Text of Government Work Report Delivered By Chinese PM at NPC Session 5 Mar 07
Text of report by Chinese Central TV first programme on 5 March
[Full text of the speech delivered by PRC Premier Wen Jiabao on the work of the government at the opening of the fifth session of the 10th National People's Congress at the Great Hall of the People in Beijing - live]
Fellow deputies:
On behalf of the State Council, I now submit a report on the work of the government to this session for your examination and approval and comments for opinions from members of the National Committee of the Chinese People’s Political Consultative Conference.
I. Review of the Work in 2006
China made a good start in the year 2006 implementing the 11th Five-Year Programme and we made major achievements in the national economic and social development. The economy achieved steady and rapid growth. The gross domestic product [GDP] reached 20.94 trillion yuan, a growth of 10.7 per cent over the previous year. The consumer price index rose by 1.5 per cent. Economic growth reached or slightly exceeded 10 per cent for four consecutive years without significant inflation. Economic efficiency was raised steadily. National revenue of the year reached 3.93 trillion yuan, a growth of 769.4bn yuan. The profit of large industrial enterprises grew by 31 per cent and increased by 444.2bn yuan.
We further deepened reform and opening up. We made new progress in reforming key areas and crucial links. The total volume of import and export trade reached $1.76 trillion, an increase of 23.8 per cent over the last year and utilized direct foreign investment was $69.5bn.
We accelerated the development social programmes. We made major achievements in scientific and technological innovation, continued to develop education, enhanced the development of public health systems, and further developed culture and sports.
The people’s living standards further improved. In cities and townships, an additional 11.84m people found jobs. The per capita disposable income of urban residents reached 11,759 yuan and the per capita net income of rural residents reached 3,587 yuan, an increase of 10.4 per cent and 7.4 per cent respectively in real terms after adjusting for price factors. All these achievements showed that our comprehensive national strength has been further enhanced. We have taken solid steps towards our goal of building a well-off society in an all-round way. (applause)
The main tasks accomplished over the past year include the following:
1. We have strengthened and improved macroeconomic regulation. Aimed at the glaring problems of excessively rapid investment growth in economic operations, excessive monetary and credit supply, and excessively large trade surplus, the central government promptly adopted a series of macroeconomic regulation measures. We have strengthened land control and tightly regulate newly increased construction land, and strictly investigated and punished illegal activities in land use. We have strengthened the supervision of money supply and credit and raised the renminbi base lending rates twice and raised the deposit reserves rates of financial institutions thrice. We have strengthened the regulation of finance and taxation in economic operations. We have enhanced the examination and approval as well as the supervision and inspection new projects in the market. We have strengthened the regulation and supervision of real estate market and focused on readjusting the housing supply structure. Macroeconomic regulation measures have produced gradual results. The growth margin of fixed asset investment has dropped and the rate of bank credit and loan has slowed, thus preventing economic growth from over heating and preventing sharp rise and fall in the economy.
2. Efforts to address the three rural issues [san nong - agriculture, peasants, and rural areas] were intensified. We steadily promoted the building of a new socialist countryside. Last year, 339.7bn yuan from the central government budget was spent on the three rural issues, a year-on-year increase of 42.2bn yuan. We rescinded the agricultural tax and taxes on special agricultural products nation-wide, putting an end to the tax that has been collected in China for more than 2,600 years. We continued to increase direct subsidies for grain farmers and subsidies for growing superior grain cultivators and for purchasing of agricultural machinery and tools; implemented the policy of granting general subsidies agricultural production supplies; continued to implement the minimum purchase price policy for key grain varieties in major grain-producing areas; and increased transfer payment to financially strapped counties and villages and major grain producing counties.
Despite serious natural disasters, the production of major agricultural products increased steadily. Grain output reached 994.9bn jin [49.54bn kilograms], registering the third consecutive annual increase. We increased the construction of rural infrastructure, including roads, water conservancy, electricity, and communications. We have resolved the issue of safe drinking water for another 28.97m rural residents, built methane facilities for another 4.5m rural households, thereby improving the working and living conditions in rural areas. Further progress has been made in the work relating to reducing rural poverty. To protect the lawful rights and interests of rural migrant workers in cities, we formulated policies and implemented measures to address the their low wage and overdue wage issues, to standardize labour management in accordance with the laws, and to improve job training and social security system for them.
3. The adjustment of economic structure was accelerated. We formulated and implement policies and measures to accelerate and rejuvenate the equipment manufacturing industry and to promote independent development of major technologies in key areas. We began to manufacture mega kilowatt nuclear power generators, ultra super critical thermal power generating units, and new types of ships, and launched major projects to produce high-end digital control machine tools and key manufacturing equipment.
We also formulated and implement policies and measures to carry out structural readjustments in 11 industries, include the steel, coal, and cement industries. As a result, there was a significant decline in the growth rate of investment in some industries that had surplus production capacity, and the total investment for new projects dropped significantly. We closed down backward coal and electrolytic aluminium production facilities, totalling 110m tons and 1.2m tons respectively. A number of major projects vital to the overall national economy were either completed and put into operation or started. The Qinghai-Tibet Railway was open for traffic; all generating units at the Three Gorges Left-Bank Power Station were completed and put into operation; and the construction of the Xiangjiaba Hydropower Station on the Jinsha River started. These projects will play an import role in providing momentum for future economic development.
We attached greater importance to the work of energy conservation and environmental protection, improved policies on saving energy and reducing emission of pollutants, and established a general responsibility system for meeting energy saving and pollution discharge reduction targets.
We have actively promoted energy conservation in key industries, key enterprises, and key projects and started pilot projects in the recycling economy as well as strengthened the water pollution treatment work in key valleys and regions such as the Three Gorges Dam region, Songhua River, sources and routes the south-to-north water supply project, and in Bohai Sea. We have implemented key environmental protection projects such as desulphurization in coal- fired power plants, urban sewage treatment, and harmless waste treatment process.
