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GOV.cn  Monday, March 16, 2009  

The following is the full text of the Report on the Work of the Standing Committee of the National People's Congress (NPC), which was delivered by Chairman Wu Bangguo of the NPC Standing Committee on March 9, 2009 for review at the Second Session of the 11th NPC and adopted on March 13:

REPORT ON THE WORK OF THE STANDING COMMITTEE

OF THE NATIONAL PEOPLE'S CONGRESS 　　

Delivered at the Second Session

of the Eleventh National People's Congress on March 9, 2009

Wu Bangguo

Chairman of the Standing Committee of the National People's Congress

Fellow Deputies,

I have been entrusted by the Standing Committee of the National People's Congress (NPC) to present this report on its work for your deliberation and approval.

Main Accomplishments of Last Year

Faced with tremendous hardships and rigorous challenges in 2008, the Party Central Committee, with Comrade Hu Jintao as General Secretary, united with the people of all our ethnic groups and led them in working hard with one heart and one mind, completely winning a great victory in combating disasters and providing disaster relief, successfully hosting the Beijing Olympics and Paralympics, flawlessly accomplishing the Shenzhou VII manned space mission, solemnly commemorating the 30th anniversary of the reform and opening up policy, maintaining rapid economic growth, further improving the people's lives, maintaining overall social stability, enhancing China's international standing and making great new achievements in the cause of socialism with Chinese characteristics.

Last year was the first year in which the Standing Committee of the Eleventh NPC carried out its functions in accordance with the law. We fully implemented the guiding principles of the Seventeenth National Party Congress and the Third Plenary Session of the Seventeenth Central Committee, took Deng Xiaoping Theory and the important thought of Three Represents as our guide, thoroughly applied the Scientific Outlook on Development, and organically integrated the leadership of the Party, the position of the people as masters of the country and the rule of law. Focusing on the overall work of the Party and the state, we devoted a great deal of effort to resolving serious issues in economic and social development, exercised our functions and powers in accordance with the law, did our work energetically, and fully played our role as an organ of state power. Over the past year, we deliberated 15 draft laws, passed nine of them, heard and deliberated 13 work reports from the State Council, the Supreme People's Court and the Supreme People's Procuratorate, adopted three resolutions, investigated compliance with five laws, approved 13 treaties and accords China concluded with foreign countries and its accession to seven international conventions, and made decisions on and approved the appointment and removal of a number of employees in Chinese state organs, thus making further contributions to socialist economic, political, cultural and social development.

1. Giving full support to earthquake relief and post-earthquake recovery and reconstruction

The massive earthquake that hit Wenchuan in Sichuan Province on May 12 inflicted enormous damage to both lives and property in the quake zone and seriously affected the country's economic and social development. The earthquake elicited a sympathetic response from all the Chinese people. The NPC Standing Committee acted promptly, carried out the arrangements of the Central Committee diligently, took the characteristics of the NPC's work as its starting point, strengthened oversight and legislation, fully supported earthquake relief and post-earthquake recovery and reconstruction in the quake zone, and made full use of the political advantages of the socialist system which enables it to concentrate resources to accomplish large undertakings.

First, we promptly adjusted our work plan. The Chairperson's Council held a special session on May 22 to listen to the State Council's report on the earthquake. In order to focus on our work priorities and help the State Council concentrate on earthquake relief, the Chairperson's Council decided to adjust the work plan of the Standing Committee by putting deliberation of the State Council's report on earthquake relief and post-earthquake recovery and reconstruction and its proposed revisions of the central budget for 2008 on the agenda of the June meeting of the Standing Committee. It also decided to postpone deliberation of the 2007 central government final budget and the auditing report as well as the deliberation and approval of the final budget from the June meeting, where this is normally done, to the August meeting. In order to allow sufficient time to incorporate the useful lessons accumulated in carrying out earthquake relief, interim arrangements, and post-earthquake recovery and reconstruction into relevant laws, the Chairperson's Council decided to postpone the deliberation of the revised draft Law on Protecting Against and Mitigating Earthquake Disasters from June to October.

Second, we resolutely implemented the Party Central Committee’s decision on collecting financial resources for earthquake relief. It was made clear at the Chairperson's Council meeting on May 22 that safeguarding the lives of people in the quake zone was paramount and that we needed to proceed from the actual earthquake relief situation in everything we did. It was proposed that the bulk of the central budget stabilization fund should be used to establish a fund for post-earthquake recovery and reconstruction in line with the principle of taking special measures in special situations. According to the proposal, the actual revenue and expenditures of the fund should be included in the central budget, which should be adjusted accordingly, and this plan should be submitted to the NPC Standing Committee for deliberation and approval in accordance with the law. According to the same proposal, before the plan to revise the budget was approved, the fund should be first financed through the central treasury to ensure timely allocation of funding for earthquake relief and post-earthquake recovery and reconstruction. In addition, the requirement was made that there should be strict auditing and oversight of the use of the funds, and it was suggested that any further funding required should be arranged in advance. At the meeting of the Standing Committee in June, we deliberated and approved the plan to revise the central budget for 2008, and reached agreement to establish a fund for post-earthquake recovery and reconstruction, thus providing funding guarantees for smooth progress in earthquake disaster relief and post-earthquake recovery and reconstruction. Another proposal was made that the relevant authorities should formulate a plan for post-earthquake recovery and reconstruction and specific measures for implementing it as soon as possible, clarify recovery and reconstruction policies, and adopt a variety of means to support reconstruction and help disaster victims to resume production.

Third, while throwing ourselves headlong into earthquake relief, we never lost sight of the importance of promoting economic and social development to ensure that the tasks for the whole year would be completed. The Standing Committee passed a special resolution on June 26 which positively appraised the remarkable achievements made in providing earthquake relief; fully endorsed the work of the State Council, local governments and all sectors of society; and called for continued efforts to do everything possible to rescue the injured, make appropriate arrangements for the disaster victims and effectively carry out post-earthquake recovery and reconstruction. During the meeting, members of the Standing Committee pointed out that the massive Wenchuan earthquake and the severe snow and ice storms in part of the south at the beginning of the year made it difficult to successfully carry out our economic work for the whole year. They added that when facing difficulties, it is even more important to follow the Central Committee's decisions and arrangements, provide earthquake relief while also promoting economic and social development, pay close attention to, promptly study and effectively solve the major problems arising in economic activity, and successfully provide earthquake relief and promote economic and social development. Standing Committee members also stressed the need to carefully prepare for the Beijing Olympics despite the disruptions to ensure it is a distinctive and high-level event.

Fourth, we completely revised the Law on Protecting Against and Mitigating Earthquake Disasters. After the revised version of this law was deliberated for the first time at the meeting of the Standing Committee in October, we released the full text to the public via major news media for comments, and received over 7,300 comments and suggestions in return. Special committees of the NPC promptly organized highly qualified personnel to conduct investigations in the quake zone and carefully listen to the comments of cadres and ordinary people providing earthquake relief on the frontlines. The Standing Committee considerably revised the draft law based on these comments to raise the earthquake resistance standards for building construction, especially for schools, hospitals and other public facilities, improve the emergency rescue system and strengthen the systems and measures for making interim arrangements and carrying out post-earthquake recovery and reconstruction.

2. Vigorously promoting sound and rapid development of the economy

Thoroughly applying the Scientific Outlook on Development and promoting sound and rapid economic development is a focal point of the work of the Standing Committee. In our work, we focused on major problems in economic and social development, employed a full range of oversight means, strengthened follow-up oversight, made improvements in our work, and improved the legal framework, thereby making the work of the NPC more thorough and dynamic.

First, we carried forward implementation of the major macro-control decisions and arrangements of the Central Committee. In the face of a complicated, volatile international economic situation and serious conflicts and problems hindering domestic economic development last year, the Central Committee sized up the situation and promptly shifted the primary task for macro-control, which had been defined at the beginning of the year to be the prevention of excessively fast economic growth from becoming overheated growth and the prevention of structural price increases from turning into significant inflation, and redefined it to be maintenance of steady and rapid economic growth and curbing price hikes in mid-2008. In response to the rapidly spreading global financial crisis, in November the Central Committee resolutely shifted to a proactive fiscal policy and a moderately easy monetary policy and adopted a series of policies and measures to boost domestic demand and promote economic growth.

In order to ensure proper implementation of the Central Committee's major policies and arrangements, the Standing Committee, in addition to hearing and deliberating the reports on strengthening macro-control in the financial sector and stabilizing prices as originally scheduled, also deliberated and approved the report of the State Council on responding to the global financial crisis and ensuring steady and rapid economic development at its December meeting in response to the latest developments in the global financial crisis. At the meeting, members of the Standing Committee fully affirmed the State Council's work. In addition, they also noted that because the current global financial crisis was spreading and its impact on China's real economy was continuing to widen, the external economic environment for the country's development was worsening by the day. It was also noted that because of insufficient effective demand, some deep-rooted issues and problems in China's economic and social development would also become more serious. This required us to be more aware of potential danger and bring our thinking and actions in line with the Central Committee's analysis and judgment of the situation and its overall work arrangements. It was necessary for us to faithfully follow the guiding principles of the Central Economic Work Conference, transform serious challenges into development opportunities, and change market pressure into an impetus for adjustment. While working to maintain steady and rapid economic development, we needed to concentrate on speeding up transformation of the pattern of economic development and carrying out economic restructuring. Everyone present at the meeting emphasized that the excess production capacity in many industries made it imperative for us to strictly maintain the orientation of policies and investment and avoid low-level, redundant construction and a new round of haphazard urban expansion in implementing the proactive fiscal policy and the moderately easy monetary policy.

To ensure smooth implementation of the proactive fiscal policy, we proposed funding additional investment programs in 2008 from that year's surplus revenue in the central budget in accordance with the relevant provisions of the Budget Law, which had to be reported to the Standing Committee as required by law. We agreed that a certain proportion of the funds should be disbursed before the NPC approves the 2009 central budget in order to ensure adequate funding for key development projects and that when the budget is approved it should be implemented accordingly. We also suggested that the bonds issued for local governments, which need to be approved by the State Council and issued by the Ministry of Finance on their behalf, be incorporated into their budgets and submitted to the people's congress or its standing committee at the corresponding level for approval.

Second, we promoted transformation of the pattern of economic development. Accelerating change in the pattern of economic development and promoting improvement and upgrading of the industrial structure are pressing and major strategic tasks that have an overall bearing on the national economy. The Standing Committee heard and deliberated the State Council's report on the intermediate assessment of the implementation of the Outline of the Eleventh Five-Year Plan at its December meeting. Those present at the meeting fully acknowledged the achievements made, analyzed problems from an objective perspective, and made pertinent suggestions. They noted that the assessment showed satisfactory progress was being made toward most of the targets set forth in the outline and that the outline was being implemented satisfactorily on the whole. However, three of the four indices reflecting the condition of the economic structure - added value of the service sector, employment in the service sector, and R&D expenditures - failed to achieve the expected progress, and two major binding targets - energy consumption per unit of GDP and total emissions of major pollutants - fell far short of the set goals. To a great extent this showed that the pattern of China's economic development had not been transformed fundamentally: industry still holds the dominant position in the industrial structure, exports and investment still play the leading role in the demand structure, and serious problems such as mounting pressure on resources and the environment, increasing difficulty in expanding employment, and insufficient consumption still exist. We proposed that the State Council and relevant departments attach great importance to these problems, accelerate the implementation of the "three transformations" in the pattern of economic development [transformation from relying mainly on investment and exports to relying on a well coordinated combination of consumption, investment and exports, transformation from secondary industry serving as the major driving force to primary, secondary and tertiary industries jointly driving economic growth, and transformation from relying heavily on increased consumption of material resources to relying mainly on advances in science and technology, improvement in the quality of the workforce and innovation in management - Tr.] in accordance with the guiding principles of the Seventeenth Congress, and work harder to fulfill the objectives and tasks set forth in the Outline of the Eleventh Five-Year Plan. The Standing Committee also prodded governments at all levels and other concerned parties to apply the Scientific Outlook on Development and transform the pattern of economic development by enacting the Law to Promote a Circular Economy, revising the Patent Law, hearing and deliberating the State Council's report on preventing and controlling water pollution, and investigating compliance with the Environmental Impact Assessment Law.

Third, we promoted reform and development in rural areas. Doing the work related to agriculture, rural areas and farmers well has an overall bearing on the progress of the cause of the Party and the state. The last Standing Committee made significant achievements in tracking and overseeing these problems over the course of five consecutive years. Last year the Standing Committee heard and deliberated the State Council's report on spurring steady increase in rural incomes and related reports and made important suggestions on how to do a good job in work related to agriculture, rural areas and farmers. It investigated compliance with the Law on Specialized Farmer Cooperatives and acquired an in-depth understanding of the development of all types of specialized farmer cooperatives and the major problems facing them. We called for the implementation of all the policy support stipulated by the law to enable them to play a bigger role in strengthening the organization of farmers and guiding them in competing in domestic and international markets. The oversight by the NPC effectively promoted the building of a new socialist countryside. Thanks to the concerted efforts of the State Council, local governments at all levels and farmers, the growth rate of rural per capita net income reached 8% in 2008 following an annual increase of over 300 yuan or more than 6% over the previous four years running. Both total output and the yield per unit area reached an all-time high in the same year. By the end of 2008, the number of specialized farmer cooperatives nationwide exceeded 110,000, covering over 1.4 million households. The average annual income of rural households that have joined the cooperatives was more than 20% higher than that of those that have not. While fully confirming these achievements, members of the Standing Committee also pointed out that we needed to attach great importance to problems such as the still low overall income level of farmers, the widening income gap between urban and rural residents, the declining comparative returns from agriculture, backward agricultural infrastructure, and new difficulties facing rural workers looking for nonagricultural employment. They also pointed out the need to effectively promote rural reform, significantly increase our funding for agriculture, rural areas and farmers, strictly protect arable land, gradually make the prices of grain and other agricultural products more reasonable, constantly improve financial and technical services to aid agriculture and benefit farmers, support and guide the development of the non-public sector of the economy and rural workers seeking employment in a variety of nonagricultural sectors, maintain steady agricultural development and sustain increase in rural incomes.

