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LISA MULLINS: China's Premier gave his annual state of the nation speech today. Wen Jiabao admitted the country's economy was under strain, but he promised to create millions of jobs and lift China's economic growth back to 8 percent. And he also sent a message of reconciliation to Taiwan. The World's Mary Kay Magistad heard the speech and sent us this report.

MARY KAY MAGISTAD: It's been awhile since Taiwan has received a lot of kind words in the Chinese premier's annual address to the National People's Congress. In fact, it has tended to be on the receiving end of veiled or not-so-veiled threats. Not today, when Premier Wen Jiabao had this to say about Taiwan:

WEN JIABAO: We are ready to make fair and reasonable arrangement through consultation on the issue of Taiwan's participation in the activities and international organizations. And we're also ready to hold talks on cross-Straits political and military issues and create conditions for ending the state of hostility and concluding a peace agreement between the two sides.

MAGISTAD: “Peace agreement” is an interesting choice of words, because there's no war between China and Taiwan, only tension that's lasted for decades. A thaw in relations started a year ago when Taiwan's confrontational pro-independence president Chen Shui-bian was replaced by the more conciliatory Kuomintang Party leader Ma Ying-Jeou. But there's only so conciliatory even Ma's government is going to be. An initial wry response from the chairman of Taiwan's Mainland Affairs Council to Premier Wen's overtures was, “Perhaps China could remove the hundreds of missiles it not has pointing at Taiwan before talking about peace.” The Taiwan side also didn't share Wen's certitude about this:

WEN JIABAO: We are convinced that with the concerted efforts of the people on both sides, we will achieve complete reunification of the Motherland and the great rejuvenation of the Chinese nation.

MAGISTAD: Well, it plays well to the crowd in China. But Taiwanese cabinet officials said no such thing will happen until there's mutual trust, and internal consensus on each side. At the moment, surveys consistently show that most Taiwanese like things the way they are – friendly toward China, economically engaged with China, but with Taiwan being master of its own house and its own democracy. Within China's house, there is plenty to keep the government busy. Wen said today that China is facing its biggest economic challenge so far this century, but also said the government will increase spending to try to ensure the economy grows 8 percent this year and adds 9 million jobs.

JIABAO: In China, a developing nation with a population of 1.3 billion people, maintaining a certain growth rate for the economy is essential for expanding employment for both rural and urban residents, increasing people's incomes, and ensuring social stability.

MAGISTAD: Social stability. It came up a lot in this speech. The threat of social unrest, in the wake of almost 30 million people having lost jobs in recent months, hangs over the government's efforts to revive the economy. For The World, I'm Mary Kay Magistad, in Beijing.

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