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Full text of the report on China's economic and social development plan

(Xinhua)
Updated: 2004-03-17 13:17

Following is the full text of the Report on the Implementation of the
2003 Plan for National Economic and Social Development and on the 2004
Draft Plan for National Economic and Social Development, delivered at the
Second Session of the Tenth National People's Congress on March 6, 2004:

REPORT ON THE IMPLEMENTATION OF THE 2003 PLAN FOR NATIONAL ECONOMIC AND
SOCIAL DEVELOPMENT AND ON THE 2004 DRAFT PLAN FOR NATIONAL ECONOMIC AND
SOCIAL DEVELOPMENT

By Ma Kai Minister in Charge of the National Development and Reform
Commission

Fellow Deputies,

As entrusted by the State Council, I am now reporting to this session on
the implementation of the 2003 Plan for National Economic and Social
Development and on the 2004 Draft Plan for National Economic and Social
Development. I am presenting these to you for your examination and
approval and also for comments and suggestions from members of the
National Committee of the Chinese People's Political Consultative
Conference (CPPCC). I. Implementation of the 2003 Plan for National
Economic and Social Development

Acting in accordance with the resolution on economic and social
development adopted at the First Session of the Tenth National People's
Congress (NPC), the people of all our ethnic groups vigorously worked
under the leadership of the Communist Party of China (CPC) to promote
reform, opening up and the modernization drive over the past year. We won
a great victory in the fight against the severe acute respiratory
syndrome (SARS), and we overcame natural disasters and other
difficulties. Our national economy had rapid growth, good performance and
strong vitality, and we successfully attained our main targets for
economic and social development.

1. The economy grew rapidly, and economic efficiency improved
significantly. China's GDP hit 11.6694 trillion yuan in 2003, a 9. 1%
increase over the previous year. Per capita GDP rose to 9,030 yuan,
exceeding the important benchmark of US$1,000 for the first time when
calculated at the present exchange rate. Growth of domestic demand was
accelerated. Investment in fixed assets for the whole country was 5.5118
trillion yuan, a year-on-year increase of 26.7%. Retail sales of consumer
goods totaled 4.5842 trillion yuan, up 9.1%. Consumer prices rose by 1.2%.

Economic efficiency improved in step with economic growth. Government
revenue for the entire country was 2.17 trillion yuan, 14.7% more than
the previous year. Economic efficiency in the industrial sector reached a
record high. Total profits of state- owned and large non-state owned
industrial enterprises were 815.2 billion yuan, an increase of 42.7%, 22
percentage points greater than the previous year. State-owned enterprises
and enterprises with the controlling stake held by the state generated
378.4 billion yuan in profits, an increase of 45.2%. Of the industrial
products made last year, 98.1% were sold.

2. Structural adjustment was vigorously carried forward, and economic
vitality continued to improve. The acreage devoted to high-quality crop
varieties increased. The acreage sown to high- quality special wheat
accounted for 38% of China's total acreage sown to wheat, 7 percentage
points higher than the previous year. Principal crops were further
concentrated in the areas with the most suitable conditions. The
livestock and fishery industries continued to develop, and the output of
dairy products increased by 25%. Smooth progress was made in major
agricultural, forestry and water control projects. Manufacturing
industries with a high technological content led industrial growth. The
production of electronic and information products grew by 34%. Treasury
bonds continued to play a major role in promoting structural adjustments.
A number of projects of great importance for long-term economic and
social development were completed and put into operation, and they
performed well. Water was successfully stored in the Three Gorges
Reservoir; permanent locks on the Three Gorges Project were opened to
navigation; and the project's first set of generators began producing
power. Construction was started on the eastern and central routes of the
South-to-North Water Diversion Project. An additional 46,000 kilometers
of highways and 1,164 kilometers of newly completed railway lines were
opened to traffic. The power industry developed more quickly. The country
produced 1.9 trillion KWH of electricity in 2003, 15.5% more than in
2002. The generating capacity of newly started projects and projects put
into operation during the year each totaled more than 30 million KW.
Tertiary industry continued to develop, and some new service industries
expanded rapidly. The number of telephone subscribers reached 532
million, a year-on-year increase of 112 million.

Economic growth was driven to a greater degree by internal momentum. The
total amount of funds invested by enterprises from their own resources
for technological upgrading increased by 30.2%. The non-state sector of
the economy invested actively. Investment from collective and
individually-owned businesses grew by 22.9%, 6. 1 percentage points
greater than the previous year. Exports from collective and private
businesses rose by 83.1%, contributing significantly to the rapid growth
of China's exports.

