Yesterday's man, Wen Jiabao, gives the world a glimpse of China's tomorrow under incoming President Xi Jinping

Defence, the environment and economic growth: outgoing premier reveals incoming president's priorities

The world is watching Beijing for signs of what the future holds under incoming President Xi Jinping. Today it got a glimpse, as outgoing premier Wen Jiabao delivered his 10th and final address to China’s annual National Congress. In it, Mr Wen – whose decade-long term will end when the congress closes – set out a list of his country’s top priorities, from cutting economic inequalities at home to combating corruption, cleaning up China’s rapidly worsening pollution problem and raising the country’s defence budget at a time when it is involved in several territorial rows with its neighbours.

It also contained a pledge to keep economic growth at 7.5 per cent – a fantasy for many Western governments but almost conservative in a land where between 2001 and 2010 it didn’t dip below 9 per cent. Even last year – a relative failure in comparison with the Noughties as a result of spluttering demand for Chinese goods in Europe and the US – it was 7.8 per cent.

While the words were delivered by Mr Wen, they are in reality the manifesto of the Chinese Communist Party and of its leader Mr Xi, who will be confirmed as president – replacing Hu Jintao – at some point before the end of the 13-day session. The NPC is the last piece in the elaborate once-a-decade leadership transition that kicked off with a Communist Party congress in November, at which Mr Xi was named as party leader and military head.

“Some people still lead hard lives,” said Mr Wen, referring to the yawning income gap in China that has seen much of the newly minted wealth concentrated among a privileged few in the cities of the coast and the south. “We must make ensuring and improving people’s well-being the starting point and goal of all the government’s work, give entire priority to it, and strive to strengthen social development.”

Mr Wen, who will be succeed by his top lieutenant, Li Keqiang, became known as “Grandpa Wen” for his common touch during his 10-year term, although that image was somewhat undermined by a New York Times report last year that alleged his family had accumulated billions of pounds during his rise to power.

The speech, which was delivered to muted applause and watched by an impassive Mr Xi, placed special emphasis on reducing energy consumption, improving conservation and solving the country’s serious air, soil and water pollution problems. Military spending is set to rise this year to 740.6billion yuan (£78.5bn), according to a Ministry of Finance report released today, as China continues to upgrade its fleet of fighter jets, ships and missiles. It has commissioned its first aircraft carrier, and is also working on developing its own stealth technology.

The country’s military spending as a percentage of gross domestic product was unchanged last year at 1.3 per cent, considerably lower than the world’s biggest defence spender, the US, which shelled out nearly six times as much on defence in real terms last year. The Communist Party insists this modernisation programme poses no threat, but China’s neighbours, particularly Japan, say China has become more aggressive in how it handles disputes over territory in the resource-rich waters of East and South China seas.

Japan’s Foreign Minister Fumio Kishida said his country “intends to continue watching China’s defence policy and its military strength closely”, while Chief Cabinet Secretary Yoshihide Suga said: “It is desirable for China to increase transparency in its defence and military policy, including expenditures.”

As China’s neighbours watched the defence budget, rising social discontent at home and possible instability prompted a third successive annual rise in spending on domestic security.: