(Adds reaction, paragraphs 14-18)
By John Ruwitch
HANOI Jan 12 Vietnam's ruling communists
opened an eight-day party congress on Wednesday with a candid
admission the fast-growing economy had become unstable, as
delegates began the process of reshuffling leaders and
charting new policies.
As leaders sang the national anthem to begin the
five-yearly event, streets in the chilly capital Hanoi were
festooned with red and yellow banners, some bearing the iconic
hammer and sickle. Propaganda posters bore the smiling
likeness of revolutionary leader Ho Chi Minh or of proud,
The economic backdrop is less festive. Inflation surged to
a 22-month high in December, the government is struggling to
bring down a hefty fiscal deficit, the currency has been
depreciating for three years and the trade deficit remains
Outgoing Communist Party chief Nong Duc Manh told the 11th
Party Congress that "macro balances are unstable" in the
country of nearly 90 million people as he outlined
achievements and challenges for the next five years.
In an hour-long speech, Manh said the economic growth
target for the 2011-15 period would be 7.0-7.5 percent a year.
September drafts of documents for the congress to consider had
a stronger five-year target at 7.5-8.0 percent.
Manh said the GDP growth target for the 10-year period to
2020 was 7-8 percent.
"The coming years are a period in which the economy of our
country will recover, returning to fast growth after a period
of slowdown, and (we will) restructure the economy for fast
and sustainable development," he said.
Economists say the leadership appeared too focused last
year on economic growth, which reached 6.8 percent, leading to
a resurgence of inflation, which kept pressure on the currency.
The central bank devalued the dong twice last year, and
since October it has been trading against the dollar on the
unofficial market well below the lower end of its band.
All three major ratings agencies downgraded Vietnam last
year on macroeconomic concerns exacerbated by the questions
surrounding the troubles at near-bankrupt state shipbuilder
Vinashin. The case has sparked debate in the
fast-changing country about the favoured role of the
The congress is not expected to decide on specific
policies, but delegate Vu Tien Loc, who is head of the
state-backed Vietnam Chamber of Commerce and Industry, said he
hoped to discuss much-needed economic restructuring.
"In the coming five years there will be many challenges
for the Vietnamese economy, and it will be a period in which
we will need to have more resolve in the task of pushing
changes in the structure of the economy," he said.
"We hope the focus of discussion on economic problems will
be how to speed up the process of transforming the structure
of the economy to raise efficiency and competitiveness of the
On Hanoi's streets, people were more concerned about
bread-and-butter issues than congress and pending leadership
Nguyen Thuy Lan, 42, who runs a tiny shop selling
motorcycle helmets, complained about inflation, taxes and food
safety and said she hoped there would be changes but was not
"There've been lots of party congresses over the
years. Sure, things are more open, but there are still
problems," she said.
Down the street, Nguyen Dac Luan, 38, who repairs
mobile phones, said he read congress-related news but not
"I don't really follow politics," he said. Asked if
he thought the congress would mean much for policies or the
economy, he said no.
Manh will be replaced at the congress, a party
official confirmed on Monday. But it remains unclear exactly
who the next party chief will be.
Party sources and analysts have said Prime Minister Nguyen
Tan Dung may be returned for a second term, while the current
head of parliament, Nguyen Phu Trong, could become general
Truong Tan Sang, a southerner who currently runs
day-to-day affairs of the party and a rival of Dung's, is
tipped for the relatively weak post of state president.
Regardless of the personnel changes at the pinnacle of the
party and government, few analysts foresee major policy changes.
(Additional reporting by Nguyen Van Vinh and Nguyen Huy Kham.
Editing by Jason Szep and Andrew Marshall)