3. New strides were made in developing the western region, and
implementation of the strategy for reinvigorating northeast China and
other old industrial bases began. Ecological conservation and
environmental protection work in the western region was further
intensified. Some 3.37 million hectares of farmland were returned to
forests; 3.77 million hectares of barren hills and wasteland were
afforested; and 6.66 million hectares of seriously degraded grassland
were improved. Greater efforts were put into infrastructure development.
An additional 317 kilometers of track was laid on the Qinghai-Tibet
railway line. The eastern section of the West-to-East Natural Gas Piping
Project was completed, allowing natural gas to be delivered to east
China. An additional power transmission capacity of over 8 million KW was
installed as part of the West-to-East Electricity Transmission Project.
Another 4,200 kilometers of highways connecting county seats were built
or upgraded. An adequate supply of potable water was ensured for 8.6
million more rural people. More than 300,000 rural households had access
to methane. Implementation of the strategy for reinvigorating northeast
China and other old industrial bases began. The eastern and central
regions accelerated their development, and new areas of economic growth
kept emerging.

4. There was all-round development in science, technology, education and
all other social undertakings as well as continued progress in ecological
conservation and environmental protection. Basic and hi-tech research was
intensified. Continued progress was made in the state innovation system.
The first successful manned spaceflight by Shenzhou-V was another
milestone in China's hi-tech development. Education continued to develop.
Fresh progress was achieved in compulsory education. Regular institutions
of higher learning across the country enrolled 3.822 million students,
617, 000 more than the previous year. Efforts to develop public health
facilities were intensified, and about 6 billion yuan from the sale of
treasury bonds was allocated to develop an anti-SARS infrastructure,
disease prevention and control networks at the provincial, prefectural
and county levels, and a public health emergency response system. The
rate of natural population growth was 6.01. Implementation of key
cultural projects proceeded smoothly. Radio, film, TV, the press,
publishing, sports and other undertakings continued to develop.

Ecological conservation and environmental protection were intensified,
and economical and multipurpose utilization of natural resources was
promoted. Some 2.05 million hectares of forests were developed to improve
ecological conditions or serve as shelterbelts. Banning or temporarily
suspending animal grazing allowed for 8.6 million hectares of grassland
to be effectively protected and rationally utilized. Pollution control
and treatment were accelerated in key river valleys and regions,
including the drainage basins of the Huaihe, Haihe and Liaohe rivers,
Taihu, Chaohu and Dianchi lakes, and the Three Gorges Reservoir. The
percentage of urban sewage receiving centralized treatment, the
percentage of urban household garbage safely disposed of, and the
multipurpose utilization of industrial solid waste all increased
moderately.

5. The various reforms pressed ahead in an orderly manner, and China
continued opening wider to the outside world. Institutional restructuring
of the State Council was completed smoothly, and steady progress was made
in institutional restructuring of provincial-level governments. The
experimental reform of rural taxes and administrative charges was carried
out throughout the country. Important steps were taken in the reform of
the state- owned assets management system and state-owned enterprises.
Reform of the electric power, telecommunications and civil aviation
industries was continued. The export tax rebate mechanism was improved.
The reform of state-owned commercial banks was accelerated. The Chinese
People's Insurance Company and the China Life Insurance Company completed
their reorganization and transformation into stock companies and were
successfully listed on overseas stock exchanges. Smooth progress was made
in the trial reform of rural credit cooperatives in eight provinces and
municipalities directly under the central government. Trials for
restructuring the cultural system were started in selected regions. Major
and important cases were investigated and prosecuted in the course of
rectifying and standardizing the order of the market economy, resulting
in gradual improvement of the market environment.

Foreign trade grew rapidly. Imports and exports totaled $851.2 billion, a
year-on-year increase of 37.1%. The scope of foreign investment continued
to expand, and the quality of foreign investment utilization constantly
improved. A total of $53.5 billion in foreign direct investment was
actually utilized. Fresh progress was made in implementing the strategy
of "going global," and overseas investment was further expanded and
diversified.

6. More jobs were created, and people's lives continued to improve. A
total of 8.59 million more urban residents found jobs, and 4.4 million
laid-off workers were reemployed in 2003; both figures exceeded the
targets set for the year. The registered unemployment rate was 4.3% in
cities and towns at the end of 2003. The urban population had a per
capita disposable income of 8,472 yuan, an increase of 9% in real terms,
and the rural population had a per capita net income of 2,622 yuan, an
increase of 4.3% in real terms. Living allowances for laid-off workers
and old-age pensions for retirees were basically paid on time and in
full. Social security coverage further increased, as more people became
covered by old-age, medical, unemployment or workman's compensation
insurance. Some 22.35 million urban residents received subsistence
allowances, 1.7 million more than in 2002. The government allocated
special funds to help people in disaster- afflicted areas restore
production and improve their living conditions. Programs to give people
work in place of relief subsidies continued to expand. Better roads and
supplies of electricity and potable water in poverty-stricken areas
improved working and living conditions there. Steady progress was made in
pilot programs to move impoverished people out of areas afflicted by
extremely poor ecological conditions.

