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BEIJING, Wednesday (Reuters) China's Zhu Rongji will offer a glowing review of his five years as premier in a policy speech on Wednesday, while warning that social unrest involving overtaxed farmers and the urban unemployed could threaten the country's future.

Zhu, in his final work report to the National People's Congress, or parliament, will press lawmakers to "nip grass-roots conflict in the bud" by helping laid-off workers and struggling farmers, according to excerpts seen by Reuters.

The tough-talking premier, who stepped down from his number three spot in the ruling Communist Party in November and is due to retire from government at the two-week congress, attacked corrupt officials and extolled the virtues of clean government.

His report also says China will push to resume dialogue with rival Taiwan as soon as possible, and will seek the lifting of a decades-old ban on direct trade, transport and mail links with the island Beijing regards as a renegade province.

Zhu reserves his most passionate plea for help for the tens of millions of urban jobless, and for higher incomes for the 800 million rural Chinese -- a problem the no-nonsense reformer has said brought on the "most headaches" of his tenure.

"We must exert a great deal of effort to resolve the problems of back pay for workers and overburdened farmers," Zhu says.

"Deal correctly with inner conflicts among the people under a new situation. Deal appropriately with sudden, collective incidents and work hard to resolve grass-roots conflicts and disputes to nip them in the bud," Zhu says in the speech.

Despite such problems, Zhu says the economy should with "hard work" grow at least seven percent in 2003, after clocking rapid eight percent growth in gross domestic product last year.

Zhu has presided over a booming Chinese economy, but he warns that its achievements could be threatened by a failure to address the concerns of struggling farmers.

China's countryside has faced growing problems in recent years in the form of a glut of farm produce, sliding prices and slowing rural income growth, he says.

"Agricultural, village and farmers' problems relate to the overall situation of China's reform, opening and modernisation. We cannot neglect them or relax at any time," his report says.

"If we do not change these conditions, they will severely dampen farmers' enthusiasm, rock the foundations of agriculture and even threaten the entire national economy," Zhu says.

To ease the burden, Zhu calls for an expansion of pilot tax reform proposals that will eliminate arbitrary fees on farmers' incomes, and supports the movement of rural workers to cities to look for work. 

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