3. Focusing on solving the problems affecting people's well-being

Putting people first and promoting the resolution of problems affecting people's well-being are another focus of the work of the Standing Committee. We combined legislation with oversight in our work. While improving our work, we also strived to enact and improve laws and while working on legislation, we also strived to more effectively investigate compliance with laws and carry out work oversight, thus strengthening the connection between the work of the NPC and people's well-being and making the NPC's work even more practical.

Because food safety affects the people's health and safety, deputies to the NPC and all sectors of society attach great importance to this issue. In response to the serious problems revealed by the defective Sanlu milk powder and other major food safety scandals, the Standing Committee revised the draft Law on Food Safety based on in-depth investigations and studies and a wide range of opinions.

First, to effectively strengthen oversight and management of food safety, in addition to prescribing that all relevant competent authorities shall exercise oversight within the scope of their duties and responsibilities, the revised draft law stipulates that the State Council shall set up a food safety commission to coordinate and guide food safety work. It also stipulates that local people's governments at and above the county level shall have overall responsibility for and lead, organize, and coordinate oversight and management of food safety within their administrative areas.

Second, to address the misuse of food additives, the revised draft law follows a principle of prescribing non-use, use of appropriate amounts or use of lower amounts and clearly stipulates that food additives shall be used only if they are technically necessary and have been proved safe through risk assessment. When the use of a food addictive is necessary, food safety standards shall be strictly followed in deciding the category, scope and concentration of the additive. No chemicals other than food additives and no materials that might be harmful to people's health shall be used in food production.

Third, annual sales of health food of every conceivable description have exceeded 100 billion yuan. Without proper oversight in place, people cannot tell what is genuine from what is fake, making it difficult to decide which products to purchase. To address this problem, the revised draft law stipulates that the State Council shall quickly work out regulations to standardize production, restore order in the distribution market and strengthen oversight and management in order to boost the confidence of consumers.

Building on the work of the last Standing Committee, this Standing Committee carried out another investigation of compliance with the revised versions of the Law on Compulsory Education and the Law on the Protection of Minors. We also investigated compliance with the recently promulgated Law on Labor Contracts. These investigations have a direct bearing on the well-being of 170 million primary and junior secondary school students and over 360 million minors and the immediate interests of hundreds of millions of workers. The issues involved in these laws are all concerns of deputies to people's congresses and the general public. We looked closely at actual conditions in society and uncovered significant problems in the enforcement of laws and then submitted important suggestions on implementing a funding mechanism for compulsory education, increasing funding for compulsory education, cleaning up the cultural environment of the Internet to which minors are exposed and doing more to solve the problem of wages in arrears, especially those of rural migrant workers. Our suggestions, which were carefully studied by the State Council and relevant departments, helped to more effectively enforce the law and improve work.

First, the funding mechanism for compulsory education was implemented in accordance with the law, and funding for compulsory education throughout the country increased by a large margin. Per capita budgetary expenditures for primary and junior secondary school students increased significantly over the previous year. The central government also increased funding for the renovation of school buildings in the central and western regions of the country.

Second, relevant departments of the State Council jointly carried out a special campaign to clean up objectionable and unhealthy online material, strengthen management of Internet content and severely crack down on illegal and criminal behavior dangerous to the young, thereby improving the online cultural environment and winning acclaim from the general public.

Third, promulgation of the Law on Labor Contracts has brought about greater awareness of the importance of labor contracts, and significantly increased the number of labor contracts concluded. Some 93% of employees working for large enterprises signed their labor contracts across the country. The average term of newly concluded contracts was also longer. Employment and reemployment efforts were intensified and protection of the rights and interests of workers of enterprises, especially rural migrant workers, was strengthened. In light of the latest developments and problems facing employment efforts, Standing Committee members pointed out at their meeting that we must strongly support the development, transformation and upgrading of small and medium-sized enterprises, adopt whatever means necessary to stabilize and expand employment, prevent accumulation of wages in arrears and huge layoffs and work hard to solve the problem of too few workers concluding labor contracts in the service and construction industries and in small and medium-sized enterprises and private companies in order to safeguard the legitimate rights and interests of all workers and ensure harmonious labor relations.

In order to improve the social security system and help dispel the worries of workers, the Standing Committee made big changes to the draft Social Security Law on the basis of initial deliberation by the last Standing Committee. Specific rules were formulated in the five chapters concerning old-age insurance, medical insurance, workers' compensation, unemployment insurance and maternity insurance. Clear provisions were set out to address issues of greatest concern to workers, such as transfer of basic old-age insurance accounts between regions, and the need to improve overall planning for basic old-age insurance funds and tighten regulation of social security funds. These changes have been widely applauded by the general public, and we are improving the draft law in light of the suggestions received. The Standing Committee also revised the Law on the Protection of Disabled Persons, adding more provisions prohibiting discrimination against people with disabilities and strengthened protection of their rights and interests in matters such as rehabilitation, education, employment, social security and handicap-accessible facilities.

4. Striving to successfully carry out our routine work

During the past year we strove to successfully carry out our routine work while concentrating on the main tasks of the Party and the government and doing the above-mentioned work well in accordance with the features of the NPC's work. We made further progress in legislation, oversight, and our efforts to give full play to the role of the deputies and special committees and carry out foreign relations work, and raised the overall quality and level of the Standing Committee's work.

In our legislative work of the past year, we first of all formulated the five-year program for legislation and held a legislative work meeting to map out the work plan for the coming period. Second, we enacted the Law on State-Owned Assets in Enterprises, the Law on Food Safety, the seventh amendment to the Criminal Law, and the Law to Promote a Circular Economy and revised the Law on Protecting Against and Mitigating Earthquake Disasters, the Law on Security for Disabled Persons, the Fire Protection Law, the Insurance Law and the Patent Law. To address the major problems in the administration and supervision of state-owned assets in enterprises, we defined the basic principles governing the system of investors of state-owned assets as part of the Law on State-Owned Assets in Enterprises. Provisions were set out in this law concerning the basic rules that must be followed and strict oversight procedures for major actions related to investor rights and interests. Provisions covered actions that could easily lead to loss of state-owned assets, such as conversion of enterprises into joint stock companies, related party transactions and evaluation and transfer of assets. Third, we called on the concerned departments to formulate supporting regulations and relevant work procedures to ensure full compliance with laws, requiring that arrangements be made to formulate supporting regulations during the process of deciding on legislative items and drafting laws in an effort to implement laws and corresponding regulations at the same time. Fourth, we worked to make legislation more scientific and democratic and expand the orderly participation of the general public in the legislative process. It was decided by the Chairperson's Council that in principle, all draft laws under deliberation by the Standing Committee should be released to the public on www.npc.gov.cn, that major bills should also be published by major national media organizations to solicit opinions from the general public, and that this should become common practice. We also carried out thorough investigations and studies concerning issues of vital importance involved in draft laws and gave relevant parties the opportunity to stay fully informed and express their ideas through workshops and debates so they could participate in efforts to find solutions and improve draft laws.

In oversight work, we followed the suggestion of deputies to incorporate deliberation of the State Council's report on counteracting the severe snow and ice storms in part of the south and carrying out post-earthquake recovery and reconstruction into the agenda of the Standing Committee's April meeting. We called on relevant departments to learn from their experience, improve the mechanisms for coping with emergencies and truly enhance disaster preparedness and mitigation capability. At our August meeting we heard and deliberated the reports on the final central government budget for 2007, on auditing work and on plan implementation, deliberated and approved the report on the final central government budget and submitted important proposals on establishing a mechanism for ensuring adequate basic financial resources at the county level, carrying out VAT reform throughout the country in 2009 and standardizing transfer payments. At our October meeting we heard and deliberated the report of the Supreme People’s Court on improving criminal trial work and the report of the Supreme People's Procuratorate on strengthening oversight for criminal trials. We called on the courts and procuratorates to correctly enforce the law, follow a policy of severity tempered with mercy in criminal trials, ensure justice and efficiency in trial and oversight work and constantly work to improve judicial work. We improved filing and examination for normative documents last year, including administrative laws and regulations, local ordinances and legal interpretations. We received a total of 475 normative documents to be filed and handled 86 suggestions from ordinary individuals and organizations concerning examination work.

In enabling deputies to play their proper role, we first of all diligently processed their proposals. The special committees have handled all the 462 proposals that the Presidium of the last NPC session assigned to them. Eight laws that came up in 26 proposals have been adopted by the Standing Committee. Deliberations are being conducted on four draft laws that were brought up in 50 proposals, and 38 legislative items listed in 126proposals have been included in the legislative plan. Second, we expanded channels through which deputies can stay informed and learn about political affairs. We organized inspection tours and studies for deputies on special topics, informed them of the latest developments through various means, and continued to invite deputies to attend meetings of the Standing Committee as observers and participate in investigations of compliance with laws. Deputies attending meetings and participating in investigations carefully prepared in advance and actively contributed to the discussions. This gave the people a voice and played an important role in improving the quality of the work of the Standing Committee. Third, we took the suggestions submitted by deputies very seriously. A total of 6,279 suggestions were made by the deputies during the last NPC session, and the problems mentioned in 4,489, or 71.5%, of them have been resolved or will be resolved according to plan.

In the area of foreign relations, we continued to consolidate the mechanisms for regular exchanges between the NPC and the congresses or parliaments of other countries. We carried out various forms of dialogue with the parliaments of the United Kingdom, France, Japan, the Republic of Korea and Egypt, as well as with the European Parliament. In response to provocations from the congresses of some countries concerning the Taiwan and Tibet questions, we engaged in fierce struggle and defended China's core interests through declarations from the chairperson of the Foreign Affairs Committee. Members of the Chairperson's Council, special committees and friendship groups worked to improve interaction with foreign congressional leaders, representatives and aides, increase mutual trust, remove misunderstandings, boost mutually beneficial cooperation and promote improvement in all aspects of foreign relations through exchange visits. We actively took part in the activities organized by international and regional parliamentary organizations and successfully hosted the fifth Asia-Europe Parliamentary Partnership Meeting.

The special committees of the NPC represent rich funds of knowledge and capable personnel and carry out their work on a regular basis. The Standing Committee makes good use of the role of the special committees. Shortly after it was formed, the new Standing Committee promptly held discussions with leading members of the special committees to exchange views and reach a common understanding on how to strengthen and improve the work of the NPC, especially the work of the special committees. Focusing on the central tasks of the NPC and its standing committee, the special committees did a great amount of effective work in improving the quality of legislation, making oversight more effective, making good use of the role of deputies and carrying out foreign relations work, and effectively promoted overall improvement in the work of the Standing Committee.

5. Effectively promoting self-improvement

Working on self-improvement helps to ensure that the NPC and its standing committee are able to properly exercise their functions and powers and give full play to their role. This Standing Committee attaches great importance to self-improvement and keeps ideological and political development high on its agenda. It maintains the correct political orientation and uses it to guide all the work of the NPC.

This Standing Committee held its first meeting on March 19 last year, the day after the First Session of the Eleventh NPC was successfully concluded. The requirement to maintain the correct political orientation in the work of the NPC was firmly established as the first order of business at that meeting. Time was then set aside for careful study of the guiding principles of the Seventeenth Congress and General Secretary Hu Jintao's important speeches to strengthen ideological consensus and improve understanding. Members of the Standing Committee and the special committees all agree that the people's congresses and their standing committees are organs of state power and extremely vital political institutions. Maintaining the correct political orientation is essential to the success of the work of the people's congresses. The most fundamental aspect of this effort is to organically integrate the leadership of the Party, the position of the people as the masters of the country and the rule of law, and the core of this effort is to uphold the leadership of the Party. The people's congresses and their standing committees exercise their functions and powers and decide on issues collectively in accordance with the law, so maintaining the correct political orientation depends on each and every person involved. To keep to the path of socialism with Chinese characteristics and uphold and improve the system of people's congresses in their work, we must more fully recognize the essential differences between the system of people's congresses and Western capitalist countries' system of political power.