Because of the complicated and volatile international situation, the
unexpected SARS outbreak and the numerous natural disasters, these
achievements in China's economic and social development were made only
with great difficulty. They are attributable to the correct leadership of
the CPC Central Committee with Comrade Hu Jintao as General Secretary,
which maintained control of the overall situation and remained calm and
resolute in making decisions. Credit also goes to local authorities and
government departments, which consciously followed the important thought
of Three Represents, unified the broad masses of cadres and people and
worked hard in a down-to-earth manner. These achievements are also due to
the National People's Congress strengthening its oversight and guidance
and the CPPCC taking an active part in the deliberation and
administration of state affairs.

While affirming our achievements, we are clearly aware that there are
still many difficulties and problems in China's economic and social
development that we cannot afford to ignore. Some longstanding,
deep-rooted problems have yet to be solved, and there are still
structural barriers holding back economic and social development.
Moreover, there are new circumstances and problems affecting the
operation of the economy. First, farmers have difficulty increasing their
incomes and grain production has dropped considerably. The 2003 increase
in per capita net income for the rural population was 0.5 percentage
points lower than in 2002. The problem of indiscriminate expropriation of
arable land is serious. Grain output for 2003 decreased by 26.4 billion
kilograms year-on-year. Second, the problem of unemployment remains
serious. We still have about 14 million laid-off workers and unemployed
people in cities and towns. Approximately 10 million new urban residents
are expected to enter the labor force this year. In addition, large
numbers of surplus rural laborers still need to shift to non-agricultural
industries and urban areas. Third, there is an excessively wide income
gap among some members of society, and in both urban and rural areas many
low-income people lead a fairly difficult life. Fourth, the economic
structure is still irrational, and too much of our economic growth is
based on extensive production. The problems of haphazard investment and
low-level, redundant expansion are worsening in some industries and
localities, resulting in excess energy consumption, serious waste of
resources and environmental pollution. Considerable disparity remains
between supply and demand in coal, electricity, oil and transport
capacity, and the shortages of resources are increasingly affecting
development. Fifth, economic and social development remains imbalanced.
The public health service system is far from sound. The situation that
rural education remains weak as a whole requires fundamental changes.
Sixth, the order of the market economy remains somewhat chaotic. We
urgently need to improve the social credit system. Major industrial
accidents occur frequently. We need to take a long-term perspective
rooted in the present and solve these problems through reform and
development.

II. Regulatory Targets and Main Tasks for Economic and Social Development
in 2004

The year 2004 is an important year for achieving the targets set in the
Tenth Five-Year Plan and a crucial time for maintaining good momentum in
economic growth. To ensure economic and social development this year, we
must follow the guidance of Deng Xiaoping Theory and the important
thought of Three Represents and fully implement the guiding principles of
the Sixteenth National Congress of the CPC and the Third Plenary Session
of its Sixteenth Central Committee. We must continue to put the people
first and articulate and bring to fruition a conception of all-round,
balanced and sustainable development. In line with the need to balance
urban and rural development, balance development among regions, balance
economic and social development, balance development of man and nature,
and balance domestic development and opening wider to the outside world,
we must shift the focus of our economic work onto restructuring the
economy, changing the mode of economic growth, and improving its quality
and efficiency. We must nurture, guide and make good use of everyone's
initiative in accelerating development so as to bring about sustained,
rapid, balanced and sound development of the national economy and all-
round social progress.

Our main macro-control targets for 2004 are as follows:

- Economic growth rate around 7%.

- Nine million new jobs for urban residents and registered urban
unemployment rate confined to 4.7%.

- Rise in the consumer price index of about 3%.

- Increase in total import and export volume of 8%.

To attain these targets, we need to focus on accomplishing the following
tasks.

1. Adopting comprehensive measures to increase rural incomes and
maintaining and increasing grain production capacity. Following the
principle of "giving more, taking less and loosening control," we will
strive to increase rural incomes, aiming for an increase in the per
capita net income of 5% in 2004. We will continue to carry out strategic
restructuring of agriculture and the rural economy. We will implement a
plan to arrange where crops are grown so as to use cropland to the best
geographical advantage. We need to strengthen scientific research in
agriculture and apply research results more widely. We will promote the
development of intensive processing of farm and livestock products and
other non- agricultural industries in rural areas, and improve the
distribution of farm products. We will develop farmers' cooperatives for
specialized production and speed up industrialization of agricultural
operations. We will strengthen the emergency animal epidemic prevention
system, improve the systems of quality standards of farm products and for
inspecting, testing and certifying them, and implement the Action Plan
for Pollution-Free Food. We will promote the adjustment and
transformation of township and village enterprises, selectively develop
small towns, and strengthen intra-county economies. Vocational training
will be offered to rural laborers, and better information will be
provided to guide the movement of surplus rural labor in an orderly way.
The problem of withholding or delaying payment of the wages of migrant
rural workers in cities must be solved, and a mechanism to ensure the
timely payment of such wages will be established and improved. Pay for
farmers will be included in the budgets for government-financed rural
construction projects to ensure they are properly paid. We will deepen
the reform of rural taxes and administrative charges, reduce the rates
for agricultural taxes and eliminate taxes on all special agricultural
products except tobacco to effectively lighten the burden on farmers. We
will give more people work in place of relief subsidies as part of the
effort to improve the mechanism for alleviating rural poverty through
development. Emergency disaster relief work must be done well, and proper
arrangements will be made for the work and daily lives of needy rural
households.