We have implemented special environmental protection programmes by correcting and penalizing enterprises for illegal pollutant discharge in four consecutive years so as to protect the health of the masses. We have firmly promoted ecological protection and construction. We have made temporary achievements in rectifying the order of mineral resources development. We have strengthened the work of geological survey.
We have continued to implement the overall strategy of regional development. We have solidly promoted the development of the western region, smoothly launched the project of revitalizing the old industrial bases in the northeast region, and started the project of promoting the rise of the central region. We have made new achievements in first developing the eastern region.
4. We have actively promoted reform and opening up. We have made full plans for comprehensive rural reform. We have steadily implemented the collective forestry rights system. We have made new progress in adjustment of the distribution of state-owned economies, reform of the shareholding system of state enterprises, and supervision and control of state assets. We separated the government and enterprises in the postal system and we have continued to promote the reform for the power system. We have taken new steps in reforming the shareholding system of state-owned commercial banks. The Bank of China and the National Industrial and Commercial Bank of China have been successfully listed in the country. We have made interim achievements in the reform of rural credit cooperatives. We have basically accomplished the reform of the shareholding distribution of listed companies. We have enhanced the development of the fundamental system of the securities market. We have deepened the reform of the insurance industry and gradually deepened the reform of the foreign exchange control system. We have continued to improve the fiscal and taxation systems. We have smoothly implemented the civil workers’ wages system reform and regulated the income distribution order. We have deepened the task of rectifying and regulating the market order.
We have readjusted the foreign trade structure. We have improved the policies for the export tax rebate, customs tariff, and processing trade; controlled the export of products of high-energy consumption and high pollutants. We have actively increased imports. We have optimized the use of the foreign capital structure by opening up the service industry such as bank, distribution, and telecommunication sectors wider to the outside world. We have deepened and expanded the economic and trade exchanges with foreign countries. We have supported enterprises in their foreign investment and cooperation. We have fully carried out our commitment in joining the World Trade Organization, and improved the economic system, and laws and policies related to foreign trade.
5. We have vigorously developed social undertakings. The central finance spent 77.4bn yuan, 53.6bn yuan, 13.8bn yuan, and 12.3bn yuan for science and technology, education, healthcare, and cultural sectors respectively in the whole year, an increase of 29.2 per cent, 39.4 per cent, 65.4 per cent, and 23.9 per cent over the last year.
We have promoted scientific and technological innovation. We have promulgated for implementation the outlines for the state medium and long-term scientific and technological development programme, and formulated and implemented relevant specific projects and supplementary policies. We have successively initiated 16 major special projects such as the development of large gas fields and coal gas; new-generation broadband wireless mobile communication network; designing and manufacturing of large airplanes; and manned spaceflight and moon exploration project.
We made breakthroughs in key technologies, such as high performance super computers, super-high quality hybrid rice paddy, third generation mobile communications, and digital television. China’s capacity for independent innovation has increased.
Priority was given to developing educational undertakings. A total of 184bn yuan was allocated by central and local governments to fund rural compulsory education. This fund enabled us to waive the tuition and miscellaneous fees for 52m rural students receiving compulsory education in the western region and in some areas in the central region, provide free text books for 37.3 m illion s tudents from families in financial hardship, and assist 7.8m boarding students to pay their living expenses.
Of the 420 targeted counties for the two basics project, which is the project to make nine-year compulsory education basically universal and to basically eliminate illiteracy among young and middle-aged adults, 317 counties reached the goal. The proportion of the targeted population attaining the goal of the two basics in the western region increased to 96 per cent from the 77 per cent in 2003. The central government spent nine billion yuan for the third consecutive years in building facilities for 7,651 rural boarding schools. A total of eight billion yuan was invested in developing modern distant learning programmes for primary and secondary schools in rural areas. The programmes covered over 80 per cent of the primary and second schools in rural areas in the central and western regions and provided accesses for more than 100m primary and secondary students to high quality education resources. New enrolment at secondary vocational schools totalled 7.41m, and the total attendance reached 18.09m. The total attendance at institutions of higher education reached 25m, and the gross enrolment rate rose to 22 per cent.
Priority was given to medical and health care work. An improved disease prevention and control system in urban and rural areas and a medical treatment system for public health emergencies were basically established. Work has began to set up rural health service system, and 2.7bn yuan of treasury bonds was allocated by the central government for the development of the medical and healthcare facilities at the county, township, and village levels.
Pilot project of a new type of cooperative medical care system was extended to 1,451 counties, county-level cities, and city districts, covering 50.7 per cent of the country’s total number of counties, county-level cities and city districts and 410m rural residents. A total of 4.27bn yuan allocated by the central government, in addition to local government funding, significantly raised the allowance for rural participants in the cooperative medical care system. The development of the community-based system of urban medical service was accelerated. Subsidized medical care was improved for urban and rural residents. The central government allocated 5.1bn yuan to support local governments’ efforts to improve public care services. Substantial progress was made in preventing and controlling major diseases, such as AIDS.
We actively developed cultural and sport undertakings. The press and publishing, radio, television, film, literature, art, philosophy, and social sciences flourished. Culture-related facilities, especially cultural facilities in rural areas, were improved. The project to expand radio and television coverage in rural areas was extended from incorporated villages to unincorporated villages. Continued progress was made in projects to build multiuse culture centres in communities, towns, and townships, and the national share data base project for culture information resources. Cultural system reform was further deepened; the development of cultural industries was accelerated; and cultural exchanges with foreign countries were increased. Sports activities for the general public were extensively developed.
The level of competitive sports constantly improved and the effort to build socialist spiritual civilization continued to be strengthened.
6. We worked hard to increase employment and improve social security work. We continued to improve and implement policies that support employment and reemployment. The central government allocated 23.4bn yuan for employment and reemployment efforts. We created jobs through a variety of channels, stepped up vocational and technical training, provided support and assistance to zero- employment households and people who have difficulty finding employment, and helped 5.05m laid-off workers find new jobs. The goa l set out in 2004 to basically solve the long-standing problem of deferred payments to construction companies and unpaid wages for rural migrant workers in the construction industry within three years was basically met. A total of 183.4bn yuan, or 98.6 per cent of the total amount owed, has been paid to construction companies. This payment included 33bn yuan in overdue wages for rural migrant workers.
The social security system was strengthened. Based on the pilot project carried out in three northeastern provinces, eight more provinces participated in the pilot project of setting up individual basic old-age insurance accounts for enterprise employees. After years of effort, the work of incorporating basic cost-of-living allowances for workers laid off from state-owned enterprises into the unemployment insurance system has been basically completed. Basic pension benefits for retired enterprise employees were increased. The coverage of social insurance was further expanded. Revenue from social security premiums increased. Oversight and management of social security funds has strengthened. The basic framework of social assistance system for both urban and rural residents was set up, and charity programmes continued to grow. The central government spent 13.6bn yuan on basic cost-of-living allowances for urban residents, 2.4bn yuan more than the previous year. Local governments also increased their spending on these allowances to varying degrees.
A system of basic cost-of-living allowances for rural residents was initiated in 2,133 counties (cities and districts) in 25 provinces (autonomous regions and municipalities), benefiting 15.09m residents. Funding for providing food, clothing, medical care, housing, and burial expenses for childless and infirm rural residents now mainly come from the government budget instead of depending on rural collectives. Assistance for orphans and protection for homeless juveniles was strengthened. Allowances for all types of entitled groups were increased significantly. A total of 11.2bn yuan was allocated from the central government budget, 47 per cent higher than the previous year. We improved the policy for compensating people whose land was expropriated to build large or medium-sized reservoirs and for assisting people displaced for reservoir projects, benefiting 22.88m persons. The long-standing problem is now being gradually solved.
Last year, some areas in China were hit by natural disasters of a severity seldom seen in history, including typhoons and droughts. We promptly took steps to carry out disaster relief work and rebuild disaster-hit areas. The central government raised some disaster relief allowances and allocated 11.2bn yuan in relief funds to help disaster victims get back on their feet.
7. We continued to strengthen democracy and the legal system. Democratic political construction at the grassroots level continued to make progress. Government legislation work was further improved.
The State Council has submitted to the NPC Standing Committee for its deliberations and approval seven proposed draft laws including the draft Law on Enterprise Income Tax, the draft Antimonopoly Law, the draft Law on Counteracting Unexpected Incidents, and the draft Revised Law on Compulsory Education. The State Council has promulgated 29 administrative statutes including the Regulations on Preventing and Treating AIDS and the Regulations Governing Foreign Banks.
We have expedited the building of a government under the rule of law, earnestly implemented the Law on Administrative License and the Law on Public Servants, and comprehensively promoted the Outline of Facilitating Administration According to Law. We have strengthened our supervision over the supervision and audit units. We have steadily restructured the administrative systems and working mechanisms in judicial departments. We have improved our work in dealing with petitions and complaints. We have continually upgraded the systems to prevent crime s and maintain social order, and extensively launched peace-enhancing activities. We have attained remarkable accomplishments in intensively rectifying social order in unruly areas and in resolving outstanding social order-related problems. We have further advanced our campaigns to build an honest government and to fight corruption, launched special tasks to rectify commercial briberies, severely dealt with a number of major and important cases involving government organs and personnel, and punished a number of corrupt elements according to law.
We have further strengthened our work on ethnic groups, religious affairs, and affairs related to Hong Kong, Macau, Taiwan, and overseas Chinese. We have attained new progress in modernizing China’s national defence and armed forces. We have attained remarkable accomplishments in diplomatic work.
After reviewing our practical experiences, we can summarize as follows: Only by emancipating our mind, seeking truth from facts, advancing with the times, blazing new trails, unwaveringly pursuing the socialist path with Chinese characteristics, upholding reform and opening up to the outside world, and upholding scientific development, harmonious development, and peaceful development, can we eventually materialize China’s magnificent goal of modernization. [applause]
Our accomplishments were the result of the comprehensive administration and correct leadership by the party Central Committee with Comrade Hu Jintao as general secretary, and the result of joint efforts and arduous struggles by the broad masses of cadres and people across China. On behalf of the State Council, I hereby extend my heartfelt gratitude to the people of various nationalities, various democratic parties, various mass organizations, and figures from various circles across China! [applause]. I hereby extend my heartfelt gratitude to the compatriots from the Hong Kong Special Administrative Region, the Macau Special Administrative Region, and Taiwan, and the broad masses of overseas Chinese! [applause] I hereby extend my heartfelt gratitude to all those friendly from various other countries who care for and support China’s modernization drive! [applause]
However, we have also soberly noticed that while facilitating economic and social development, China still faces many contradictions and problems and there are some shortcomings and inadequacies in the government work.
First, contradictions in the economic structure are outstanding. The ratios among the primary, secondary, and tertiary industries are irrational. The levels of economic development between urban and rural areas and among various regions are unbalanced. The ties between investment and consumption are uncoordinated. The weak foundations of the agricultural sector remain unchanged. We have found it much harder for China to steadily raise its grain output and for the peasants to continually raise their income.
The overall scale of fixed asset investment is still too large. The issue of excess liquidity in the banking system is prominent. Factors causing excessively rapid growth in investment and excessive issuance of credit still remain. The trade surplus has become relatively larger and the imbalance in international payment has worsened.
Second, the mode of economic growth is extensive [cu fang]. This is prominently manifested in high energy consumption and serious environmental pollution. The 11th Five-Year Programme has put forward the targets for conserving energy and reducing the emission of pollutants, and has regarded them as restrictive targets. This is of vital significance to promoting a change in the mode of economic growth and strengthening the work of energy conservation and environmental protection. Over the past year, various localities and departments have done a great deal of work and achieved positive progress. Energy consumption per unit of GDP for the previous three years rose by 4.9 per cent, 5.5 per cent, and 0.2 per cent respectively, but dropped by 1.2 per cent in 2006. The increase in the total amount of major pollutants discharged slowed down in 2006. Chemical oxygen demand and the discharge of sulphur dioxide rose 1.2 per cent and 1.8 per cent respectively, down from the respective increase of 5.6 per cent and 13.1 per cent the year before. However, we did not materialize the targets set at the beginning of last year for reducing energy consumption per unit of GDP by about 4 per cent and the total amount of major pollutants discharged by 2 per cent. The main reasons are: industrial restructuring has been proceeding slowly; heavy industries, particularly highly energy-consuming and highly polluting sectors, are still growing rapidly; many backward production facilities that should have been closed down are still in operation; and some localities and enterprises have failed to strictly comply with laws, regulations, and standards for energy conservation and environmental protection. It will take time for the relevant policies and measures to achieve prominent results. It is a very serious matter that the 11th Five-Year Programme has put forward these two restrictive targets. The targets cannot be changed, and we must resolutely work to materialize them. [applause] From now onward, the State Council will have to report annually to the NPC on the progress made in conserving energy and reducing emission, and report on the overall achievement made in the five years at the end of the 11th Five Year Plan Programme period.
Third, a number of prominent issues affecting the interests of the masses have not been properly solved. There are still issues that the masses are unsatisfied with in areas including food and drug safety, medical services, education charges, income distribution, public security, and production safety. Issues that harm interests of the masses in areas including land requisition, housing demolition and relocation, structural reform of enterprises, and environmental protection have still not been fundamentally solved. Many low-income masses are having a relatively difficult life.
Fourth, there are some issues in the self-building of the government. There are delays in making changes to government functions. The non-separation of government administration from enterprise management still remains. Some departments have unclear responsibilities and low work efficiency. Expenses for carrying out official duties are not standardized, and extravagance and wastes are inflating administrative costs.
In some regions and departments, and among a small number of staff personnel, there still exist the problems of bureaucracy, formalism, deviation from the masses, dereliction of duty, malfeasance, and even the abuse of power and corruption. The root of these problems is in the fact that systems are imperfect and supervision is not in place. We must adopt stronger measures and earnestly resolve these problems in a spirit of being highly responsible to the state and the people, and never fall short of the people’s expectations. [applause]
II. Overall Work Arrangement in 2007
This year is the last year of the current term of government. In an even higher spirit, we must fulfil our responsibilities, be active and enterprising, and not be lax at all. We must strive to do all items of work better and present a satisfactory answer sheet to the people. [applause]
The basic thinking and missions of government work are: To comprehensively implement the scientific development concept with the Deng Xiaoping Theory and the important thinking of the Three representations as guidance; accelerate the building of a socialist harmonious society; comprehensively carry out the various principles and policies since the 16th National Party Congress; strengthen and improve the macroregulation and control; put efforts into adjusting the economic structure and changing the mode of growth; put efforts into strengthening resource conservation and environmental protection; put efforts into reform and opening up and independent innovation; put efforts into promoting social development and resolving problems pertaining to the people’s livelihood; comprehensively push forward socialist economic construction, political construction, cultural construction, and social construction; and create a good environment and conditions for the convening of the 17th National Party Congress.
With various factors comprehensively considered, the prime objectives of this year’s national economic and social development are: To increase the GDP by around 8 per cent on the basis of optimizing structures, raising efficacy, lowering resource consumption, and protecting the environment; to increase urban jobs by no fewer than nine million and control the registered urban unemployment rate within 4.6 per cent; to keep the overall price levels generally stable and residents’ overall consumer price level within 3 per cent; and to improve the situation of imbalance in international income and expenditure.
Here, it must be emphasized that, under the conditions of a socialist market economy, the GDP growth rate objective advanced by the government is an anticipatory and guiding objective. It is an important basis for advancing macroeconomic indices such as budgets, employment, and prices. Due to the effect of changes in the economic environment and markets at home and abroad, the eventually realized GDP growth rate may bear definite differences from the anticipated objective. In advancing the GDP growth objective of around 8 per cent for this year, many types of factors such as demand and possibilities have been considered comprehensively. What is more important is that we must lead various areas to earnestly actualize the scientific development concept, put the focus of work on optimizing structures, raising efficacy, conserving energy, lowering resource consumption, and reducing pollution and emissions, prevent the lop-sided pursuit of and blind competition in growth rate, and to actualize good and rapid development of the economy.
To achieve the goals and tasks of economic and social development this year, we must adhere to the following policies and principles.
First, we must stabilize, improve, and implement our policies. Stabilizing policies means we must maintain the continuity and stability of the macroeconomic policies and continue to implement a sound fiscal and monetary policy. Improving policies means we must promptly improve policy measures in accordance with new situations in economic operations and pin pointedly resolve glaring contradictions and problems. Implementing policies means we must earnestly carry out various policy measures of the central government and enhance the executive power to truly implement all policies.
Second, we must strengthen and improve macroeconomic regulation and control. We must focus on controlling the scale of fixed asset investment and credit to promote balance in the total economic volume while optimizing the structure. We will encourage growth in some sectors and discourage growth in others, and suit each other according to specific situations, but should not apply uniform measures or practice. We must apply the economic levers and legal means more to guide and regulate economic activities. We must correctly handle the relationship between the central and local governments to bring into full play the two enthusiasms.
Third, we must vigorously raise the economic growth quality and efficiency. We must place the issues of energy conservation, environmental protection, and intensive land use onto a more prominent position. We must pay attention to raising product quality and enhancing economic competitiveness and sustainable development capability.
Fourth, we must attach greater importance to social development and improvement of the people’s livelihood. We must uphold the people-centred practice, promote accelerated social development, and actively solve practical problems that are most direct and most practical and that the people are most concerned about. We must safeguard social justice and fairness to let all the people enjoy the fruits of reform and development. ( applause)
Fifth, we must promote all tasks with reform and opening up as the driving force. We must uphold the direction of socialist market economic reform. We must, in line with the demand of economic and social development, advance the reform for economic systems, political systems, cultural systems, and social systems, and accelerate the development of an institutional support for implementing the scientific development concept and a harmonious society. We must fully raise the level of opening up to the outside world.
III. Promote good and rapid economic development.
Looking at the overall situation, we must focus on doing the following tasks in economic development this year.
First, we must insist on strengthening and improving macroeconomic regulation and continue to follow a prudent fiscal policy. 1. We must appropriately reduce fiscal deficits and the size of long-term national construction debt. This year, the central budget deficit is set at 245bn yuan, down 50bn yuan from last year; the long-term national construction debt is set at 50bn yuan, a decrease of 10bn yuan from last year; the regular construction investment in the central budget is set at 80.4bn yuan, an increase of 25bn yuan over last year. The central government’s overall construction investment is 130.4bn yuan. 2. We must optimize the structure and stress key points of the government’s budget and expenditure and the government’s investment.
In government investment, we must ensure three higher than, that is, the investment used in directly improving rural production conditions is higher than last year.
Funds devoted to basic education and public health and other social undertakings are higher than the previous year. And funds used for the great development of China’s western regions are also higher than the previous year. [Applause] At the same time, we will intensify support for energy conservation, environmental protection, and for autonomous renovation. Third is the rational arrangement for the surplus revenue of the central finance. In recent years, due to the fact that real economic growth has been higher than the projected target, and added with the factors of an increase in the policy-related revenue, the central finance enjoys a considerable amount of surplus revenue. From 2003 to 2006, the average annual surplus revenue topped 204bn yuan. The amount of the surplus revenue last year was 257.3bn yuan. Surplus revenue is mainly used for paying export rebates and for settling historic debts resulting from the return of farmland back to forest, for returning taxes to localities according to the law, for ordinary transfer payments, for increasing official spending on educational and scientific and technological undertakings, for increasing social protection funds, for spending in enterprises’ policy-related bankruptcy and for paying citizens’ minimum life support.
This year, we plan to arrange for 50bn yuan from last year’s surplus revenue to setup a central finance stabilizing and regulatory fund. Doing this is absolutely necessary for compiling budgets in an even scientific and rational manner and for maintaining the stability of central budget and the continuity of financial policy. Use of this fund will be incorporated into budget management and be subject to the supervision of the NPC.
There is a need to enhance financial management, earnestly do a good job of increasing revenue and cutting spending, lead an industrious and thrifty life, oppose waste and extravagance, raise efficiency in the use of financial funds, greatly promote paying of taxes according to the law, intensify management of tax collection, and standardize the government’s management of non-tax revenue. We will continue to practice a stable monetary policy. It is necessary to make comprehensive use of several instruments of monetary policy to rationally regulate and control the total amount of currency and credit, and effectively help ease the banks’ surplus capital flow problem. There is a need to readjust and optimize credit structure, give guidance to banks to increase credit support to farming, rural areas, and farmers, small-and-medium-sized enterprises, and to those businesses that engage in energy conservation, environmental protection, and in autonomous innovation undertakings. We need to continue controlling medium and long-term loans, and strictly restrict providing loans to businesses that consume excessive amounts of energy, that seriously pollute the environment, and to inferior enterprises that engage in sectors with overcapacity.
We will steadily promote the reform of the marketization of interest rates, further improve the formation mechanism of the renminbi exchange rate, enhance and improve foreign exchange management, and make active exploration and expansion of the channels and ways for the rational utilization of the state’s foreign exchange reserve. We will also adopt various measures to gradually improve the unbalanced situation in international balance of payments.
We will readjust the relationship between investment and consumption. We will adhere to the policy of expanding domestic demand by concentrating our efforts on expanding consumption needs. There is a need to deepen the reforms of the income distribution system, which can not only help ease the contradiction resulting from the widening of the income gap but also help effectively increase consumption demands. We will adopt various measures and work to help increase the incomes for urban and rural citizens, particularly for low-and-medium income earners. It is necessary to rationally readjust and strictly enforce the minimum wage system and implement the minimum hourly wage standard.
We will strengthen regulation and guidance for income distribution in enterprises and set up sound mechanisms for regular pay increases and regular payment of wages. All local governments should conduct a general survey on compliances with the minimum wage system and minimum hourly wage standards this year. We will continue to implement policies and measures for reforming the salary system for civil servants, standardizing the pattern of income distribution among civil servants, and adjusting the benefits they receive. In particular, we must expand consumer demand in rural areas, conscientiously implement policies and measures to promote higher income and lesser financial burden for rural residents, improve the distribution of goods and the market system in rural areas, improve the consumption environment and conditions in rural areas, and perfect our policies on consumption. We must actively develop consumption growth areas, such as tourism, culture, recreation, and exercise, and expand immediate consumption among residents.
We will maintain an appropriate rate of growth in fixed-asset investment. We will make efforts to improve the investment mix so as to increase investment returns. We will continue to keep a firm grip on the controls over land and credit. We will appropriately raise and strictly enforce the requirements for market access for development projects in terms of land use, environmental protection, energy conservation, technology, and safety, taking into consideration specific conditions in each industry. We will strictly control the launching of new projects and pay particular attention to controlling the scale of urban development. We will step up the development of major projects that concern the overall economic and social situations and long-term development. We will accelerate construction of important infrastructure projects such as large water conservancy projects, energy production bases, trunk rail lines, and national trunk highways. We will actively encourage more investment of non-governmental funds in agriculture, rural areas, social programmes, independent innovation, resource conservation, environmental protection, and the central and western regions. We will deepen reform of the investment system and improve the decision- making system and the system of accountability for major investment projects.
The real-estate industry plays a major role in developing the economy and improving housing conditions for the people. We must promote the industry’s sustained and sound development.
First, taking into consideration China’s large population and limited land and the level of economic development at this stage, we need to make appropriate plans, build housing scientifically, maintain consumption at an appropriate level, build environmentally friendly buildings that conserve energy and land, and form a housing construction and consumption model with Chinese characteristics.
Second, the real-estate industry should focus on developing reasonably priced commercial housing for ordinary people. The government must pay particular attention to helping low-income families resolve their housing problem. We will increase fiscal and taxation policy support and set up a sound system of low-rent housing. We will improve and standardize the system of affordable housing.
Third, we will correctly use the two approaches of government regulation and market mechanism to maintain a reasonable scale of real-estate development. We will improve the supply structure of commercial housing, strengthen oversight and regulation of housing prices, prevent overheating in housing prices, and keep prices at a reasonable level.
Fourth, we will deepen efforts to ensure order in the real- estate market, strengthen oversight, and punish and curb actions that violate the laws and regulations in real-estate development, transaction, and agency service. Local governments at all level s must assume their full share of responsibility for regulation and oversight of the real-estate market.
Second [as received], we will promote modern agriculture and push forward the building of a new socialist countryside.
The issues related to agriculture, rural areas, and farmers are major issues concerning comprehensive building of a well-off society and our overall modernization efforts. This year’s work on the three rural issues [Chinese: san nong] will focus on accelerating the development of modern agriculture, and effectively promoting the new socialist countryside.
First, we will ensure the steady development of grain production. We must protect the primary farmland, stabilize areas where grain is sowed and improve the structure of grain varieties grown and increase the per unit area yield of grain. We will strengthen the monitoring and regulation of grain products, storage, import and export, and set up a grain security warning system to ensure order in the grain market.
Second, we will substantially raise the overall production capacity of agriculture. We will accelerate development of agriculture facilities, improve agriculture technology and equipment, intensify agricultural research and efforts to expand application of advanced agriculture technology, improve the comprehensive system of agriculture-related services, and strengthen our ability to prevent and resolve disasters that affect agriculture.
Third, we will enhance efforts to boost rural infrastructure development. We will accelerate the building of all conservancy projects relating to hydro-electricity, roads, powergrids, telecommunications, and safe drinking water. We will pool resources to basically complete within two to three years the upgrading of all large, medium, and key small dilapidated reservoirs in China. We will accelerate the development of safe drinking water supplies and provide safe drinking water for another 32m people.
Fourth, we will increase rural incomes through a variety of channels. We will increase income in farming, livestock, and agriculture and forestry sectors, develop secondary and tertiary industries in rural areas particularly the processing industry for agricultural products, promote development of specialized agricultural operations, strengthen county economies, and develop channels to increase rural employment and rural incomes. We will implement policies and measures to solve the problems of rural migrant workers in cities. We will increase efforts to relieve poverty through development and reduce the size of the poor rural population.
Fifth, we will promote the training of people in the practical skills needed in the countryside and the development of rural human resources. We will step up training of farmers to make them better able to apply scientific techniques to growing crops and nurture a new kind of farmers.
Development of modern agriculture and promoting the building of a new countryside are dependent on government policy, investment, technology, and reform.
First, we need to consolidate, improve, and strengthen the policy of supporting agriculture and giving favourable treatment to farmers. We will increase direct subsidies to grain farmers producing grain, subsidies for producing superior seed varieties and purchasing agricultural machinery and tools, and general subsidies for agricultural production supplies. We will continue to follow the minimum purchase price policy for grain. We will increase support for counties and townships with financial difficulties and major grain producing counties.
Second, we need to increase investment in agriculture and rural areas. We will effectively shift the focus of state infrastructure development and development of social programmes to the countryside. This year, support for agriculture and rural areas, state fixed asset investments in the countryside, and proportion of land transferred income used for the rural development are all slated to increase at a rate higher than the previous year. Allocation from the central government budget for resolving issues related to agriculture, rural areas and farmers will total 391.7bn yuan, an increase of 52bn yuan over last year. We must vigorously develop agricultural insurance and expand the scope of the agricultural insurance pilot project.
Third, we must accelerate the progress of agricultural science and technologies. We should enhance China’s ability to make innovations in agricultural science and technology, support agricultural science and technology projects, accelerate application advances of agriculture researches, improve local systems for providing modern agricultural technology and services, and encourage the introduction of modern agriculture science and technology to individual villages and households.
Fourth, we must promote comprehensive rural reform. We must accelerate the reform of village and township bodies, the reform of rural compulsory education, and the reform of management system for county and village budgets, so as to gradually establish a competent and effective administration management systems in rural areas, a rural compulsory education system protected by the government, and a public financial system covering both urban and rural areas. Meanwhile, we must promote reforms on the system of land requisition and the system of collective forest rights, actively develop specialized cooperative organizations for peasants, and continue to clear up debts for villages.
To promote the building of a new socialist countryside, we must focus on developing rural economy and on increasing peasants’ income. We must persist in stabilizing and perfecting the basic managements in rural areas, persist in taking measures suiting to local conditions and proceeding from actual situation, and persist in respecting the peasants’ will and their rights and interests. We oppose formalism and issuing coercive orders. [applause]
Third [as received], we will take strong measures to save energy, lower energy consumption, protect environment, and use land intensively. This year, we must make conserving energy, decreasing the consumption of energy, protecting the environment, and using land intensively the breakthrough point for changing the pattern of economic growth.