First, we must fully understand the essential differences between China's people's congresses and Western congresses and parliaments. China's system of political parties is a system of multiparty cooperation and political consultation under the leadership of the CPC, not a Western-style multiparty system. The CPC is at the core of the country's leadership and the ruling party, while the democratic parties are participating parties. Deputies to the people's congresses representing counties and townships are elected directly by their constituencies. Deputies to the congresses above the county level are elected indirectly by the people's congress at the next lower level, who then form delegations on the basis of their constituencies to attend sessions of their people's congresses. The people's congresses have no congressional party groups, and they do not carry out activities on the basis of sectors of society. No seats are assigned on the basis of parties in either the people's congresses, their standing committees or their special committees. All deputies to the people's congresses, members of their standing committees and members of their special committees shoulder the great trust of the people and fulfill their responsibilities to serve the people under the leadership of the CPC in accordance with the law, no matter whether they are Communists, members of the democratic parties or persons without party affiliation, and they all share the same fundamental interests.

Second, we must be fully aware of the essential differences between the people's congresses' relationship to the governments, the people's courts and the people's procuratorates and the relationships between state organs of Western countries. The people's congresses exercise state power in a unified way, and the governments, the people's courts and the people's procuratorates are all created by them and are responsible to them and subject to their oversight. Although China's state organs have different responsibilities, they all adhere to the line, principles and policies of the Party, enforce the Constitution and laws within their respective jurisdictions under the leadership of the CPC and work to build and develop socialism with Chinese characteristics. The system of people's congresses is not a Western system with the separation of the three powers. The people's congresses decide on the major principles and policies of the state by formulating laws and passing resolutions in accordance with the stands of the Party and the will of the people. They oversee and support the governments in carrying out their administrative functions in accordance with the law. They also oversee and support the people's courts and the people's procuratorates in exercising their judicial functions fairly. They ensure that state organs carry out their work in a coordinated and effective manner. In addition, they use the power granted to them by the people to truly further their interests.

Third, we must be fully aware of the essential differences between deputies to the NPC and members of Western parliaments and congresses. Deputies come from every region, ethnic group and sector of society of the country, and there is at least one deputy from each ethnic minority group no matter how small its population is. Deputies are therefore broadly representative and they do not represent a single party or group as members of Western parliaments and congresses do. Deputies live among the people and maintain close ties with them. They all hold posts in their respective fields of endeavor and fully understand how the principles and policies of the Party and the government and the Constitution and laws are implemented and the practical problems of daily life. Deputies exercise their lawful duties and powers collectively at meetings, rather than each deputy addressing problems directly and separately from other deputies. Functional organs of the standing committees of the people's congresses at all levels collectively advise, assist and serve the deputies.

Members of the Standing Committee and the special committees all strongly believe that the key to maintaining the correct political orientation in the work of the NPC is to uphold the leadership of the Party. The CPC is the core of the leadership for building socialism with Chinese characteristics. Leadership by the Party can only be strengthened and in no way weakened. Through thorough studies and discussions, we have gained a more thorough understanding of the important points made by Comrade Deng Xiaoping, including: "Without the leadership of the Party a big country like China would be torn by strife and incapable of accomplishing anything." "China and its socialist modernization must be led by the Communist Party. There can be no wavering from this principle. Without it China would regress and become divided and chaotic, and modernization would become impossible." We have therefore become more purposeful and resolute in upholding the Party's leadership, in keeping to the path of socialism with Chinese characteristics and in adhering to and improving the system of people's congresses. Through the work of the NPC, we must ensure that the stands of the Party become the will of the state through legally stipulated procedures and that the personnel recommended by Party organizations become the leaders of the organs of state power through legally stipulated procedures. The work of the NPC must all be conducive to strengthening and improving the leadership of the Party, consolidating its position as the ruling party and ensuring that it is able to lead the people in effectively running the country.

Members of the Standing Committee and the special committees all agree that the political development path of socialism with Chinese characteristics is the only correct path that was chosen by the Chinese people under the leadership of the CPC, best suits the conditions of China, and guides the development of socialist democratic politics in China. Deepening our political restructuring means constantly promoting self-improvement and self-development of the socialist political system including the system of people's congresses. We must draw on the achievements of all cultures, including their political achievements, but we will never simply copy the system of Western countries or introduce a system of multiple parties holding office in rotation, a system with the separation of the three powers or a bicameral system.

Over the last year, we improved our competence, work style and institutions while also focusing on our ideological and political development.

First, we improved training for deputies on how to carry out their duties. Members of the Standing Committee and the special committees were brought together to learn about the organizational structure, functions and powers and rules for discussion of the NPC and other areas of knowledge closely related to their legislative and oversight work. After each Standing Committee meeting, special topic lectures were held related to its agenda and these proved very effective. In addition to study sessions organized for newly elected deputies, we focused on training for deputies on how to carry out their duties. Eight training courses were held attended by over 1,300 deputies.

Second, we revised our working methods. Most members of the Standing Committee and the special committees, who had long worked in Party and government departments, adapted to their new positions in the NPC quickly. They performed their duties in accordance with the law, spent more time and energy than they did in their former positions in investigating actual conditions, meeting with the general public and visiting lower-level organizations, strengthened their investigation and study efforts and compiled a number of valuable reports, thus improving the quality of deliberations and providing reference information that helped in the formulation of major policy decisions of the Party and government.

Third, we improved our working systems. We revised and improved four documents concerning our work on the basis of a careful review of practical experience, including rules for discussion in the Chairperson's Council, and conducted studies on how best to modify the organic Law of the National People's Congress, the Electoral Law of the National People's Congress and Local People's Congresses and rules for discussion in the NPC Standing Committee.

organs of the NPC launched a campaign to thoroughly study and put into practice the Scientific Outlook on Development. In order to serve scientific development and improve their role as collective adviser and assistant for deputies, they conscientiously worked to resolve major problems, and established a sound permanent mechanism for improving their work. They improved the overall quality of their cadres, focusing on increasing their competence. They encouraged their employees to devote themselves to study, became more harmonious, and strove to fully mobilize the enthusiasm, initiative and creativity of their employees, producing positive changes in their overall situation.

Fellow Deputies,

The achievements of the Standing Committee last year were made under the correct leadership of the CPC Central Committee with Comrade Hu Jintao as General Secretary and are the result of the hard work of the deputies, members of the Standing Committee and the special committees, and the employees of the organs of the NPC. Credit is also due to the State Council, the Supreme People's Court and the Supreme People's Procuratorate for their assistance and to the local people's congresses and their standing committees and the general public for their support. On behalf of the Standing Committee, I would now like to express my sincerest thanks to all of them.

We are also clearly aware that more than a few aspects of our work need to be improved. First, we need to focus more on key areas and concentrate more on key problems in carrying out our work in order to improve the overall quality of the work of the NPC and make it more target-focused. Second, we need to urge the relevant authorities to formulate supporting regulations for laws in a timely manner to effectively resolve the problem of laws that cannot be effectively enforced due to lack of supporting regulations. Third, we need to improve services to deputies to help them better carry out their duties. Fourth, we need to further coordinate the efforts of special committees so that they can function more efficiently. Fifth, we need to improve our publicity efforts related to the law, make state organs more purposeful about carrying out their functions in accordance with the law and enhance respect for the law and increase awareness of the legal system among the general public. We will conscientiously accept the oversight of the people, earnestly listen to the opinions of deputies and carefully study new situations and problems that arise in the development of democracy and the legal system to constantly strengthen and improve the work of the Standing Committee and more effectively exercise the functions and powers granted to us by the Constitution and laws.

Major Tasks for This Year

The year 2009 marks the 60th anniversary of the founding of New China and it will be a crucial year in terms of responding to the major challenges presented by changes in the international and domestic environments and developing all our country's undertakings. The general requirements for the work of the Standing Committee are as follows: We must faithfully follow the guiding principles of the Seventeenth Congress, the Third Plenary Session of the Seventeenth Central Committee and the Central Economic Work Conference. We must take Deng Xiaoping Theory and the important thought of Three Represents as our guide and thoroughly apply the Scientific Outlook on Development. We must organically integrate the leadership of the Party, the position of the people as masters of the country and the rule of law, focus on the overall work of the Party and the government in carrying out our functions and powers, work to develop the legal system of socialism with Chinese characteristics, strive to promote steady and rapid economic development and social harmony and stability, intensify efforts to ensure effective enforcement of the Constitution and laws, and work to bring the work of the NPC up to a new level.

1. Taking decisive steps toward establishing a legal system of socialism with Chinese characteristics

The CPC Central Committee clearly set the goal of establishing a legal system of socialism with Chinese characteristics by 2010. This year will be crucial for efforts to attain this goal. We must both formulate new legislation and revise and eliminate unsuitable portions of existing laws while working to improve the quality of legislation in accordance with the guiding principles of the Seventeenth Congress so we can take decisive steps toward establishing a legal system of socialism with Chinese characteristics.

First, we must promptly formulate new laws and make revisions in existing laws that will form the framework for the legal system, focusing on improving legislation concerned with social issues while continuing to improve legislation concerned with economic, political and cultural issues. Legislative work on the agenda for this year includes the following. We will formulate a social security law, social welfare law, law on tort liability, law on administrative coercion, law on arbitration of disputes concerning contracted rural land, law on mental health and law on national defense mobilization. We will also revise the Law on State Compensation, the Law on Protecting State Secrets, the Electoral Law, the organic Law of Villager Committees, the Land Administration Law, the Postal Law and the Statistics Law. We will work to improve organization and coordination in legislative work, make legislation more scientific and democratic, expand orderly participation of the general public in the legislative process, improve research and scientific verification to formulate legislation and work to obtain a broad consensus of opinion to improve the quality of legislation. We will continue to urge relevant authorities to promptly formulate supporting regulations to ensure effective enforcement of laws.

Second, we need to finish the work of revising unsuitable provisions to improve existing legislation. There are 231 laws currently in effect in China, and a number of these have areas that still have room for improvement. There are three main categories of laws requiring improvement. 1) There are some laws which were formulated in the 1980s or early 1990s and contain provisions that no longer meet the requirements for developing the socialist market economy. 2) There are inconsistencies and gaps in laws formulated at different times. 3) Some laws are difficult to apply and the state is unable to enforce compliance with them. In light of this situation, the Standing Committee last year made arrangements for the work of revising unsuitable portions of the existing laws. We need to finish this work before the end of this year. We will carefully study and make a comprehensive analysis of suggestions made by relevant parties and proceed in order of importance and urgency. We will handle this task in accordance with the different types of treatment required, i.e. revision, rescinding, legal interpretation or formulation of new provisions, to develop a scientific, consistent and harmonious legal system.

Thanks to the concerted efforts of all sectors of society since the introduction of the reform and opening up policy in 1978,a legal system of socialism with Chinese characteristics had been basically established by the end of the term of the Tenth NPC. With the Constitution as its core and seven types of laws as its backbone, this legal system consists of three levels of laws and regulations, i.e. laws, administrative regulations, and local ordinances. There are now laws that cover basically every area of the country's economic, political, cultural and social activities, and these laws effectively ensure and promote development of the cause of socialism with Chinese characteristics. At the same time, we are clearly aware that the rapid economic and social development, constant progress in socialist democratic politics, the rich and varied cultural activities in society, efforts to create a harmonious society, structural and institutional reform and innovation, and the deepening of economic globalization all present new issues and new requirements for our legislative work. Our legislative tasks are still arduous.

It must be emphasized here that ours is a legal system of socialism with Chinese characteristics, so we must bear in mind the following four points in the process of establishing and improving it.

First, the Western model of a legal system cannot be copied mechanically in establishing our own. Some of the laws in the legal systems of other countries are incompatible with the situation and conditions in China so we will not formulate such laws. Some laws that are not part of the legal systems of other countries but are nevertheless a practical necessity for China need to be promptly enacted.

Second, administrative regulations and local ordinances are both important components of our legal system. When conditions are not ripe to formulate laws, administrative regulations or local ordinances can be legally formulated instead. When sufficient experience has been obtained and conditions become ripe corresponding laws can be formulated. Local ordinances, autonomy statutes or specific regulations can also be legally formulated to cover local issues and matters specific to ethnic minority areas.

Third, we need to distinguish between legal means and regulatory tools and resort to legislation only when it is truly necessary in order to make better use of the functions and roles of the legal system.

Fourth, our legal system is dynamic, open and in the process of development. We need to constantly improve it in light of developments and changes in the objective situation so that it can keep pace with the times.

2. Focusing oversight work on promoting the implementation of the major policy decisions and arrangements of the CPC Central Committee

This year is the toughest year for economic development since we entered the new century, with huge tasks facing us in reform, development and stability. But, great opportunities exist side by side with severe challenges. In order to successfully carry out this year's work, the Central Committee has clearly pointed out that we must maintain steady and rapid economic growth based on boosting domestic demand, promote sustainable development by accelerating transformation of the pattern of development and economic restructuring, make economic and social development stronger and more dynamic by deepening reform and opening up, intensify social development to speed up resolution of difficult and hotspot issues that bear on the interests of the people, and promote sound and rapid economic and social development and social harmony and stability. The Central Committee has made a number of major policy decisions and arrangements to accomplish these tasks and has called on all Party members and the people of all our ethnic groups to enhance their confidence in the face of difficulty and work hard together to constantly move forward the cause of socialism with Chinese characteristics. The top priority for the Standing Committee's oversight work this year is to oversee implementation of the major policy decisions and arrangements of the Central Committee. We will fully implement the Law on Oversight, apply a combination of oversight means, and urge and support the State Council, the Supreme People's Court and the Supreme People's Procuratorate in carrying out their work in accordance with the targets and tasks they put forward in their work reports to ensure implementation of the Central Committee's major policy decisions and arrangements and successful accomplishment of this year's tasks for economic and social development.