We will strengthen our grain production capability and improve the
country's food security. The acreage sown to grain must be expanded. We
will work hard to increase the yield per unit area and ensure that grain
output totals 455 billion kilograms this year. We will practice the most
stringent possible system for protecting farmland. We will reform the way
land is expropriated and requisitioned and the mechanism of compensating
for its expropriation and requisition. The transformation of farmland to
non-agricultural purposes will be planned and managed strictly. We will
launch a project to industrialize production of high-quality grains, and
establish a group of state production centers concentrated in major grain
producing areas to produce high- quality and special grain crops.
Investment will be increased to develop improved crop strains, promote
wider application of advanced agricultural techniques, prevent and
control plant diseases and pests, improve irrigated areas, develop dry
farming and water-saving irrigation, turn hillsides into terraced fields
and build silt trappers. Improvement of low- and medium-yield farmland
will be accelerated. Major grain consumption areas will also be obligated
to protect their primary farmland to maintain necessary grain production
capacity and ensure adequate local grain reserves.

2. Adjusting the orientation of investment using treasury bonds to make
full use of their role in promoting restructuring and balancing
development. We will ensure the continuity and stability of our
macroeconomic policies, adhere to the principle of stimulating domestic
demand, and continue to implement a proactive fiscal policy and a prudent
monetary policy. At the same time, we will make timely and appropriate
adjustments to the emphasis and intensity of these policies in response
to changes in the economy. Premier Wen Jiabao pointed out in his Report
on the Work of the Government yesterday that we would issue 110 billion
yuan worth of long-term construction treasury bonds this year. We must
manage and use them well in line with the resolutions of this session.
This year the focus of these funds will be shifted from the previous
emphasis on expanding domestic demand and stimulating economic growth to
promoting restructuring and balancing economic and social development.
They will be mainly used for the following: first, to increase support
for developing agriculture and rural areas by building more small and
medium-sized infrastructure projects such as water-efficient irrigation
facilities, potable water supplies, roads, methane production facilities,
hydroelectric plants and pasture enclosure projects, so as to promote
balanced urban and rural development; second, to place greater emphasis
on developing social undertakings by investing more in infrastructure
projects for public health and medical care, elementary education,
primary-level governments, people's courts and public security,
procuratorial and judicial organs, so as to promote balanced economic and
social development; third, to support development of the western region
and adjustment and transformation of northeast China and other old
industrial bases, so as to promote balanced regional development; fourth,
to continue to improve ecological conservation and environmental
protection, so as to promote balanced development between man and nature;
and fifth, to build more key infrastructure projects, so as to create the
conditions necessary for long-term, stable economic and social
development.

We will speed up construction on key bond-financed projects. The
preparatory work for laying the track on the Qinghai-Tibet railway line
will be basically completed in 2004, and the cumulative length of laid
track will reach 647 kilometers. We will accelerate the preliminary work
on the South-to-North Water Diversion Project and meet the schedule and
quality standards for the construction under way. The entire West-to-East
Natural Gas Piping Project will be put into commercial operation. An
additional power-generating capacity of 8.2 million KW will go on line in
the West-to-East Electricity Transmission Project. Construction will
begin this year on the Chinese Center for Disease Control and Prevention,
the second phase of the National Library of China project and the China
Digital Library project. We will strengthen inspection, supervision and
management of bond- financed projects to ensure more efficient use of the
funds and the quality of these projects.

3. Adjusting and optimizing the industrial structure and keeping economic
growth stable. In line with the needs of the new road of
industrialization we are taking, we will promote technological innovation
and speed up industrial restructuring, emphasizing rejuvenation of
equipment manufacturing industries. We will accelerate the industrial
application of advances in new and high technology. We will continue
working on hi-tech projects to develop live broadcast satellite systems,
the next generation Internet, biology and new medicines. We will work to
put the national economy and society on an IT basis. We will put greater
effort into upgrading centers for modern equipment manufacturing
industries and developing a group of new industries. We will improve our
capability for independent development and for producing complete sets of
key equipment. We will successfully carry out specific projects to
domestically produce urban mass transit equipment, environmental
protection equipment, heavy-duty industrial gas turbines, large-capacity
hydroelectric power generating facilities, coal mining combines and other
major equipment.

