The Chinese government pledged on Thursday to increase spending on social programs including pension and medical reform in 2009 despite pressure from the international financial crisis.

"The more difficulties we face, the greater attention we should pay to ensuring people's well-being and promoting social harmony and stability," Premier Wen Jiabao said in a government work report to the annual session of the parliament that opened on Thursday.

The central government plans to spend 293 billion yuan (about US$42.84 billion) on the social safety net this year, up 17.6 percent or 43.9 billion yuan over the estimated figure for last year, he said.

"Local governments will also increase funding in this area," he said.

The fund will help "expand coverage of social security programs" and "increase social security benefits" of the Chinese, according to the Premier.

The government will allocate an additional 850 billion yuan in the three years beginning on 2009, including 331.8 billion yuan from the central government, to ensure smooth progress in the reform of its medical and health care system.

"We will continue to ensure that maintaining and improving people's life is always the starting and end point of our economic work," he said.

Economists said the lack of health insurance and social security is holding back China's economic development and the government's efforts to spur domestic demand, as people tend to clutch their purses tightly for unexpected disease, a laid-off, or old-age.

Migrants, farmers highlighted

The Premier vowed in the report to formulate and implement a method for old-age pensions for the country's 130 million rural migrant workers, and, at the same time, to introduce a method for transferring old-age pension accounts for workers moving from one region to another.

The government also aims to expand social security programs to cover more "employees in the non-public sector, rural migrant workers, and farmers whose land was expropriated".

Starting from this year, the government will introduce a new policy in all rural areas to subsidize hospitalized childbirth, provide regular prenatal checkups and postpartum visits for women, and monitor the growth of infants and toddlers less than three years of age to prevent birth defects, he said.

China has established several policies concerning social welfare since 1984. By 2008, about 219 million people have pensions and about 317 million have basic medical insurance. An additional 124 million have unemployment insurance, 138 million have work injury insurance and 91 million have childbirth insurance.

China has to invest 5.74 trillion yuan by 2020 in building an all-round social welfare system to enhance people's livelihood, according to the China Development Research Foundation, a government think tank.

The amount will cover all aspects including pension, education, health care, housing, employment and aid to rural residents and migrant workers, the foundation said in a report.

Spending in the next three years will top 2.6 trillion yuan, the report said.

The foundation's chairman Wang Mengkui said the social welfare system should keep pace with the country's economic development, which was essential to "solve the problem" of the imbalance between urban and rural areas and among regions and to benefit the whole population.

Legal base for safety net

China's draft law on social insurance, which aims to create a universal safety net for the country's 1.3 billion people, underwent its second reading by the top legislature last December.

The draft specifies a common right for citizens, urban and rural alike, to pay premiums and enjoy old-age pensions and insurance for medical care, work injuries, unemployment and childbirth.

To address the concerns of migrant workers, the social insurance draft law allows Chinese citizens to pay pension premiums in one place and draw money in another if they migrate to other cities or provinces.

This stipulation is particularly significant as the country has a much more mobile population than in the past.

The draft also determined that a new rural medical system, in which farmers and governments raise funds together, would be included in the medical insurance plan.