First, we must improve oversight of economic work. We will hear and deliberate the State Council's special work reports on transforming the pattern of economic development, promoting development of small and medium-sized enterprises, and preventing and controlling air pollution, as well as its reports on the 2008 central government final budget, auditing work and plan implementation, and will deliberate and approve the final budget. We will devote a great deal of effort to promoting steady and rapid economic development and transforming the pattern of economic development.

Second, we must strengthen our oversight of the handling of issues affecting people's well-being. We will hear and deliberate the State Council's special work reports on developing a social safety net in rural areas, promoting employment and reemployment, carrying out recovery and reconstruction following the earthquake that hit Wenchuan, Sichuan Province, and developing vocational education, the Supreme People's Court's report on improving enforcement of civil law, and the Supreme People's Procuratorate's report on investigating cases of dereliction of duty and infringement of rights. In addition, we will investigate compliance with laws such as the Law on Trade Unions, the Food Safety Law and the Livestock Breeding Law in a strong effort to maintain and improve people's standard of living and promote social harmony and stability.

In light of the fact that there are quite a few uncertainties in this year's economic situation, we will concentrate our oversight work on two areas to make it more focused and effective. First, we will carry out more investigations and studies to gain a clear picture of actual conditions so we can focus on major problems and the main aspects of those problems and put forward good comments and suggestions. Second, we will use a combination of oversight means, strengthen follow-up oversight, focus on key and difficult problems of common concern to the deputies, and urge the concerned parties to improve their work and set up a sound permanent mechanism for resolving these problems.

We have devoted a great deal of effort in recent years to strengthening and improving the oversight work of the NPC, achieved significant results and established a comprehensive system of effective working mechanisms and methods. The Tenth NPC formulated the Law on Oversight to provide a legal framework for these mechanisms and methods in order to make the oversight work of the standing committees of the people's congresses at all levels more standardized and proceduralized. Over the last two years or so since its implementation, this law has proven to be a good law that is in line with China's actual conditions and the work of the people's congresses. In order to ensure that this law is implemented more successfully and that the people's congresses carry out their oversight work more effectively, we need to clear up three points.

First, the power of oversight is an important power granted to the people's congresses by the Constitution and laws. Their oversight carries the force of law and is carried out in the name of the country and the people, making it irreplaceable. Their oversight work, which consists of oversight of law enforcement and oversight of work performance, covers a great deal of ground, involves a great variety of arduous tasks and is well worth doing.

Second, the people's congresses oversee the work of the people's governments, people's courts and people's procuratorates, but this does not mean that they are confrontational or create difficulties for the parties they oversee. On the contrary, the people's congresses and the organizations they oversee are working toward the same goals. When the people's congresses carry out their oversight work effectively in accordance with the law, it helps improve the work of the people's governments, people's courts and people's procuratorates. When the people's governments, people's courts and people's procuratorates willingly accept the oversight of the people's congresses in accordance with the law, it helps ensure that the people's governments carry out their administrative functions in accordance with the law and that the people's courts and people's procuratorates exercise their judicial functions fairly.

Third, the key to doing the oversight work of the people's congresses well is to focus on key areas and stress practical results. A law may contain many provisions, but there are usually only a few that the people are most concerned about. At the same time, there are many issues and problems that have to be addressed in the course of our work, but there are usually only several that are in fact crucial. Therefore, if we focus on resolving these crucial issues, we can expand our efforts to include other issues so that the results of our oversight work can be truly significant.

3. Making continued progress in strengthening the role of deputies, carrying out foreign relations work and promoting self-improvement

We will continue to fully implement the guiding principles of document No. 9 issued by the Central Committee, starting with upholding and improving the system of people's congresses, respecting the major role of deputies and maintaining an attitude of service to deputies. We will work to improve the level of service provided to deputies, expand their participation in the work of the Standing Committee and special committees, sincerely listen to deputies' criticism and comments, improve the handling of bills they submit, expand channels to enable them to stay informed of state affairs and developments, provide special training for them and work hard to protect, guide and unleash their initiative in performing their functions in accordance with the law.

We will continue to strengthen and improve foreign relations work of the NPC. We will consolidate and improve the NPC's mechanisms for regular exchanges with the congresses and parliaments of other countries, make good preparations for exchange visits with the congresses and parliaments of the countries included in the mechanisms for regular exchanges, and engage in extensive friendly contacts with foreign congresses and parliaments to give more play to the unique role of the NPC in foreign relations.

We will strengthen and improve the NPC's publicity efforts. We will make full use of radio, TV, newspapers, periodicals, the Internet and other media to explain the political development path of socialism with Chinese characteristics and the system of people's congresses, step up efforts to inform people about and report on the NPC's legislative and oversight work, and work to increase knowledge of the law and enhance respect for it throughout society.

We will continue to intensify our self-improvement efforts, maintain a correct political orientation for the work of the NPC and firmly instill the concept of attaching great importance to the Party, political matters, the overall situation, the people and the law. We will carefully study the Constitution to better understand it and safeguard its authority. We will handle matters in accordance with the law and prescribed procedures, improve the deliberation procedures, working rules and work style of the Standing Committee, improve investigation and study efforts, and carefully organize seminars. We will strengthen coordination of the work of the special committees to improve its overall quality and level. We will strengthen ties with local people's congresses and work with them to develop socialist democracy and the socialist legal system. organs of the NPC need to build on their achievements in the campaign to thoroughly study and put into practice the Scientific Outlook on Development and constantly work to improve their working systems and mechanisms as well as the overall quality of their cadres, improve their services and be a good collective advisor and assistant.

Fellow Deputies,

Our responsibilities and missions inspire us, and our difficulties and challenges test us. Let us rally closely around the Central Committee with Comrade Hu Jintao as General Secretary, hold high the great banner of socialism with Chinese characteristics, thoroughly apply the Scientific Outlook on Development, work hard together with one heart and one mind, greet the 60th anniversary of the founding of New China with brilliant achievements, and courageously forge ahead on the path of socialism with Chinese characteristics!  

]]> http://www.itheone.com/article.asp?id=58 frank722@126.com(Frank) Sat,11 Jul 2009 00:26:17 +0800 http://www.itheone.com/default.asp?id=58
The following is the full text of the Report on the Work of the Government delivered by Premier Wen Jiabao at the Second Session of the Eleventh National People's Congress on March 5, 2009 and adopted on March 13, 2009:

REPORT ON THE WORK OF THE GOVERNMENT

Delivered at the Second Session of the Eleventh National People's Congress on March 5, 2009

Wen Jiabao

Premier of the State Council


Fellow Deputies,

On behalf of the State Council, I now present to you my report on the work of the government for your deliberation and approval. I also solicit comments and suggestions on the report from the members of the National Committee of the Chinese People's Political Consultative Conference (CPPCC).

I. Review of the Work in 2008

The year 2008 was truly eventful. Our country's economic and social development withstood severe challenges and tests that were rarely seen before. Under the leadership of the Communist Party of China (CPC), the people of all our ethnic groups faced difficulties squarely, worked with courage and determination, surmounted all difficulties and obstacles, and made new achievements in reform, opening up and socialist modernization.

- The national economy continued to maintain steady and rapid growth. GDP topped 30 trillion yuan, an increase of 9% over the previous year. Overall price rises were held in check. Government revenue was 6.13 trillion yuan, an increase of 19.5%. Grain output rose for the fifth consecutive year and totaled 528.5 million tons, a record high.

- Reform and opening up were further deepened. New breakthroughs were made in reforms in key areas and crucial links, such as the fiscal, taxation, financial and pricing systems and administration. Imports and exports totaled US$ 2.56 trillion, an increase of 17.8%. Paid-in foreign direct investment reached $92.4billion.

- Development of social programs was accelerated, and the living standards of the people continued to rise. A total of 11.13million more urban residents entered the workforce. Urban per capita annual disposable income reached 15,781 yuan, an increase of 8.4% in real terms, and rural per capita net income reached 4,761 yuan, up by 8% in real terms.

- Great victories were won in the fight against massive natural disasters. The Beijing Olympics and Paralympics were held successfully, and the Shenzhou VII manned space mission was a complete success.

These achievements signify that we have taken new and solid steps along the path of socialism with Chinese characteristics. They have greatly fortified the courage and strength of the people of all our ethnic groups to surmount difficulties and will definitely encourage us to bravely forge ahead on the new historical course.

Last year, we accomplished the following important work:

1. Making timely and resolute adjustments to macroeconomic policies and doing everything possible to maintain steady and rapid economic development

We maintained the right direction, focus, intensity and pace of macro control, and adopted a series of policies and measures to promote steady and rapid economic development. In a complex and volatile situation, we actively responded to the severe impact of the global financial crisis and worked hard to make our macro control more proactive, targeted and effective. In the middle of the year, when energy and grain prices on the international market were high, world economic growth slowed, and exports from and economic growth in China's coastal regions began to decline, we promptly shifted the priority of macro control to maintaining steady and rapid economic development and controlling price hikes, and adopted relevant fiscal, taxation and financial measures. In September, the international economic situation started to deteriorate sharply and its negative impact became increasingly felt in China. We again resolutely shifted the focus of macro control to preventing economic growth from slowing down too quickly. We implemented a proactive fiscal policy and a moderately easy monetary policy. We raised export rebate rates three times, lowered the benchmark interest rates on savings and loans for financial institutions on five occasions, reduced required reserve ratios four times, suspended the individual income tax on interest earnings from savings, reduced securities transaction stamp tax rates, cut taxes and fees on housing transactions, and increased credit support to small and medium-sized enterprises. In accordance with the requirement that we act fast, be forceful, take targeted measures and stress implementation, we promptly introduced ten measures to further boost domestic demand and promote economic growth, and implemented them without delay. We adopted a succession of policies and measures to encourage financial institutions to support economic development, promote sound development of the textile and other light industries and the real estate market, expand consumption by improving distribution, maintain steady growth in foreign trade, and keep the employment situation stable. At the same time, we stepped up efforts to formulate plans for restructuring and revitalizing key industries. Together, these measures have played a crucial role in alleviating serious problems affecting economic performance, enhancing confidence, stabilizing expectations and maintaining steady and rapid economic development.

We continued to strengthen our work related to agriculture, rural areas and farmers without any letup. Central government budgetary spending on agriculture, rural areas and farmers was 595.5 billion yuan for the whole year, a year-on-year increase of 163.7 billion yuan or 37.9%. This included 103 billion yuan, twice the figure for the previous year, in direct subsidies to grain producers, general subsidies for agricultural production supplies, and subsidies for superior crop varieties and the purchase of agricultural machinery and tools. We significantly raised minimum grain purchase prices three times, with the total increase exceeding 20%. We implemented a temporary policy for purchasing and stockpiling major agricultural products. We intensified the protection of arable land and the construction of agricultural water conservancy projects, and increased overall agricultural production capacity. We supported the production of hogs, oilseeds and dairy products. These policies and measures played an important role in maintaining and stimulating the enthusiasm of farmers, ensuring the supply of major farm products and increasing rural incomes, and provided strong support for maintaining overall stability in economic and social development.

We unswervingly promoted independent innovation and economic restructuring. We launched 16 major national science and technology projects, and established a number of new national engineering centers, key laboratories and enterprise technology centers in such fields as information technology, biotechnology and environmental protection. We successfully developed a number of key technologies and major equipment in the areas of regional aircraft, automobiles powered by new energy sources and high-speed railways. The central government invested 116.3 billion yuan in science and technology, an increase of 16.4%. Significant steps were taken in reorganization of the telecommunications and civil aviation industries. We continued to eliminate backward production facilities. Last year, we shut down small thermal power plants with a total capacity of 16.69 million kilowatts and closed 1,054 small coalmines. Investment in infrastructure and basic industries was increased, and a number of major projects in energy, transportation and water conservancy were completed or launched. Steady progress was made in implementing the master strategy for regional development, and economic development in different regions became better coordinated.

We steadfastly promoted energy conservation, emissions reduction and ecological and environmental protection. The central government allocated 42.3 billion yuan to support development of ten key energy conservation projects and environmental protection facilities. The daily sewage treatment capacity rose by an additional 11.49 million tons in urban areas, and desulfurization equipment was installed in coal-fired power plants with a total capacity of 97.12 million kilowatts. Energy consumption per unit of GDP fell by 4.59% from the previous year; chemical oxygen demand fell by 4.42%; and sulfur dioxide emissions fell by 5.95%. For the past three years combined, total energy consumption per unit of GDP dropped by 10.08%; chemical oxygen demand dropped by 6.61%; and sulfur dioxide emissions dropped by 8.95%. We built on the achievements in returning farmland to forests and restoring livestock pastures to grasslands, and carried out ecological conservation projects such as protecting virgin forests and developing the Sanjiangyuan Nature Reserve in Qinghai Province. We implemented the plan to prevent and control water pollution in major river valleys and regions and issued the white paper China's Policies and Actions for Addressing Climate Change.

2. Balancing economic and social development and strengthening all aspects of social development with the focus on improving people's lives

Efforts were intensified to increase employment and improve the social safety net. We improved our policy to stimulate and expand employment by encouraging business startups, and enforced the minimum wage system. The coverage of all social security schemes continued to expand, with 17.53 million more urban workers subscribing to basic old-age insurance, 20.28 million more subscribing to basic medical insurance, and the unemployment, workers' compensation and maternity insurance steadily expanding to cover more workers. Pensions of enterprise retirees rose by 110 yuan per month per person. We launched trials to reform the basic old-age insurance system for employees of government-affiliated institutions. We actively explored ways to establish a new system of old-age insurance for rural residents and made steady progress in making social security available to rural migrant workers in urban areas and farmers whose land has been expropriated. We comprehensively improved the system of cost of living allowances for both urban and rural residents, and provided allowances to 66.19 million residents. We raised living allowances for low-income groups and university students in a timely fashion. Preferential treatment enjoyed by key entitled groups was increased substantially. We intensified efforts to develop low-income housing and renovate shantytowns, thus alleviating some of the housing difficulties of the low-income population. An additional of more than 48 million rural people gained access to safe drinking water.

Further progress was made in promoting fair education for all. Free compulsory education became available to all students, urban or rural, throughout the country, and all rural students receiving compulsory education obtained free textbooks. The standards for repairing and renovating school buildings in the central and western regions were raised, and the government allocated 3.25 billion yuan to provide heating to rural primary and secondary schools in the north. Development of vocational education was accelerated. The national financial aid system for students was further improved. The central government spent 22.3 billion yuan and local governments increased funding as well to assist more than 20 million students. Grants of 1,500 yuan per student per annum were given to secondary vocational school students from rural areas or needy urban families, benefiting 90% of the current student population in these vocational schools.

Steady progress was made in reform and development of the pharmaceutical and health care system. A total of 814 million people, accounting for 91.5% of the rural population, now benefit from the new type of rural cooperative medical care system. The number of selected cities participating in trials of the basic medical insurance system for urban residents increased from 88 to 317, and the number of participating individuals increased by 73.59 million to 117 million. Significant progress was made in developing a system of community-based health services in urban areas. We continued to expand the coverage of the reward and assistance system for rural families complying with family planning regulations, and implemented the "lower birthrate equals faster prosperity" program in more places in the countryside.

We accelerated the development of culture and sports. Public cultural infrastructure facilities were improved, the cultural industries developed rapidly, and reform of the cultural management system was constantly deepened. We mobilized all resources and hosted a distinctive and high-level Beijing Olympicsand Paralympics, thus fulfilling the century-old dream of the Chinese nation, and Chinese athletes competed hard and brave and scored excellent achievements in the Games. This greatly aroused the patriotism of all our people and strengthened the cohesiveness of our nation.

We continued to strengthen democracy and the legal system. The system of local-level democracy was further improved. Significant progress was made in enhancing law-based government. Last year, the State Council submitted eight bills, including a draft of the Social Insurance Law and draft amendments to the Law on Protecting Against and Mitigating Earthquake Disasters, to the Standing Committee of the National People's Congress for deliberation. It also formulated or revised 30 administrative laws and regulations. The Regulations on Making Government Information Public was fully implemented. The public security system for crime prevention and control was strengthened. We battled against secessionist and terrorist activities, protected China's national security and maintained social stability. Our work related to ethnic minority, religious and overseas Chinese affairs further improved.

3. Vigorously advancing reform and opening up and injecting fresh vitality and impetus into economic and social development

Institutional restructuring of the State Council was basically completed and that of local governments is progressing steadily. Comprehensive rural reforms continued to deepen, and reform of collective forest rights was instituted throughout the country. SOE reform was deepened. The transformation of the Agricultural Bank of China and China Development Bank into joint stock companies proceeded smoothly. The new Law on Corporate Income Tax went into effect, and real estate taxes were unified for domestic and overseas-funded enterprises and Chinese and foreign individuals. After years of deliberation, reform in pricing, taxes and fees for refined petroleum products was smoothly introduced. Aplan for reform of the pharmaceutical and health care system was devised and referred to the general public for comments. These innovations in systems and mechanisms have laid a solid foundation for our long-term development.

The country opened wider to the outside world. We vigorously implemented the strategy of competing on quality and diversifying export markets. We increased efforts to establish innovation bases to invigorate trade through science and technology and bases for providing services outsourced from other countries. We supported the export of products with Chinese trademarks and intellectual property rights. We improved the policy system for the processing trade. We steadily opened service industries wider to the outside world and provided more guidance to orient foreign investment in China. We integrated existing funds and set up new ones designed to promote external economic and technological cooperation. We promulgated regulations on managing overseas contracted projects and rectified the system of administration of cooperative overseas labor services. We actively promoted energy and resources cooperation overseas, further expanded our assistances to other countries, and the pace of enterprises going global was accelerated. Further progress was made in the development of free trade zones, and in our economic dialogues with major trading partners and mutually beneficial cooperation with other developing countries.

Fellow Deputies,

A massive earthquake that shocked the world struck Wenchuan on May 12. Under the firm leadership of the CPC Central Committee and the State Council, people of all ethnic groups in China, especially in the quake zone, worked as one and fought in unison against the earthquake disaster. The people's army rushed to the frontlines without thinking of their own safety. We launched an earthquake rescue and relief operation that accomplished its work faster, mobilized more personnel and committed more resources than ever before in China's history. We steadfastly gave top priority to saving people's lives. We pulled 84,000 survivors out of the rubble. We promptly repaired damaged infrastructure, and resolutely unblocked the Mount Tangjia quake lake to avert potential secondary disasters. We did our utmost to prevent an epidemic from occurring and ensured that there was no major outbreak of diseases after the deadly earthquake. The central government allocated 38.4 billion yuan for quake relief and 74 billion yuan for post-earthquake recovery and reconstruction. We promptly introduced a host of policies and measures to support the quake zone. We energetically organized one-to-one assistance to designated areas affected by the earthquake. People from all sectors of society in China made generous donations, both in cash and in kind; our compatriots in Hong Kong, Macao and Taiwan as well as overseas Chinese contributed generously to the disaster relief campaign; and the international community provided us with earthquake rescue and relief assistance. All this combined to forma boundless source of strength for the Chinese people to overcome the disaster. This hard struggle against the earthquake produced uncountable touching and brave exploits and fully demonstrated the great indomitable and unyielding spirit of the Chinese people, thus writing a heroic chapter in the history of the nation.

None of the achievements we made last year came easily. They were the result of overall planning and correct leadership of the Party Central Committee with Comrade Hu Jintao as General Secretary, as well as the concerted and strenuous efforts of the whole Party, the entire army and the people of all our ethnic groups. On behalf of the State Council, I hereby express our sincere gratitude to the people of all our ethnic groups and to the democratic parties, mass organizations and people from all sectors of society. I also express our sincere thanks to compatriots in the Hong Kong and Macao Special Administrative Regions and Taiwan and to overseas Chinese, as well as to foreign governments, international organizations and friends in other countries that take an interest in and support China's modernization drive.

While acknowledging our achievements, we must be clearly aware that we face unprecedented difficulties and challenges.

First, the global financial crisis continues to spread and get worse. Demand continues to shrink on international markets; the trend toward global deflation is obvious; and trade protectionism is resurging. The external economic environment has become more serious, and uncertainties have increased significantly.

Second, continuous drop in economic growth rate due to the impact of the global financial crisis has become a major problem affecting the overall situation. This has resulted in excess production capacity in some industries, caused some enterprises to experience operating difficulties and exerted severe pressure on employment. Factors leading to decline in government revenues and increase in government expenditures have increased. It has become more difficult to maintain steady agricultural development and keep rural incomes growing.

Third, institutional and structural problems that have long hindered healthy economic development still remain, and some of them are still prominent. Consumption demand is insufficient, and development of tertiary industries is sluggish. Our capacity for independent innovation is weak. Consumption of energy and other resources is high. Environmental pollution is serious. Disparities in development between urban and rural areas and between regions are widening.

Fourth, some problems affecting the vital interests of the people have not been fundamentally alleviated. There are still many problems demanding urgent solution in the areas of social security, education, health care, income distribution and public security.

Fifth, order in the market is not well standardized; market oversight and law enforcement are not fully in place, and the social credit rating system is still in need of improvement. A number of serious and major incidents concerning food and workplace safety have occurred, which have inflicted serious loss of life and property on the people and taught us a sobering lesson.

We need to thoroughly appreciate how serious and complex the international and domestic economic situations are, be more mindful of potential perils and crises, fully exploit favorable conditions and actively respond to all challenges so that we can successfully accomplish all our tasks and prove worthy of the great expectations and trust conferred on us by the people.

II. General Plan for the Work in 2009

This year is crucial for the implementation of the Eleventh Five-Year Plan. It will also be the most difficult year for China's economic development since the beginning of the 21st century. We face arduous tasks in promoting reform, development and stability.

An analysis of the overall international and domestic situations shows that China is still in an important period of strategic opportunities. Challenges and opportunities coexist, as do hardships and hopes. Neither the fundamentals of China's economic and social development nor its positive long-term trend has changed. We are fully confident that we will overcome difficulties and challenges, and we have the conditions and ability to do so. Our confidence and strength come from many sources: from the scientific judgment and correct grasp of the situation of the central leadership; from the policies and measures that have been formulated and implemented to respond to challenges and promote long-term development; from the huge demand generated by the development of infrastructure, the upgrading of the industrial structure and consumption patterns, environmental protection, and the development of the ecosystem and social programs in the rapid process of industrialization and urbanization; from the support of such factors as our ample capital and labor resources, our sound financial system in smooth operation, vigorous enterprises and flexible macro control policies; from our material, scientific and technological base and institutional conditions that have been created in the 30 years of reform and opening up; from our unique political and institutional advantages that enable us to mobilize resources to accomplish large undertakings, the stable, harmonious social environment we enjoy, and the enthusiasm and creativity of the whole nation from top to bottom to promote scientific development; and from the powerful spirit of the Chinese nation, which always works hard and persistently to make the country strong. As long as we closely follow the Party's leadership and firmly rely on the people of all our ethnic groups, we will be able to overcome any difficulties, minimize the adverse impact of the global financial crisis and promote sound and rapid economic and social development.

To carry out the work of the government well this year, we must hold high the great banner of socialism with Chinese characteristics, take Deng Xiaoping Theory and the important thought of Three Represents as our guide, and thoroughly apply the Scientific Outlook on Development. We need to make ensuring steady and rapid economic development the main task of our economic work. We need to strengthen and improve macroeconomic control, vigorously expand domestic demand, particularly consumer demand, change the pattern of development and speed up strategic economic restructuring, and deepen reform and improve our work of opening to the outside world. We need to improve the people's lives, increase social harmony and promote all-round progress in socialist economic, political, cultural, social and ecological development.

We have set the following major targets for this year's national economic and social development: GDP will grow by about 8%; the economic structure will further improve; urban employment will increase by more than nine million persons; the urban registered unemployment rate will be held under 4.6%, urban and rural incomes will grow steadily; the rise in the CPI will be around 4%; and the balance of payments will continue to improve. It needs to be stressed that in projecting the GDP growth target at about 8%, we have taken into consideration both our need and ability to sustain development. In China, a developing country with a population of 1.3 billion, maintaining a certain growth rate for the economy is essential for expanding employment for both urban and rural residents, increasing people's incomes and ensuring social stability. As long as we adopt the right policies and appropriate measures and implement them effectively, we will be able to achieve this target.

To ensure success of the government's work this year, we must act on the following principles.

First, we must boost domestic demand to sustain economic growth. We need to steadfastly take reversing the downward trend in economic growth as the primary goal of macro control, and make boosting domestic demand a long-term strategic principle and a basic point of departure for stimulating economic growth. We will work to increase effective demand, shore up weak links, and give full play to the leading role of domestic demand, particularly consumer demand, in driving economic growth.

Second, we must adjust the structure of the economy to raise it to a higher level of development. In changing the pattern of development, we will continue to focus on economic restructuring and independent innovation. We will turn pressure into impetus for growth, unwaveringly protect and develop advanced productive forces, shut down backward production facilities, integrate factors of production and create more room for development. We will balance our efforts to sustain economic growth, adjust the structure and improve economic performance to raise the overall quality of the national economy and strengthen the basis for its further development.

Third, we must press ahead with reform to make the economy more vigorous. We will continue to take deepening reform and opening up as the fundamental driving force for promoting scientific development. We need to further emancipate our minds, intensify reform in major areas and key links, eliminate obstacles embedded in systems and mechanisms and stimulate greater creativity for development.

Fourth, we must give top priority to ensuring people's well-being and promote social harmony. The more difficulties we face, the greater attention we should pay to ensuring people's well-being and promoting social harmony and stability. We will continue to ensure that maintaining and improving people's lives is always the starting and end point of our economic work. We will implement an even more proactive employment policy and closely integrate efforts to stimulate growth with efforts to expand employment and improve people's lives in order to ensure that all of the people share in the fruits of reform and development.