The focus of energy saving and environmental protection efforts will be on the following:
1. To improve and tighten the energy consumption and environmental protection standards. Potential new projects must be assessed for energy consumption and environmental impact, and projects that do not meet the standards will not be allowed to proceed. Enterprises still do not meet the standards after rectifications and improvements must shut down in accordance with the law.
2. To resolutely close down backward production facilities. During the 11th Five-Year Programme, we plan to close down small thermal power plants with total power generating capacity of 50m kiloW. The target for this year is to close down power plans with a total capacity of 10m kiloW. We plan to close down backward iron mills and steel mills with total production capacities of 100 and 55m tons respectively in the next five years. Our target this year is to close down iron and steel mills with production capacities of 30 and 35m tons respectively. We will intensify our efforts to shut down more backward production facilities in the cement, electrolytic aluminium, ferroalloy, coal, and calcium carbide industries.
3. To give a high priority to key industries and enterprises. We will step up energy conservation and emission reduction in key industries such as the steel, nonferrous metals, coal, chemicals, building materials, construction, and key enterprises that use more than 10,000 tons of coal annually. We will comprehensively carry out a key energy saving project to upgrade low-efficiency coal industrial boilers and furnaces and regional combined heat and power facilities. We continue to give priority to the development of urban public transport system.
4. To improve the system of energy conservation and environmental protection policies. We will give full play to the role of market mechanism and comprehensively use the economic means of pricing, public finance and taxation, and credit funds to promote energy conservation and environmental protection. We will deepen reform of prices for resource products and charges for pollution, improve the system of taxes on resources and strengthen the system of compensated exploitation of mineral sources.
5. To quicken the technological advancement in energy-saving and environmental protection. The government will actively promote renewal of equipment and technical transform aimed mainly at energy- saving and reduction in gas exhaustion, and guide enterprises to adopt new facilities, new technique, and new technology advantageous to energy-saving and environmental protection. We will strengthen integrated use of resources and clean production process, and vigorously develop recycled economy, and energy-saving and environment-friendly industries.
6. To intensify pollution management and environmental protection. The government will increase national debt and the central budget funding to support cities and towns to build waste handling facilities for domestic liquid waste, house refuse, and dangerous waste materials. We will continue to manage the pollution in the key watershed, including the water so urce and the coastal areas of the three rivers [Huai River, Hai River, and Liao River] and three lakes [Tai Lake, Chao Lake, and Dian Lake], the Songhua River, the Three Gorges Reservoir and its upstream, and the projects for diverting water from the south to the north. We will prohibit polluted industries and city pollutants to flow to the rural areas in order to control pollution in the rural areas from the sources.
7. To intensify law enforcement, supervision, and management. The government will set up a more effective supervisory management system for energy-saving and environmental protection, and will firmly impose punishment against all illegal acts.
8. To seriously implement an objective responsibility system. The government will earnestly establish and improve the scientific, complete, and uniform target index system, monitoring system, and appraising system for energy-saving and reduction in gas exhaustion in order to implement a strict responsible system.
To use our lands economically and intensively will not only affect current economic and social development, it is also linked to the long-term interest of the state and the foundation of survival for the people. On the land issue, we must not commit irreversible historical mistakes that bring disaster to our future generations. We must defend the basic policy of keeping at least 1.8bn mu [One mu equals 0.0667 ha] of farmland across the nation. We must firmly implement the strictest land management system.
First, we must seriously implement overall and annual planning for land utilization. We must firmly control the size of land usage in construction, strengthen the protection of farmland, especially the basic farmland, and forbid development of farmland without approval. We must seriously implement the newly revised regulations for prohibition and restriction in land usage, in particular, the prohibition in development of villas for housing development, golf courses, and building of new training centres by party and government organizations and state-owned enterprises.
Second, we must earnestly improve and strictly implement the standard for economical and intensive land usage, including construction of common facilities and housing. The increase in usage must be controlled, the stock must be checked, in order to raise the level of land use efficiency and intensity.
Third, we must thoroughly control the use of industrial land, and firmly implement the base price standard for sales of industrial land.
Fourth, we must implement the tax and fee policy for land development, regulate the management of proceeds from land sales, and thoroughly implement the regulations stipulating the need to transfer all proceeds from sales of state land to local budget.
Fifth, we must impose a stricter and responsible system for land management, implement land supervision system, and enforce stern investigation and punishment for all illegal land use cases.
We should vigorously promote, across the whole society, formats of production and consumption that are energy-conserving, environmentally friendly, and civilized so that energy conservation and environmental protection will become self-conscious acts of every enterprise, village, unit, and social member who will strive to build a society that is energy-conserving and environmentally friendly.
Fourth [as received], we should expeditiously facilitate industrial structural upgrade and independent innovation. We should persistently pursue a path of new industrialization and strive to optimize industrial structure. We should focus on vigorously developing the service industry, upgrade the industry’s level and standards, and continue to give play to the guiding role of the information industry and information technology in the national economy and society. We should encourage and support an expedited development in the service industry by facilitating structural reform, increased investment, and upgraded policies. Particularly, we should develop modern service industries including physical distribution, finance, information, consultation, tourism, and community services industries.
The overall scale of China’s industries is large but its industrial levels and technological standards are low. It is an urgent task for us to transform these large industries to competent industries. We should expeditiously develop new and high- industries, invigorate equipment-manufacturing industries, vigorously develop renewable energy resources, systematically develop alternative energy resources, and extensively utilize advanced technologies to transform and upgrade traditional industries. We should expeditiously readjust industries with excessive productivity. While optimizing industrial structure, we should focus on intensifying industrial planning and guiding policies through economic and legal means.