At present, exercising appropriate control over the scale of fixed assets
investment and rigorously curbing haphazard investment and low-level,
redundant construction in some industries and regions constitute both an
important task for industrial restructuring and a pressing need to keep
economic growth stable and rapid and free from drastic fluctuations. We
will strengthen and improve macro-control, and guided by the market, we
will use mainly economic and legal means supplemented by administrative
means to guide and promote sound development of the iron and steel,
electrolytic aluminum and cement industries. We will vigorously encourage
mergers and regrouping in these industries, support enterprises that can
benefit from economies of scale to expand rapidly, and allow market
forces to determine their success or failure. We will put into practice
all regulatory measures set forth in the Report on the Work of the
Government for providing guidance through state policy and planning and
industrial information, tightening market access and strengthening
management of land use and credit.

We must work hard to alleviate bottlenecks in economic development. We
will accelerate development of large coal mines and the coal transport
system, so as to increase the coal supply without compromising production
safety. We will continue developing power generating facilities and power
grids in accordance with the principle of giving priority to building
power generating capacity and ensuring its rational distribution. In
2004, construction will be started on power plants with a combined
capacity of 40 million KW, new power generating capacity of 37 million KW
will come on line, and desulphurization equipment will be built
simultaneously as required. We will improve management of power grids and
the demand for power to ensure a safe power supply. We will properly
organize the production and import of crude and processed oil and speed
up the building of a national strategic oil reserve. We will better
regulate economic operations in accordance with the laws of the market to
balance supply and demand in coal, electricity, oil, transport capacity
and important raw and processed materials. We will develop more trunk
lines and transportation hubs. The basic way to alleviate the disparity
between supply and demand in coal, electricity, oil, transport capacity
and important raw and processed materials is to increase the supply as
much as possible and at the same time to effectively change the pattern
of economic growth, restructure the economy, and restrict haphazard
development of industries and enterprises that waste energy and resources
and cause serious pollution and to encourage all industries to save
energy and eliminate waste.

4. Implementing a proactive employment policy and continuing to expand
consumer spending and improve people's lives. We will further implement
existing measures such as fiscal and credit support and tax and fee cuts
and exemptions and do everything possible to create more jobs. We will
give full play to the role of labor-intensive industries, small and
medium-sized enterprises and non-public sectors of the economy in
expanding employment. We will vigorously develop the tertiary industry
and expand avenues for employment in traditional service industries such
as business, food and beverage service and transportation. We will create
more jobs in the areas of public health, urban environmental protection,
medical care, as well as community and domestic services. We will expand
employment in tourism, education, training, culture, sports and
information services. We will promote diverse types of employment and
encourage people to be flexible in taking a job or become self-employed.
We will improve the employment service system, strengthen the
reemployment assistance system and provide better job training, job
introduction and employment guidance services to laid-off workers and the
unemployed. We will work harder at job placement for college graduates
and ex-servicemen.

We will improve the consumer environment, expand consumer spending and
gradually increase the proportion of consumption in our GDP. While doing
everything possible to increase rural incomes, we will improve commodity
distribution facilities and commercial outlets in rural areas and develop
infrastructure facilities there such as those for water, power and roads,
thus creating conditions for rural residents to expand their consumption.
We will continue to implement the "three-stage guarantee" and ensure that
the living allowances for workers laid off from state-owned enterprises
and the pensions of retirees are paid on time and in full. We will
improve the social assistance system, provide subsistence allowances to
the urban poor and help needy urban families solve their practical
problems. We will increase the supply of low- and moderate-price
commercial housing, stimulate the secondary housing market and expand
consumer spending on housing. We will vigorously develop urban public
transport services. We will steadily increase consumer spending on
private cars and communications. We will encourage people to spend more
on travel, sports, fitness and culture. We will accelerate the
development of the credit system and develop consumer credit. We must
combine efforts to expand consumption with those to strengthen regulation
of income distribution. We will raise the minimum wage appropriately to
increase the incomes of urban residents, especially low- and
middle-income people. We need to strengthen supervision over income
distribution in monopoly industries and intensify collection and
management of individual income tax to regulate excessively high incomes.

5. Increasing revenue, reducing expenditures and ensuring steady and
sound financial operations. We will improve tax collection and management
and crack down on tax evasion and tax fraud to ensure steady revenue
growth. We will adjust the pattern of budgetary expenditures and tighten
control over them. We will focus on increasing funding to solve the
problems facing agriculture, rural areas and farmers and to support
employment work, social security, education, science, culture and health.
We must ensure that government employees' salaries and government
retirees' pensions are paid on time and in full, and that state organs
receive the funding necessary for their normal operations. We will
continue to have zero growth in our general expenditures. Total national
revenue in the budget for 2004 is 2.357 trillion yuan and total
expenditures are 2.6768 trillion yuan. This keeps the central government
budget deficit within 319.8 billion yuan.

