The real problem is the shortage of telecommunication and transportation

CHINESE Premier Mr Li Peng may still be an arch-conservative at heart, but he has grown into a wily one.

Faced with economic growth spiralling above official forecasts, his Annual Work Report was like doing the political splits.

His report readjusted growth forecasts from six per cent to eight per cent and reaffirmed paramount leader Mr Deng Xiaoping's speedier economic reforms as he also stressed that the government should take a watchful step and strengthen the central controls over the economy.

Everyone knows that even the new forecast will be exceeded, but Mr Li's revised figures were just enough to put one of his feet in the liberal camp without moving the other from his conservative power-base.

This year's pragmatic approach is a contrast to 1992, when he burned his fingers by underestimating the country's Gross National Product target, earning scorn from Mr Deng's supporters wanting to develop a market economy at full speed.

''People know who is in control. If Li Peng doesn't speak in line with Mr Deng Xiaoping, people will just ignore him because we know who has the final say,'' a Chinese official in Hongkong said.

In his speech, Mr Li projected that this year's Gross Domestic Product (GDP) would reach eight per cent with an inflation rate at six per cent. The Budget deficit would decline to 20.5 billion yuan from last year's 23.7 billion yuan.