To build an innovative country, we should earnestly implement the objectives and tasks stipulated in China’s National Medium-and Long- Term Scientific and Technological Development Programme. We should conduct special major scientific and technological projects, and strive to tackle and attain a number of core and crucial technologies involving the national economy, the people’s livelihood, and national security. We should rely on key projects to independently develop major heavy equipment industries and strive to attain breakthroughs in fields where China has significant superiority.
We should strengthen basic research, research on technological frontier, and studies on social services. We should expeditiously establish a system for technological innovation, which regards enterprises as the main body, which gears towards the market, and where industrialists, scholars, and researchers are integrated. We should improve the mechanisms for encouraging independent innovations, and implement taxation policies, monetary policies, and government procurement systems that encourage and support independent innovations. We should vigorously invest on fighting risks against launching new endeavours. We should urgently formulate and implement national strategies governing intellectual property rights to earnestly strengthen the protection of intellectual property rights. We should continue to implement the action plan to upgrade all the Chinese people’s scientific knowledge.
Fifth [as received], we should further facilitate a coordinated development among regions. We should persistently make overall plans while taking into account various factors, rationally formulate programmes, utilize our superiority, and implement policies to enhance a coordinated development among regions. We should continue to vigorously develop China’s western regions; focus on strengthening infrastructural projects, developing the ecological environment, and enhancing scientific and technological education; and develop special industries with relative superiority. We should urgently formulate follow-up policies to consolidate and enhance China’s accomplishments in restoring reclaimed land to forests and grasslands. We should continue to facilitate key ecological projects including protection of natural forests, prevention and rectification of desertification, and rectification of stony desertification. We should actively reinvigorate old industrial bases in Northeast China; focus on intensifying industrial restructuring; properly restructure and reform important industries and enterprises; facilitate the development of equipment- manufacturing industry, raw material-processing industry, new and high-technological industry, and farm product-processing industry; and increase the construction of bases for cash crops.
We should expeditiously conduct pilot projects on economic restructuring of cities with depleted energy resources and rectification of collapsed coal mines. We should expeditiously transform areas occupied with temporary sheds.
The focus in the central region is on the continued strengthening of the construction of production capabilities in major grain- producing areas and their capability to process and convert agricultural produce; strengthening the construction of important energy and raw material bases and comprehensive transportation systems; and supporting the development of advanced manufacturing industries and new high-tech industries. For the eastern region, the focus is on optimizing and upgrading the industrial structure, strengthening independent innovation capabilities and international competitiveness, and taking the lead in reform and opening up and scientific development. We will continue to give full play to the roles of special economic zones and Shanghai’s Pudong New Area and push forward the development and opening up of regions with relatively better conditions, such as Tianjin’s Binhai New Area.
We will intensify state support for regions lacking in development, encourage developed regions to direct support to regions lacking in development, and promote accelerated economic and social development in old revolutionary areas, ethnic areas, frontier areas, and poor areas. We will properly undertake the development of dam areas and the relocation work for dams.
IV. Pushing Forward the Construction of a Socialist Harmonious Society
The harmonious construction of society, with the people living in peace and enjoying their work, is the common wish of the broad masses and an important mission in the government’s work. This year, we will earnestly carry out the spirit of the sixth plenary session of the 16th CCP Central Committee and adopt stronger measures to take an important step in building a socialist harmonious society.
First, we will accelerate the development of social endeavours such as education, health, culture, and sports. Education is the foundation of the nation’s development. Equity in education is an important part of social equity. We will persist in putting education in the strategic status of prioritized development, and accelerate the development of education at all levels and of all types. The overall arrangements are to make compulsory education universal and consolidate it, accelerate the development of vocational education, and put efforts into raising the quality of higher education.
This year, we will abolish all tuition fees and miscellaneous fees in the compulsory education phase in rural areas nationwide. [applause]
This will broadly reduce the economic burden of the families of 150m middle and elementary school students in rural areas. We will continue to provide textbooks free of charge to students from poor families in rural areas, and also subsidize boarding and living costs. [applause]
We will improve guarantee mechanisms for compulsory education budgets in rural areas and continuously raise the level of guarantees. This year, the budget allocated from the national finances for compulsory education in rural areas is 223.5bn yuan – an increase of 39.5bn yuan from last year. During the 11th Five- Year Programme period, 10bn yuan will be invested from the central finances to implement plans to refurbish junior middle schools in rural areas. Regional governments must also correspondingly increase investments in this respect. At the same time, we will continue to properly resolve the problems facing the children of needy urban families and farmer-workers in receiving compulsory education. This year, we will also ensure the comprehensive completion of the two basics plan to tackle difficult issues in the western region as well as modern long-distance education projects for middle and elementary school students in rural areas. We can definitely actualize the objective of enabling all children to go to school and go to good schools. [applause]
We will place the development of vocational education at an even prominent position, so that education will be genuinely oriented towards the needs of society. This is a major reform and historical task. [applause]
We will stress developing secondary vocational education and establish a vocational and training network covering urban and rural areas. There is a need to deepen the reform of the management system of vocational education, set up a mechanism of joint participation by various sectors, enterprises, and schools, and promote a mode of school running marked by the integration between industrial sectors and schools, and by the cooperation between schools and enterprises. The central task of higher education is to raise quality, accelerate educational and teaching reforms, stabilize the scale of enrolment, enhance high-level academic discipline and college building, renovate the mode of nurturing capable people, optimize the capable people training structure, and work hard to train a large number of outstanding people. We will support and standardize the development of non-official educational undertakings, and give play to the initiative of running schools by people in society.
We will promote the following two major measures to promote educational development and fairness in education:
First, starting from this year’s new academic year, we will establish a sound state scholarship and educational grant system at institutes of higher learning, higher vocational schools, and secondary vocational schools. To that end, the central government will increase financial spending from last year’s 1.8bn yuan to 9.5bn yuan. Some 20bn yuan will be arranged for next year. [applause] At the sam