II. Major Tasks for 2009

This year, our government work will give high priority to dealing with the global financial crisis and promoting steady and rapid economic development. We will take a coordinated approach, stress key areas, and fully implement a package plan to ensure steady and rapid economic development. We will dramatically increase government investment by launching a four trillion yuan two-year investment plan, for which the central government has pledged 1.18 trillion yuan, and implement a structural tax reduction in order to stimulate domestic demand. We will also implement a massive plan to adjust and reinvigorate industries to raise the overall competitiveness of the economy; vigorously promote independent innovation and provide scientific and technological support to increase the sustaining power of development; and significantly increase social security benefits, expand urban and rural employment and promote development of social programs. To implement this package plan, we will concentrate our efforts on the following seven areas.

1. Improving and strengthening macro control and maintaining steady and rapid economic development

We need to adhere to a flexible and prudent control policy to make our macro control more responsive to changes and more results-oriented. We will reverse the slowdown in economic growth as soon as possible and maintain steady and rapid economic development.

We will implement a proactive fiscal policy.

First, we will significantly increase government spending. This is the most active, direct and efficient way we can expand domestic demand. There will be a large discrepancy between government revenues and expenditures this year. On the one hand, a slowdown in economic growth and the reduction of tax burdens on enterprises and individuals will inevitably slow the growth of government revenues. On the other hand, we must significantly increase investment and government expenditures to stimulate economic growth, improve people's lives and deepen reform. To cover the shortfall arising from the decline in government revenues and growth in expenditures, we have set this year's central government deficit at 750 billion yuan, 570 billion yuan more than last year. In addition, the State Council will allow local governments to issue 200 billion yuan worth of government bonds through the Ministry of Finance, which will go into provincial budgets. These will add up to a 950 billion yuan deficit, accounting for less than 3% of the GDP. Although the deficit will increase significantly this year, the constant drop in government deficits in previous years provides room to issue more bonds this year, and the ratio of the cumulative balance of outstanding government bonds to GDP, which is around 20%, is within the acceptable range of what our overall national strength can bear and is therefore safe.

Second, we will carry out structural tax reduction and promote reform of taxes and fees. We will reduce tax burdens on enterprises and individuals by a variety of means such as tax cuts, rebates and exemptions to encourage enterprise investment and consumer spending and invigorate the micro-economy. Preliminary calculations indicate that the burdens on enterprises and individuals will fall by approximately 500 billion yuan this year as the result of comprehensively carrying out VAT reform; implementing existing preferential tax policies on small and medium-sized enterprises, the real estate industry and securities transactions and export rebate policies; and rescinding or suspending 100 administrative charges.

Third, we will optimize the structure of government expenditures. We will continue to increase investment in key areas, strictly control regular expenditures, and do everything we can to reduce administrative costs.

We will follow a moderately easy monetary policy and give monetary policy a more active role to play in promoting economic growth.

First, we will improve financial control. We will increase the broad money supply by about 17% and grant over five trillion yuan in additional loans to ensure that the supply of money and credit meets the requirements of economic development.

Second, we will improve the credit structure. We will strengthen monitoring and guidance of the flow of credit, increase financial support for weak links such as agriculture, rural areas and farmers as well as small and medium-sized enterprises, and effectively resolve the problem some businesses have in getting financing. We will strictly control lending to industries and enterprises that are energy intensive or highly polluting or have excess production capacity.

Third, we will improve the mechanism for transmitting monetary policy and guarantee the smooth flow of funds. We will make full use of the advantages and special features of all kinds of financial institutions, innovate and improve financial services, satisfy reasonable requests for financing, and create a synergy for finance to promote economic development.

Fourth, we will strengthen and improve financial oversight and supervision. All kinds of financial enterprises need to strengthen risk management and become better able to withstand risks. We will ensure that there is a proper balance between innovation, opening up, and oversight and supervision in the financial sector. We will strengthen monitoring and supervision of cross-border capital flows and maintain financial stability and security.

We need to make our fiscal and monetary policies more consistent and coordinated with our industrial, trade, land, investment and employment policies to create a control synergy.

2. Actively boosting domestic demand, especially consumer demand, and strengthening the role of domestic demand in driving economic growth

First, we will expand consumption, especially individual consumption. We will continue to adjust income distribution, raise the proportion of the national income that goes to wages, increase the proportion of government spending dedicated to improving people's lives and expanding consumption, and increase subsidies to farmers and low-income urban residents. We need to cultivate areas of high consumer demand and expand consumption in new areas. We will improve the policy on automobile consumption, accelerate development of markets for second-hand cars and car rental, and guide and promote rational spending on automobiles. We will vigorously expand consumption that makes people's lives easier, such as community-based businesses, property management and household services; accelerate development of tourism and leisure consumption; increase consumption in culture, recreation, sports and fitness services; and vigorously expand consumption in new areas such as the Internet and animation. We will improve consumption policies and the consumption environment. We will accelerate the project to encourage retailers to open stores in more townships and villages, and encourage commercial chains to open more outlets in rural areas. We will intensify the development of consumption facilities and service networks in both urban and rural areas, rectify order in the market, and safeguard the legitimate rights and interests of consumers. We will promptly work out and introduce policies and measures to encourage consumption, and vigorously develop consumer credit. We will do all the work of implementing the programs for bringing home appliances, agricultural machinery, and automobiles and motorbikes to the countryside well, and we will make effective and flexible use of the 40 billion yuan in central government subsidies provided to get enterprises to increase their sales and enable farmers to enjoy real benefits.

Second, we will maintain rapid growth in investment and improve the investment structure. The central government plans to invest 908 billion yuan this year. Government investment will focus on projects to improve people's lives such as those for developing low-income housing, education, heath care and culture; projects to conserve energy, protect the environment, improve the ecosystem, upgrade technologies, and make scientific and technological innovations; projects to make key infrastructure improvements, including farmland improvement and water conservancy projects, railways, and freeways; and post-earthquake recovery and reconstruction. We must channel government investment to areas where it best counteracts the effects of the global financial crisis and to weak areas in economic and social development, and no government investment will be made in the regular processing industries. We will promptly work out and introduce preferential policies to encourage and guide non-governmental investment. We need to support non-governmental investment in areas favored by state industrial policies and encourage enterprises to increase spending on R&D and technological upgrading through proper release of information and improved guidance. All government money comes from the people, and we must spend every penny responsibly. We will make every effort to ensure that all construction projects meet high quality standards and are built to last and be passed onto our future generations as valuable legacy.

Third, we will promote the steady and healthy development of the real estate market. We will adopt even more vigorous and effective policies and measures to stabilize market confidence and expectations, keep real estate investment stable, and promote steady and orderly development of the real estate industry. We will speed up implementation and improvement of policies and measures to promote development of low-income housing projects. Wewill strive to solve the housing problems of 7.5 million low-income urban families and 2.4 million families living in shantytowns in forests, on reclaimed land and around coalmines within three years. This year, the central government will allocate 49.3 billion yuan for the construction of low-income housing to increase funding for developing low-rent housing and improving housing conditions in shantytowns, and increase housing subsidies for the central and western regions by an appropriate amount. We will expand the pilot program for renovating dilapidated houses in rural areas and build permanent housing for nomads in ethnic minority areas. A pilot program will be launched in selected places where conditions permit to use the idle portion of the housing accumulation fund to support development of affordable housing. We will vigorously develop public rental housing. We will effectively implement credit, tax and other policies to support people in purchasing homes and making home improvements. Individuals who meet relevant criteria and apply for bank loans to support the purchase of a second home for personal use will enjoy similar preferential lending policies that apply to the purchase of first homes. We will implement the policy to reduce or exempt the business tax on housing transfers to varying degrees based on the age of the housing. We will expand consumption and supply of ordinary commercial housing, and increase credit support for building small and medium-sized condominiums at low and medium price levels. We will speed up development of the market for second-hand homes and the home rental market. We will encourage and guide local governments to stabilize and develop their real estate market in light of local conditions, and strengthen supervision of the housing market by type. We will continue to rectify order in the real estate market, and standardize transactions. We will help rural migrant workers in cities solve their housing problems. We will deepen reform of the urban housing system to meet people's multilevel housing demand, and strive to ensure adequate housing for everyone.

Fourth, we will accelerate recovery and reconstruction of areas hit by the Wenchuan earthquake. We will promptly and fully implement the master plan for post-earthquake recovery and reconstruction. The central government will allocate 130 billion yuan for this purpose this year. We will quickly rebuild homes for quake-affected urban and rural residents by combining repair and reinforcement of existing housing with construction of new housing. We will basically complete reconstruction of rural houses collapsed or badly damaged during the earthquake, and ensure quake-stricken residents can move into new houses by the end of this year. We will accelerate rebuilding of schools in the quake zone and ensure that more than 95% of the students whose school buildings were destroyed in the earthquake will have permanent school buildings. We will continue work to repair and rebuild infrastructure such as transportation, communications, energy and water conservancy facilities. We will effectively prevent and control geological disasters, restore the ecosystem, improve the environment, and resume cultivation of damaged arable land. We will speed up industrial rebuilding and development in the quake zone on the basis of the plan to adjust and reinvigorate key industries. We will continue to provide one-to-one assistance and special aid to the quake zone and manage and use funds, goods and materials for post-earthquake reconstruction well. We will intensify and accelerate post-earthquake reconstruction and strive to basically reach the targets in two years that had originally been set for three, so that residents of the quake zone can begin to live a happier life as soon as possible.

3. Consolidating and strengthening the position of agriculture as the foundation of the economy, and promoting steady development of agriculture and continuous increase in rural incomes

We will focus on the following five areas.

First, we will steadily develop grain production. We will effectively keep the area planted in grain crops stable, focus on increasing the yield per unit area and optimizing the variety mix, and increase the country's grain production capacity by 50 million tons.

Second, we will adjust the agricultural structure based on market demand. We will support the production of important agricultural products in short supply, and improve the quality, profitability and competitiveness of agricultural products. We will speed up implementation of the new plan for developing agricultural products in regions with the most suitable conditions. We will support the growing of oil bearing and other cash crops in areas with the most suitable conditions. We will stabilize hog production, implement the plan for reinvigorating the dairy industry, and promote large-scale, standardized, healthy farming practices in animal husbandry and aquaculture. We will strengthen the prevention and control of major animal and plant epidemics.

Third, we will intensify development of agricultural infrastructure and projects designed to improve the lives of rural people. We will develop land on a large scale and comprehensively improve farmland, water supplies, roads, and forests. We will upgrade low- and medium-yield farmland and develop farm plots that meet high standards. We will speed up the reinforcement of large and medium-sized reservoirs and dangerous key small reservoirs. We will further improve irrigated areas and build more small water conservancy facilities. By the end of next year, we will have basically paved the roads linking all towns and townships across the country and all incorporated villages with the proper conditions in the eastern and central regions and will have completed the construction of roads connecting all incorporated villages with the proper conditions in the western region. In addition, we will provide safe drinking water to another 60 million people and methane to an additional five million households. We will continue to improve rural infrastructure, including power grids, postal service, and telecommunications, and intensify development of rural social programs.

Fourth, we will increase rural incomes in a variety of ways. We will vigorously develop modern agriculture with distinctive local features, support intensive processing and sale of agricultural products, develop rural secondary and tertiary industries, accelerate the development of small towns, and strengthen county economies.

Fifth, we will intensify our efforts to alleviate poverty through development. This year, a new poverty line will be adopted and all low-income rural residents will be covered by the poverty relief policy. The threshold will be increased to 1,196 yuan per person on average, and coverage will be extended to include 40.07 million recipients. This marks the beginning of a new stage in China's efforts to reduce poverty through development. We need to improve state poverty relief strategies and policies, increase funding, and steadfastly make development the basis of poverty reduction. We will give priority to eradicating poverty at the village level, training rural residents for nonagricultural employment, and reducing poverty through industrial development and relocation of residents so that the poor get the basic necessities, escape poverty, and become prosperous.

We will take the following measures to comprehensively strengthen our work related to agriculture, rural areas and farmers.

First, we will greatly increase funding for agriculture and rural areas. Central government allocations for agriculture, rural areas and farmers will total 716.1 billion yuan this year, a year-on-year increase of 120.6 billion yuan. We will significantly increase funding for rural public facilities in the central and western regions, and relieve governments at and below the county level of the burden of providing supporting funds for them. Greater priority will be given to major grain-producing areas in implementing the policies and measures supporting grain production. More general transfer payments and financial rewards will be provided to major grain-producing counties and greater support given to projects for industrializing grain production.

Second, we will significantly raise minimum grain purchase prices and keep the prices of agricultural products stable at a reasonable level to encourage farmers to grow more. This year the floor price for the purchase of wheat and rice will be increased by 0.22 yuan and 0.26 yuan per kilogram on average respectively. We will apply policies in a timely fashion to temporarily purchase and stockpile major agricultural products to build up reserves of grain, cotton, edible oil and pork, and strengthen regulation of the farm products market.

Third, we will further increase agricultural subsidies. Central government funding for these subsidies will total 123 billion yuan, an increase of 20 billion yuan over last year. Direct subsidies to grain producers will continue to increase. We will increase subsidies for the use of superior seed varieties, raise subsidy levels, make subsidies available to all rice, wheat, corn and cotton growers, extend them more widely to canola and soybean farmers, and start to subsidize tea-oil tree planting. The central government will spend 13 billion yuan, a year-on-year increase of nine billion yuan, on subsidies to all agricultural and pastoral counties (farms) throughout the country for purchasing agricultural machinery and tools. We will promptly increase general subsidies for agricultural supplies to coordinate with price rises and changes in the acreage planted in various crops.