We will control the scale of credit reasonably by using a variety of
monetary policy instruments. We will focus on adjusting the pattern of
credit and encourage and guide commercial banks to provide more credit
support to promote restructuring, expand consumption and create more
jobs. We will accelerate development and improvement of the financial
market, tighten financial regulation, and guard against and defuse
financial risks. We will constantly improve the mechanism for determining
the exchange rate for the Renminbi and keep it stable at a rational and
balanced level. The broad money supply (M2) and the narrow money supply
(M1) will both increase by about 17% in 2004.

6. Balancing the development of regional economies so that the eastern,
central and western regions can complement each other and develop
together. We will improve and implement all the policies and measures for
developing the western region. We will do a good job on major projects
having a bearing on the long-term development of the western region and
small and medium-sized projects vital to the immediate interests of the
people there. We will provide more funding for upgrading roads connecting
county seats and building roads to villages, and continue to solve the
problem of a potable water supply for people and livestock. Construction
will be started on the Jiudianxia Water Control Hub and other key
projects. We will speed up the building of airports on feeder air routes
in the western region. We will build on our achievements in returning
cultivated land to forests, and effectively help those farmers and
herdsmen whose land has been returned to forests solve their problems of
food, firewood and low incomes. We will develop distinctive economic
undertakings and industries that have a competitive edge. The number of
skilled personnel working in the western region will be increased, and
laws and regulations concerning the region will be improved.

In implementing the strategy for revitalizing northeast China and other
old industrial bases, we will focus on making innovations in systems and
mechanisms. We will promote the strategic regrouping of enterprises in
such key manufacturing industries as iron and steel, automobiles,
petrochemicals, and heavy equipment. We will ensure full implementation
of the fiscal, taxation, social security and financial service policies
that support the restructuring and transformation of the old industrial
bases. We will press ahead with helping cities that rely mainly on
natural resource exploitation to change their economic model.

We will help the central region to exploit its overall advantages in
location, resources, trained personnel, and education, strengthen its
industrialized agricultural production and manufacturing centers, promote
the optimization and upgrading of its economic structure, foster new
areas of economic growth and become more industrialized and urbanized.
The eastern region will be encouraged to seize the opportunities to
upgrade its industries and technologies and become more competitive
internationally, and areas where conditions permit should take the lead
in realizing modernization. Economic exchanges and cooperation will be
increased among the eastern, central and western regions to create
economic zones and belts with distinctive features.

7. Promoting steady growth of foreign trade and utilizing foreign funds
better. We will increase export volume and profits by following the
strategy of revitalizing foreign trade through science and technology,
winning customers through quality and diversifying our markets. We will
improve the export tax rebate mechanism. Good arrangements will be made
to import important commodities and advanced equipment that are in short
supply in China. We will introduce the foreign trade agent system,
register foreign trade entities in accordance with the law and ensure
that enterprises have independent decision-making power over their export
and import activities, regardless of their form of ownership. We will
accelerate establishment of technological standards and improve the
early-warning system for industrial losses.

We will coordinate domestic development with opening up and continue to
implement policies and measures for expanding opening up and encouraging
foreign investment. We will place greater emphasis on acquiring advanced
technologies and managerial expertise from abroad and recruiting
high-caliber foreign personnel. We will improve our macro guidance for
overseas investment and improve fiscal, taxation and financial policies
to encourage capable enterprises to "go global," regardless of their form
of ownership. We will strengthen economic cooperation with our
neighboring countries and regions and gradually improve and fully
implement closer economic partnership arrangements between the mainland
on the one hand and Hong Kong and Macao on the other.

8. Continuing to implement the strategy of sustainable development and
balancing social and economic development with population growth,
resource exploitation and ecological protection. We will continue our
good work on key ecological projects, including projects to protect
natural forests, key shelterbelt projects and projects to control the
source of sandstorms affecting Beijing and Tianjin. We will improve our
overall ability to manage and protect nature reserves, functional
ecological zones, scenic spots and historical sites. Measures will be
intensified to control pollution in the drainage basins of the Huaihe,
Haihe and Liaohe rivers, Taihu, Chaohu and Dianchi lakes, and the Three
Gorges Reservoir and in areas along the routes of the South-to- North
Water Diversion Project, and to control discharge of sewage from large
industrial projects and pollution caused by acid rain and sulfur dioxide.
We will continue to prevent and control pollution in key industries and
cities and increase the proportion of urban sewage and garbage treated.
We will promote clean production and develop environment-friendly
industries.

We will raise people's awareness of endangered natural resources and the
need to conserve them, vigorously develop recycling industries and
establish a conservation-minded society. We will improve plans,
standards, policies, laws and regulations for energy and water
conservation. We will rapidly develop and apply advanced applied
technologies for conserving and replacing resources. We will concentrate
on technological upgrading of the metallurgical, nonferrous metals,
power, petrochemical, building materials and paper industries to help
save energy, water and materials and more fully utilize resources. We
will protect land and resources in accordance with the law, develop them
rationally, and pay attention to the exploitation and conservation of
marine resources.

