-term growth trend still strong

  * Says government better placed to control economy, society

  * Makes no mention of uprisings across the Middle East (Adds comments on environment)

  By Zhou Xin and Koh Gui Qing

  BEIJING, March 5 (Reuters) - China is on course for another five years of robust growth, but inflation threatens social stability and must be tamed, Premier Wen Jiabao said on Saturday.

  In China's version of a " State of the Union" address to the annual parliamentary session, Wen said the top priority this year was to curb price rises that are hurting ordinary people in the world's second-largest economy.

  Laying out a plan for the next five years, he said the drivers of China's meteoric economic rise remained firm.

  " There is huge potential demand in the market, the supply of funds is ample, the overall scientific and educational level of the people is rising," Wen said in a report to the National People's Congress.

  He vowed to boost spending on education, healthcare and public housing, initiatives intended to narrow the chasm between the rich and poor in China that has stirred resentment.

  A huge police presence in the capital and a rare public warning against protests underscored the government's sensitivity to even the faintest whiff that the unrest roiling the Middle East could spread to China.

  Building a fairer society has been a core goal of Wen's premiership, but the income gap has in fact widened during his eight years in power and he is trying to lay the groundwork for improvement before a leadership reshuffle in late 2012.

  " As Deng Xiaoping said, the first step is to make a part of the people rich and the next step is to make everyone rich," said Shen Jianguang, economist with Mizuho Securities, referring to the Chinese leader who launched market reforms in the late 1970s.

  " They have already done a great job on the first step. Some people have gotten very rich. But the second step is lagging behind."

  The premier's annual address is given in the cavernous Great Hall of the People, crowded with thousands of delegates vetted by the Communist Party to acclaim and approve its policies.

  But Wen's televised speech is also aimed at hundreds of millions of ordinary citizens who Party leaders fear could become sources of anger unless grievances about price rises, unaffordable housing and expensive healthcare are eased.

  He made clear that addressing those concerns would preoccupy China's economic policy, shaping decisions on everything from farmers' incomes to the yuan exchange rate.

  " Recently, prices have risen fairly quickly and inflation expectations have increased," Wen said. " This problem concerns the people's well-being, bears on overall interests and affects social stability. We must, therefore, make it our top priority in macroeconomic control to keep overall price levels stable."

  For 2011, the government aimed to contain average inflation to 4 percent, Wen said. Inflation has been running near a two-year high of more than 5 percent in recent months. Lofty home price rises have also defied government cooling efforts.

 

  CONFIDENCE

  Wen used his speech to lay out a series of economic targets, including the customary objective of 8 percent growth this year, which, as in previous years, is sure to be surpassed.

  There were no surprises, as all the numbers had previously been announced. More telling was the tone of Wen's comments, brimming with the confidence of a government that has presided over two decades of nearly uninterrupted double-digit expansion.

  " The government's ability to exercise overall control and respond to major challenges has increased significantly," Wen said.

  China will stay in the fast lane, with tens of millions of people moving to cities from farms, more openings to global trade and investment, and factories and computers spreading into the hinterland, he said.

  The gross domestic product was on track to exceed 55 trillion yuan in 2015. That would make the Chinese economy nearly half the size of the U.S. economy. In 2010, it was a little more than a third as big.

 

  NEW SOURCES OF GROWTH

  Wen said China was looking to generate new sources of domestic demand that would wean economic growth off its reliance on cheap exports and infrastructure projects.

  He also told parliament that China would cut energy intensity by 16 percent and carbon intensity by 17 percent by the end of 2015.

  " We are keenly aware that we will have a serious problem in that our development is not yet well balanced, coordinated or sustainable," said.

  He did not mention the popular uprisings that have shattered authoritarian governments across the Middle East, and observers see scant risk of China's one-party state soon succumbing to mass unrest.

  But his speech showed that leaders in Beijing want to head off such risks, particularly anger stemming from price rises and wage gaps.

  " The world economy will continue to recover slowly, but the foundation for recovery is not solid. Economic growth in developed economies is weak," Wen added, noting that some countries still faced sovereign debt crises.

  Wen has said government policies would focus on a rural population of 720 million people, including 153 million migrants who usually live and work outside their home towns, many working at building sites and factories that make cheap exports. (Additional reporting by Ben Blanchard and Sui-Lee Wee Writing by Chris Buckley and Simon Rabinovitch Editing by Dean Yates and Daniel Magnowski)

* Targeted deficit down from 2.5 pct of GDP in 2010

  * Revenue, expenditure easily outstripped targets last year

  * Spending on low-income housing to rise 35 pct

  * Income from resource taxes seen up 22 pct

  * Local government debt to be flat, could create pressures

 

  BEIJING/SHANGHAI, March 5 (Reuters) - China will target a budget deficit of 900 billion yuan ($137 billion) this year, or 2.0 percent of GDP, the finance ministry said on Saturday, aiming to continue to shrink its deficit even as it steps up social spending.

  The budgeted deficit for this year compares with an actual gap of 1 trillion yuan in 2010, which accounted for 2.5 percent of gross domestic product. In 2009, the deficit came in at 2.8 percent of GDP, as Beijing primed the pump of the economy through fiscal spending.

  The ministry had originally reported a deficit of about 650 billion yuan for 2010, well below its original target of 1.05 trillion yuan, but contributions to the budget stabilisation fund and bringing forward some local government expenditures for 2011 enabled it to come in close to the original target.

  In its 2011 budget, unveiled at the opening of the annual session of parliament, the finance ministry said China's central and local governments would together aim for revenue growth of 8.0 percent and expenditure growth of 11.9 percent this year, both slowing from 2010.

  Last year, revenues increased 21.3 percent and expenditures rose 17.4 percent, the ministry said, easily outstripping the original targets of 8 percent and 11.4 percent, respectively.

  Tax revenue has grown rapidly in the past few years as the economy has boomed, and authorities intensified efforts to collect taxes.

  The ministry is looking for domestic VAT to rise 11 percent this year to 2.3 trillion yuan, while property taxes are expected to bring in 11 percent more than a year ago and resource taxes are seen rising 22 percent.

 

  SPENDING

  On the expenditure side, the ministry plans to increase spending on education, social security and employment by 14 percent, while that on low-income housing will rise 35 percent.

  Spending on police and domestic surveillance will also hit new heights, with " public security" outlays planned to reach 624 billion yuan -- 23 billion yuan more than the defence budget.

  While the central government's finances are seen as being in good shape, provincial and other local governments could continue to face a tougher time raising the money they would like to spend to help fuel local economic growth, analysts said.

  The finance ministry said it was planning to sell 200 billion yuan in debt on behalf of local governments this year -- the same as last year.

  At the same time, local governments could see income from the sale of land use rights, which make up a large portion of their revenue, take a hit as authorities try to cool the property market through limits on the purchase of property for investment purposes, analysts said.

  That in turn could prompt local authorities to raise more funds via the financing vehicles through which they have racked up significant amounts of debt, which some experts say risks leading to a mountain of defaults down the road.

  " Two hundred billion yuan in local government debt is a relatively moderate amount," said an analyst with a large securities firm in Beijing.

  " If it were up to local governments, that number would be higher, because they face more pressure than the central government."

  (Reporting by Koh Gui Qing in Beijing and Steven Bian in Shanghai Writing by Jason Subler Editing by Daniel Magnowski)