Fourth, we will speed up development of a new system under which various sectors of society provide services for agriculture. We will increase spending on agricultural science and technology, intensify efforts to expand application of innovations in agricultural science and technology and become better able to provide agriculture-related technical services. We will improve public service agencies charged with promoting application of agricultural technologies, preventing and controlling animal and plant epidemics, and monitoring the quality of agricultural products at the local level. We will support supply and marketing cooperatives, specialized farmer cooperatives and pacesetting enterprises in providing diverse production and operation services.

Fifth, we will stabilize and improve the basic rural operation system. We will ensure that existing land contract relationships remain stable and unchanged for a long time to come, and enhance and better protect the land contract and management rights enjoyed by rural residents, including migrant workers who are away from their home villages. The transfer of land use rights must occur on a compensated, voluntary basis and be conducted in accordance with the law. We will adhere to and apply the strictest possible systems for protecting arable land and economizing on the use of land, and do everything in our power to keep the total amount of arable land above the red line of 120 million hectares. Reform of the system of collective forest rights will move forward. Overall rural reform will be deepened. We will accelerate reform of town and township government departments and work actively yet prudently to ease the debts of townships and villages.

4. Accelerating transformation of the pattern of development and energetically promoting strategic economic restructuring

This year we will focus on improving industrial restructuring in order to maintain economic growth and promote industrial upgrading.

First, we will conscientiously implement plans for adjusting and invigorating key industries such as the automobile, steel, shipbuilding, petrochemical, textile, nonferrous metals, equipment manufacturing, information technology, modern logistics, and light industries. We will carry out industrial restructuring and upgrading to resolve the prominent problems and conflicts that hinder their development.

Second, we will energetically adjust the structure of enterprises and carry out mergers and reorganizations. We will support superior enterprises in acquiring ones that are backward or have financial difficulties. We will encourage well-established enterprises to work with each other, and upstream and downstream enterprises to integrate their operations in order to raise the level of industry concentration and the efficiency of resource allocation.

Third, we will take more effective measures to support development of small and medium-sized enterprises. We will promptly implement financial support policies, improve the financing guarantee system, streamline loan procedures, and increase the scale of loans. Central government funding for supporting the development of small and medium-sized enterprises will increase from 3.9 billion yuan to 9.6 billion yuan. We will continue to implement preferential tax policies to encourage small and medium-sized enterprises to make scientific and technological innovations, upgrade their technology, and create more jobs. We will improve the system under which various sectors of society provide services for small and medium-sized enterprises.

Fourth, we will actively support enterprises in accelerating technological upgrading and develop innovation-based enterprises. The central government will allocate 20 billion yuan, mainly in interest subsidies, to support technological upgrading in enterprises. We will encourage enterprises to apply new technologies, new production processes, new equipment and new materials so that they can adapt to market changes, develop more readily marketable products, undertake product innovation, and improve their product quality and the level of production and business operations.

Fifth, we will accelerate development of modern service industries. We will promote development of the banking, insurance, modern logistics, consulting, software and creative industries, and develop new types of services. We will upgrade traditional service industries.

We will vigorously promote scientific and technological innovation. We will integrate making technological innovation with boosting domestic demand, maintaining economic growth, making structural adjustments and raising the level of development. This year the central government will allocate 146.1 billion yuan to the science and technology sector, up 25.6% from last year.

First, we need to speed up implementation of the Outline of the National Program for Long- and Medium-Term Scientific and Technological Development, particularly, implementation of major science and technology projects. We will select and launch a number of projects that give strong impetus to scientific and technological development, have a widespread impact, and yield quick results, in order to quickly make breakthroughs in core and key generic technologies that can stimulate the transformation of industries and technological upgrading, and support invigoration of industries and long-term economic development.

Second, we need to deepen reform of the science and technology management system. We will get enterprises to play a key role in technological innovation, and encourage more scientists and engineers to work on the frontlines of economic development spreading technologies, doing product R&D, and starting technology based enterprises. We will get enterprises, universities, and research institutes to work more closely together to accelerate the application of scientific and technological advances in production.

Third, we will make the equipment manufacturing industry stronger and larger. We will implement the project to increase self-sufficiency in doing R&D on manufacturing major equipment and implement a related system of government procurement. We will vigorously develop manufacturing of complete sets of major equipment, high-tech equipment and equipment needed in high-tech industries, raise the level of integrated innovation and make greater use of domestic components in the equipment manufacturing industry.

Fourth, we will support and promote R&D on technologies in new energy sources, biology, medicine, third generation mobile communications, the integration of telecommunications networks, cable TV networks and the Internet, energy conservation and environmental protection, and their industrial application. We will develop clusters of new- and high-tech industries, and create new areas of demand in society.

Fifth, we will continue to implement the strategy of reinvigorating the country through science and education, the strategy of strengthening the country through human resources development and the intellectual property rights strategy. We will continue to develop the national innovation system, intensify basic research and research in leading-edge technologies, and accelerate development of major infrastructure facilities and public platforms for science and technology. We will work vigorously to bring in high-caliber personnel and intellectual resources from overseas and intensify the training of all types of personnel. We will become better able to create, utilize, protect and manage intellectual property rights.

We will work tirelessly to save energy, reduce emissions, preserve the ecosystems, and protect the environment.

First, we will emphasize energy conservation in the three key areas of industry, transportation and construction; continue work on the ten major energy conservation projects; and implement energy-conserving measures for power generators, boilers, automobiles, air-conditioners and lighting products.

Second, we will energetically develop a circular economy and clean energy. We will steadfastly save energy, water and land. We will vigorously develop clean energy such as nuclear, hydraulic, wind, and solar power. We will promote the adaptation of clean coal technology for industrial application. We will strictly enforce national standards for energy consumption and environmental protection, increase the use of energy-conserving technologies and products, and promote comprehensive utilization of resources.

Third, we will improve our policies for conserving energy and protecting the environment, and strictly enforce the system of standards, assessment system and monitoring system for energy conservation and emissions reduction.

Fourth, we will launch a nationwide campaign on the importance of energy conservation and emissions reduction, in which state organs and government-affiliated enterprises and institutions need to play an exemplary role.

Fifth, we will continue to intensify pollution prevention and control in key river valleys and regions; control the spread of stony deserts and desertification; carry out ecological conservation projects to build key forest shelterbelts, protect virgin forests, and bring the sources of dust storms affecting Beijing and Tianjin under control; and protect water, forests, grasslands, wetlands and other elements of the ecosystems. We will comprehensively improve the rural environment. We will rectify and standardize order in the exploitation of mineral resources and develop and use marine resources wisely.

Sixth, we will implement the national plan for addressing climate change and become better able to respond to it. We will intensify basic research in meteorology, earthquake science, disaster prevention and mitigation, and surveying and mapping and strengthen these areas.

We will comprehensively improve product quality and enhance workplace safety. This year we will launch a campaign to rectify and standardize order in the market and carry out the Quality and Safety Year campaign, which requires all industries and sectors to strengthen quality and safety supervision of all personnel and all processes in all areas. We will further tighten oversight and supervision of workplace safety in key industries and resolutely prevent serious and major accidents. We will make intensive efforts to improve food and drug safety, and improve and strictly enforce standards for product quality and safety. We will implement strict market access rules and product trace ability and recall systems so that the people buy food and drugs with confidence and consume them with satisfaction.

We will continue to implement the overall regional development strategy of promoting the large-scale development of the western region, reinvigorating northeast China and other old industrial bases, energizing development of the central region, and getting the eastern region to take the lead in development, and promote balanced development among regions. We will encourage all regions to work on the basis of local conditions, make full use of their advantages, and find a new path for development in response to the shock of external events. The eastern region needs to vigorously open up international markets, stabilize exports, and develop advanced manufacturing, modern services and new- and high-tech industries. It needs to accelerate industrial upgrading and institutional innovation, foster new areas of economic growth, create new advantages for participating in international cooperation and competition, and raise its capability for sustainable development. Special economic zones, the Pudong New Area in Shanghai and the Binhai New Area in Tianjin need to continue to take the lead in reform and opening up. We will increase support to the central and western regions and northeast China to improve their weak links in development. To remove bottlenecks in these regions, we will increase spending on infrastructure, ecological conservation and environmental protection, launch a number of key transportation and water conservancy projects, and accelerate development of a number of grain, energy, raw materials and equipment manufacturing bases that have distinctive local features and special advantages. We will accelerate development of key areas on a priority basis. We will promote the transformation of the economies of cities once dependent on now-depleted mineral resources in these regions. We will promptly formulate specific policies to encourage industries to relocate to the central and western regions, and formulate and implement a national plan for development priority zones. We will fully support the development of old revolutionary base areas, ethnic minority areas, border areas and poor areas.

5. Continuing to deepen reform and opening up, and further improving systems and mechanisms conducive to developing in a scientific manner

Reform and opening up provide an inexhaustible driving force for economic and social development. We will unswervingly carry out reform and opening up, resolve thorny problems hindering development by deepening reform, and obtain opportunities for development as China opens wider to the outside world.

We will move ahead with price reform for resource products. We will continue to deepen reform of power prices and gradually improve the mechanism for determining rates for putting power on the grid, transmitting and distributing power, and selling power, and balance the prices of coal and power in a timely fashion. We will press ahead with reform of water prices, gradually increase the price of water for non-farming purposes supplied from water projects, and improve the system for collecting and managing water resource fees. We will accelerate the establishment of sound systems for paying for the use of mineral resources and for compensating for ecological damage, and actively carry out trade in pollution rights on a trial basis.

We will carry forward reform of the fiscal and taxation systems. We will comprehensively institute VAT reforms. We will extend the urban construction and maintenance tax and education surcharges from Chinese to foreign enterprises and citizens. We will reform and improve the system of resource taxes. We will carry out reform of the taxation system for the real estate industry. We will continue to bring order to administrative fees and government-managed funds and further standardize their management. We will deepen reform of the budgetary system to better coordinate the budget for the government's public expenditures, budget for use of state capital, budget for government-managed funds, and budget for social security programs and vigorously promote greater openness in budgetary work. We will improve the transfer payment system. We will promote the reform to place county public finances directly under the management of provincial governments.

We will carry forward reform of the financial system. We will deepen the reform of state-owned financial institutions, and steadily develop small and medium-sized financial enterprises under multiple forms of ownership and new types of rural financial institutions. We will actively encourage healthy development of informal financing. We will continue to carry out reform of capital markets, and stabilize stock markets. We will develop and standardize the bond market, and steadily develop the futures market. We will deepen reform of the insurance sector to make the most of its guarantee and financing functions. We will carry forward market-based reform of interest rates. We will improve the RMB exchange rate regime, and keep the RMB exchange rate basically stable at an appropriate and balanced level. We will strengthen the mechanism for coordinating oversight and supervision in the financial sector.

We will carry forward reform of state-owned enterprises and support the development of the non-public sector of the economy. We will deepen the reform to introduce corporate and shareholding systems in large state-owned enterprises and establish a sound modern corporate structure. We will accelerate reform of the railway, power and salt industries, improve the administrative systems of the civil aviation and telecommunications industries, and formulate and introduce complementary policies for regulating reform of the telecommunications system. We will encourage, support and guide the development of the non-public sector. We will implement all the policies for relaxing controls over market access and energetically support the involvement of private capital in SOE reform and its entry into such areas as infrastructure, public utilities, financial services and social programs.

We will accelerate institutional reform in local governments and move forward with the reform of government-affiliated institutions.

We will strive to ensure steady growth in foreign trade. While stressing the importance of boosting domestic demand, we must not slacken efforts to promote export. In the face of the serious situation of a sharp decline in external demand and growing trade protectionism, we will straighten out and adjust our foreign trade policies and increase our support for import and export. We will continue to diversify our export markets and compete on quality, enhance traditional export markets, and energetically open up new markets.

First, we will fully employ internationally accepted fiscal and taxation policies to support our export. We will increase the Foreign Trade Development Fund to an appropriate extent, focusing on cultivating brand-name export products and supporting small and medium-sized enterprises in expanding their international markets.

Second, we will improve our financial services for importing and exporting. We will expand the coverage of export credit insurance, and encourage financial institutions to develop export credit. We need to make innovations in financing guarantees for export enterprises.

Third, we will steadily carry out upgrading of processing trade. We will improve the climate for developing it, and adjust the list of commodities whose processing is classified as prohibited or subject to restrictions. We will encourage the relocation of export processing industries to the central and western regions.

Fourth, we will promptly improve policies and measures to encourage development of trade in services and energetically develop the outsourcing of international services to China.

Fifth, we will strive to expand imports, focusing on introducing advanced technology and equipment and increasing imports of key spare parts and components, and important energy sources, resources and raw materials.

Sixth, we will improve the level of trade facilitation. We will improve supervision and service in customs, quality inspections and foreign exchange and intensify the development of border ports.

Seventh, we will work for a favorable international environment for trade and economic cooperation. We will vigorously promote the Doha round of trade talks, accelerate implementation of the strategy of free trade zones, and properly handle trade frictions.