We will adhere to the basic state policy of family planning, keep the
birthrate low, and improve the health of newborns. The natural population
growth rate will be confined to 7 in 2004.

9. Continuing to promote development of science, technology and education
and developing all social undertakings. Development of the state
innovation system and the scientific and technological infrastructure
will be accelerated. We will strengthen basic and hi-tech research,
promote the application of scientific and technological advances in
production, and improve the ability of enterprises to make technological
innovation. We will begin work on large national science laboratories and
installations such as the Shanghai Synchrotron Radiation Facility. We
will make good progress in constructing the National Nanoscience Center.
National engineering research centers will be set up in the fields of
biology, informatics, new materials and pharmaceuticals, and a number of
national key laboratories will be upgraded. We will support key
enterprises to build their state-level technology centers. We will
energetically promote the development of philosophy and social sciences.

We will implement the strategy of relying on talented personnel to
strengthen the country. We will energetically train, recruit and properly
use all kinds of talented personnel. The top priority for our work in
education will continue to be rural education. We will lose no time in
improving the mechanism for ensuring adequate funding for rural education
to make it more regular and institutionalized. We will intensify our
efforts to make nine-year compulsory education basically universal and to
basically eliminate illiteracy among young and middle-aged people in the
western region. We will continue the project to renovate dangerous
primary and secondary school buildings in rural areas and the national
program to make compulsory education universally available in
poverty-stricken areas. We need to successfully carry out our pilot
projects for modern distance education in rural primary and secondary
schools. We will improve the system of government and non-government
subsidies for students from indigent families. We will work harder to
develop high-quality universities and key disciplines and improve the
quality of higher education. We will increase the number of key senior
secondary schools and vigorously develop vocational education and
continuing education. Training of high-level technicians will be stepped
up. Plans call for enrolling of 4 million undergraduate students and
330,000 graduate students in regular institutions of higher learning in
2004.

We will actively develop culture, health, sports, radio, film, TV, the
press, publishing and other undertakings. Primary-level public cultural
facilities will be improved. We will better protect our natural and
cultural heritages. We will expedite development of our disease
prevention and control system, public health emergency response system,
major epidemic disease information network and system for supervising
enforcement of health-related laws and regulations. We will strengthen
the medical and public health infrastructure and the environmental
sanitation infrastructure in rural areas. Application of digital and
computer network technologies in radio, film and TV will be accelerated.
We will promote the sound development of the sports industry. We will
make good progress in constructing Olympic venues and related facilities.
III. Promoting Economic Restructuring Vigorously but Prudently

In accordance with the decision made at the Third Plenary Session of the
Sixteenth CPC Central Committee, we must seize the favorable
opportunities presented by the rapid economic growth, the relatively
desirable financial situation and the fairly relaxed environment to push
forward reforms in key areas in a selective, planned way and eliminate
structural obstacles to developing the productive forces. This is of
great significance for solving current outstanding economic problems,
attaining this year's targets and continuing to develop for years to come.

Improving the fundamental economic system whereby public ownership is
dominant and diverse forms of ownership develop together. We will adjust
the distribution pattern and structure of the state sector of the economy
more quickly and improve the mechanism for redirecting investment of
state capital so that it can move more rationally. The system for
managing and supervising state assets will be improved. A budgetary
system for state capital management and a performance evaluation
mechanism for enterprises will be established. The transformation of
state-owned enterprises into standard stock companies will be vigorously
promoted. We will strongly encourage state, collective and non- public
enterprises to invest in each other in order to promote a mixed ownership
economy. We will foster the formation of large internationally
competitive companies and enterprise groups and further reduce government
control over small and medium-sized state-owned enterprises so as to
reinvigorate them. Measures to support reforms in the power,
telecommunications and civil aviation industries will be improved. We
will organize reform of the postal system well. We will promptly work out
plans for reforming the railway system. Commercialization of water and
gas supplies and other urban public utilities will be accelerated.
Diverse forms of collective economy will be developed. Development of
non-public sectors of the economy will be encouraged, supported and
guided. We will fully implement all policies that give non- public
enterprises the same treatment as other types of enterprises in market
access, investment, financing, taxation, land use and foreign trade. We
will speed up the process of commercializing services and improve
services and oversight for non-public enterprises.

Promoting the reform of the fiscal, taxation and financial systems.
Fiscal systems at and below the provincial level will be improved and
standardized, and the financial resources at the disposal of governments
at county and township levels will be increased. We will gradually shift
from a "production VAT" to a " consumption VAT;" we will do this first in
some industries in northeast China in 2004 on a trial basis. All measures
for reforming the export tax rebate system will be fully implemented. We
will introduce a shareholding system in the Bank of China and the China
Construction Bank and continue carrying out pilot projects for reforming
rural credit cooperatives. Interest rates will be steadily deregulated.
Capital markets will be vigorously developed, and the proportion of
direct financing by enterprises will be raised. Management of enterprise
bonds will be improved, and the amount and types of the bonds they issue
will be increased. Regulatory systems for the banking, securities and
insurance industries and mechanisms for coordinating them will be
improved.

Making arrangements for the reform of the investment system. We will
promptly formulate and improve measures to support reform of the
investment system. Enterprises will be able to make investment decisions
independently in line with the principle that "the investor makes the
investment decisions, reaps the profits and bears the risks." Scientific
and democratic decision-making mechanisms for government-funded projects
will be improved, and examination and approval procedures will be
simplified and standardized. The contractor system for construction will
be vigorously promoted. We will establish an accountability system for
investment. While expanding enterprises' decision-making powers over
investment, we will strengthen the system of macro- controls over
investment. We will rely mainly on economic and legal measures
supplemented by administrative measures when necessary to curb haphazard
investment and low-level redundant construction in some industries and
maintain a rational scale of investment. A system for supervising and
managing investment will be established and improved.

Improving pricing mechanisms. We will promote the use of different
electricity prices for periods of high and low demand and high and low
supply to properly deal with serious pricing problems as they arise. We
will reform the mechanism for modulating air passenger and freight rates.
Drug price management will be improved and drug prices will be further
reduced. Great efforts will be made to reform the water pricing system to
promote water conservation. The system of charges for urban sewage and
garbage treatment and disposal of dangerous waste will be fully
implemented. We will continue the system of public notice of prices and
charges. We will take into full consideration the ability of all sectors
of society to tolerate price changes, and we will control the timing and
magnitude of price adjustments to keep market prices basically stable.

Deepening the reform of the grain distribution system. We will improve
the grain distribution system in line with the idea of lifting controls
on grain purchasing, directly subsidizing grain producers, changing the
way grain enterprises and strengthening macro-control. The system of
direct subsidies for grain producers will be gradually improved. Reform
of state-owned grain enterprises will be accelerated. The cotton
distribution system will be improved. Macro-control and market oversight
of grain and cotton distribution will be strengthened and improved.

Improving the social security system. Based on a review of the experience
gained from pilot projects in Liaoning Province, we will extend the
application of approaches that have worked out to pilot projects in
Heilongjiang and Jilin provinces. We will improve the basic old-age
insurance system by continuing to combine contributions from enterprises
and institutions with personal accounts. We will speed up the development
of the systems of workman's compensation insurance and maternity
insurance. We will explore ways to reform the social security system for
state organs and institutions and to set up a system of subsistence
allowances for rural residents where conditions permit.

Improving the market supervision system. We will speed up the development
of a social credit system. We will improve the mechanism for product
quality oversight and control. We will continue to rectify and
standardize the order of the market economy. We will crack down on
illegal activities such as manufacturing and marketing fake or shoddy
goods, commercial fraud, smuggling and selling smuggled goods. We will
launch campaigns to clean up markets that have a direct bearing on
people's health and lives such as those for food and medicine. We will
continue to clear up problems concerning administrative charges. We will
launch special investigations of prices and charges, including education
charges and power rates, which affect rural residents. We will strengthen
oversight of production safety.

Deepening reforms of the systems of science, technology, education,
culture and health. We will reform the management system of science and
technology, improve the modern enterprise system in institutes engaged in
technological development and promote the reform of institutes engaged in
public welfare research. We will consolidate and improve the system of
rural compulsory education that is managed by governments at multiple
levels, with county governments playing the principal role, as well as
the system of higher education that is managed by the central and
provincial governments, with the latter playing the main role. We will
establish and improve the system of vocational education that is managed
by governments at multiple levels, with local governments playing the
principal role and with both overall government planning and
non-government participation. We will continue the pilot reform of the
cultural system. We will deepen the reforms of the medical insurance
system, the medical and health systems, and the medicine distribution
system. We will successfully introduce a new type of system for rural
cooperative medical care and health services on a trial basis in selected
regions. Fellow Deputies,

Successfully carrying out the work of economic and social development
this year will be an arduous but important task. Willingly subjecting
ourselves to the oversight and guidance of the NPC, heeding the comments
and suggestions from the CPPCC, and performing our official duties in
accordance with the law constitute an important guarantee for our success
in this work. We must follow the leadership of the Party Central
Committee with Comrade Hu Jintao as General Secretary and the guidance of
Deng Xiaoping Theory and the important thought of Three Represents and
earnestly implement the guidelines set at the Sixteenth National Congress
of the Party and the Third Plenary Session of its Sixteenth Central
Committee. We must keep pace with the times, work hard with a pioneering
and innovative spirit, be realistic and pragmatic, and strive to complete
all the tasks for national economic and social development in 2004.

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Wednesday, December 19, 2007

Chinesepod - Full text of the report on China's economic and social development plan

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