We will promote balanced development between foreign investment in China and Chinese investment overseas. We will keep the size of foreign investment in China steady and encourage more foreign investment in new- and high-tech industries, advanced manufacturing, energy-conservation and environmental protection industries, and modern service industries. We will further straighten out and standardize administrative fees for foreign-investment projects and the criteria for evaluating them. We will upgrade national development zones in the central and western regions and improve the opening of our border areas to the outside world. We will continue to implement the "go global" strategy, support all kinds of competent Chinese enterprises in investing overseas and undertaking international mergers and acquisitions, and encourage large enterprises to play a leading role in implementing the "go global" strategy. We will vigorously promote the establishment of trade and economic cooperation zones, joint exploitation of resources, undertaking of contracted projects and labor service cooperation in other countries. We will increase financial support for enterprises engaged in overseas investment and economic cooperation, and expand channels for investment in other countries. We will expand the scope of the registration system for Chinese investment overseas, and strengthen risk control and supervision of enterprises' overseas investments.

6. Energetically developing social programs and vigorously ensuring and improving the well-being of the people

This year we will concentrate on accomplishing major tasks that are urgently needed in economic and social development and directly related to the vital interests of the people to improve their well-being.

We will do everything in our power to stimulate employment. We will make full use of the role of the service sector, labor-intensive industries, small and medium-sized enterprises, and the non-public sector of the economy in creating jobs. We will implement a more proactive employment policy, and the central government will allocate 42 billion yuan for this purpose.

First, we will give high priority to facilitating the employment of university graduates. Graduates who take jobs in public administration and public services at the community level in urban and rural areas will receive social security benefits and position subsidies. Those who either take jobs in villages or enlist in the army will receive tuition reimbursement and have their student loans forgiven. We will encourage institutions of higher learning, research institutes and enterprises undertaking key research projects to recruit qualified university graduates to do research work. Enterprises recruiting such graduates will receive relevant employment policy support from the government. We will speed up the establishment of startup industrial parks and incubation bases that require less investment and yield quicker results where college graduates can start their own businesses.

Second, we will expand employment opportunities for rural migrant workers in cities while stabilizing their existing jobs. We will stimulate their employment through government investment and the launch of major projects. We will encourage and help enterprises that are in a difficult situation to prevent layoffs by renegotiating wage levels with their employees, adopting flexible employment and work hours, or providing job training for them. We will increase the export of organized labor services and guide the orderly flow of rural migrant workers. We will arrange for those that have returned to their home villages to take part in the construction of local public facilities.

Third, we will help urban residents experiencing difficulty finding work, members of zero-employment households and workers in disaster-stricken areas find jobs. We will create more public-service jobs.

Fourth, we will vigorously support individuals in starting their own businesses or finding jobs on their own, thus expanding employment by creating new businesses. We will adopt facilitating and preferential policies concerning market access, taxation, financing and land use to encourage more workers to become entrepreneurs. We will further lower the barrier for individuals, including rural migrant workers who have returned to their home villages, to start their own businesses and lend them more support in this area.

Fifth, we will further improve public services for employment. We will improve the release of employment information and provide more effective career and employment guidance. We will vigorously develop vocational training. We will increase policy support for skills training for rural migrant workers and urban residents experiencing employment difficulty.

We will move faster to improve the social safety net.

First, we will press ahead with institutional development. We will improve the basic old-age insurance system, continue to carryout the pilot projects to fully fund personal accounts for old-age insurance, and comprehensively carry out planning at the provincial level. We will formulate and implement a method for old-age pensions for rural migrant workers. The pilot projects for establishing a new type of old-age insurance system for rural residents will cover approximately 10% of the counties and county-level cities in the country. We will introduce a method for transferring old-age pension accounts for workers moving from one region to another, and improve the systems of unemployment, workers' compensation, and maternity insurance. We will improve the urban and rural social assistance systems.

Second, we will expand coverage of social security programs, focusing on coverage for employees in the non-public sector, rural migrant workers, farmers whose land was expropriated, people with flexible employment arrangements and freelancers. All rural residents entitled to cost of living allowances will receive them. We will increase funding for the national social safety net through multiple channels. We will strengthen supervision of social security funds to ensure their safety.

Third, we will increase social security benefits. We will continue to raise the basic old-age pensions for enterprise retirees by an annual average of about 10% per person for the next two years. We will continue to increase unemployment insurance benefits and workers' compensation. We will extend greater financial support to both urban and rural recipients of cost of living allowances and to childless and infirm rural residents who receive subsidies for food, clothing, medical care, housing and burial expenses, and increase subsidies and living allowances to members of entitled groups. We will vigorously develop social welfare and charity programs. The central government plans to spend 293 billion yuan on the social safety net this year, up 17.6% or 43.9 billion yuan over the estimated figure for last year. Local governments will also increase funding in this area.

We will continue to give priority to developing education. This year we will formulate the Outline of the National Medium- and Long-Term Program for Education Reform and Development to make comprehensive arrangements for education reform and development in China through 2020. This year, we need to focus on the following five areas.

First, we will promote fairness in education. We will implement free compulsory education policies for both urban and rural areas well. We will increase public expenditures on rural compulsory education to 300 yuan per primary school student and 500 yuan per junior secondary school student. We will progressively ensure that children of rural migrant workers have access to free compulsory education in the places where their families have relocated. We will increase living allowances for rural students receiving compulsory education who come from poor families and stay in school dormitories. We will strive to basically clear the debts incurred in providing nine-year compulsory education in rural areas within three years. We will improve the national financial aid system for students and increase financial aid for secondary vocational school and university students from poor families to ensure that everyone enjoys equal opportunity to receive education and that no child is denied schooling due to financial difficulties.

Second, we will optimize the education structure. We will energetically develop vocational education, with the focus on supporting rural secondary vocational education. We will gradually make secondary vocational education free, beginning this year with rural students from poor families and students studying agriculture-related subjects. We will continue to improve the quality of higher education, develop high-quality universities and key disciplines, and guide institutions of higher learning to adapt their specialties, curriculums and courses to meet the needs of the market and China's economic and social development.

Third, we will improve the quality of teachers. We will apply a performance-based salary system for teachers in compulsory education and raise salaries for the 12 million primary and secondary school teachers. The central government will spend 12 billion yuan and local governments will also increase funding for this purpose. We will step up training for all teachers, especially rural teachers, and encourage graduates from teachers colleges and other colleges and universities to teach at community and village schools.

Fourth, we will advance well-rounded education. Education of all types and at all levels must focus on promoting all-round development of students. Reform of curriculums, textbooks, teaching methods and examination and evaluation systems should be accelerated to relieve primary and secondary school students of their excessive study load so that they will have more time to think, practice and create.

Fifth, we will implement a program to ensure that all primary and secondary school buildings are safe and promote standardization in the construction of rural primary and secondary schools. We will make school buildings places that are the safest and provide the greatest assurance to parents.

We will carry forward pharmaceutical and health care reform and development. We will ensure that public medical and health care services serve the public good and fully arouse the initiative of health workers. We will work hard to establish a nationwide basic medical and health care system for both urban and rural areas to begin providing universal coverage. We will focus on the following five areas starting from this year.

First, we will develop a system that ensures basic medical care. Urban residents will be covered by basic medical insurance for urban workers or basic medical insurance for non-working urban residents, and rural residents will be covered by the new type of rural cooperative medical care system. We will ensure that these programs cover over 90% of those eligible within three years. The central government will provide appropriate subsidies for retirees from closed or bankrupt state-owned enterprises in financially strained regions to get such insurance. We will continue to raise the standard for financing and increase government subsidies for basic medical insurance for non-working urban residents and the new type of rural cooperative medical care system, appropriately expand the scope of reimbursement and raise the proportion of costs reimbursed. We will improve urban and rural medical assistance programs and improve the level of assistance.

Second, we will establish a national system for basic drugs. This year, we will formulate and promulgate a unified national basic drugs catalog and adopt policies concerning their production, distribution, pricing, use and insurance reimbursement in order to ease the burden on patients for the cost of basic drugs.

Third, we will improve the community-level medical and health service system. This year, we will complete the building of 29,000health clinics in towns and townships supported by the plan. In the coming three years, the central government will allocate funds to support the building of another 5,000 central health clinics in towns and townships, 2,000 county-level hospitals and 2,400 community health service centers in urban areas. We will support the construction of health care clinics in villages in remote regions and ensure that all incorporated villages have their own health care clinics.

Fourth, we will steadily promote equal access for all to basic public health services. We will expand the scope of free public health services and ensure that the per capita public health service expenditure for both urban and rural residents is not less than 15 yuan, a level that will rise gradually in the future. We will appropriate more funds to prevent and control major communicable diseases, chronic and occupational diseases, and endemics.

Fifth, we will carry forward pilot reforms in public hospitals with the emphasis on reforms in their management system and their operation and oversight mechanisms. We will encourage every locality to seek effective ways to separate government administration from medical practice, management from operations, medical care from drugs, and for-profit from nonprofit operations. We will gradually eliminate the practice of hospitals subsidizing their medical services with drug sales and reform the mechanism of subsidizing public hospitals. We will encourage all localities to seek ways to establish a medical service pricing mechanism based on consultations among stakeholders and establish a system whereby relevant institutions, representatives of the general public, and experts oversee and evaluate the quality of medical services. We will give full play to traditional Chinese medicine and folk medicines of ethnic minorities in disease prevention and control. Governments at all levels will allocate an additional 850 billion yuan in the next three years, including 331.8 billion yuan from the central government, to ensure smooth progress in the reform of the system of pharmaceuticals and health care. Because this reform concerns the people's health-related rights and interests, we need to improve leadership, make plans and arrangements carefully, progress vigorously yet prudently, and effectively solve the problem of medical services being unaffordable and inadequate, in order to provide safe, effective, convenient and affordable medical and health care services for the people.

We will do our work related to population and family planning well and maintain a low birthrate. From this year on, we will introduce a policy in all rural areas to subsidize hospitalized childbirth, provide regular prenatal checkups and postpartum visits for women, and monitor the growth of infants and toddlers less than three years of age. We will intensify our efforts to prevent birth defects. We will increase the reward to rural women at or above the age of 60 who have complied with family planning regulations from 600 yuan to 720 yuan per person. We will improve services for and intensify management of the floating population and better protect the rights and interests of women and minors. We will provide routine gynecological examinations for rural women. We will support and accelerate programs benefiting people with disabilities. We will continue to intensify our work concerning the elderly.

We will vigorously develop culture and sports. Developing cultural programs and promoting cultural enrichment will help not only enrich people's cultural lives but also expand avenues of consumption. We need to vigorously develop non-profit cultural programs and accelerate improvement of the system of public cultural services. We will intensify construction of key cultural facilities as well as community-based cultural facilities in both urban and rural areas, particularly the project to extend radio and TV coverage to all villages, and the construction of multipurpose cultural centers in towns and townships and small libraries in rural areas, and we will vigorously promote cultural projects that benefit the people. We will help accelerate the development of cultural industries, improve policy support for them and foster leading cultural enterprises. We will help philosophy and the social sciences flourish, and actively develop literature, the arts, radio, TV, film, the press and publishing. We will strengthen development and management of Internet culture and effectively protect our cultural relics and intangible cultural heritage. We will reform management and operation of nonprofit cultural institutions and transform for-profit cultural agencies into enterprises. We will build more and better community-based public sports facilities, vigorously promote mass sports activities, raise the level of competitive sports and develop the sports industry.

We will strengthen the development of democracy and the legal system. We will carry out political restructuring in an active yet prudent manner and develop socialist democratic politics. We need to improve democratic institutions, enrich the forms of democracy, expand its channels, and carry out democratic elections, decision-making, administration and oversight in accordance with the law. We will improve the mechanisms of self-governance by the people at the community level and expand the scope of community-level self-governance, improve the system for community-level democratic administration and ensure that the people directly exercise their democratic rights and administer community-level public affairs and public programs in accordance with the law. We will increase publicity of and education in the law, intensify education about citizenship, and promote the values of socialist democracy, the rule of law, freedom, equality, equity and justice. We will coordinate development of urban and rural communities and promote the healthy growth of civic organizations. We will strengthen government work concerning the law, increase transparency in government legislation, expand public participation therein, and ensure that the law is enforced in a standardized, fair and civilized manner.

We will strengthen public administration and maintain harmony and stability in society. We need to pay special attention to safeguarding people's legitimate rights and interests, correctly handle problems among the people, properly deal with their complaints in a timely manner, and resolutely correct all actions that harm their interests. We will improve the mechanism for mediating, handling and resolving social tensions and guide the people in expressing their concerns relating to their interests by reasonable and lawful means. We will adhere to the system whereby leading cadres, especially principal ones, handle people's letters and receive people's visits in order to serve the people and resolve conflicts. We will improve the early-warning system for social stability to actively prevent and properly handle all types of mass incidents. We will launch intensive campaigns to ensure public security and maintain law and order through a full range of measures. We will be on high alert for and severely crack down on criminal offenses in accordance with the law in order to safeguard national security and social stability.

7. Intensifying government self-improvement and making the government better able to manage overall economic and social development

Achievements were made in reforming the government and intensifying its self-improvement over the past year, but they still fall considerably short of what the people expect. The functions of government have not yet been completely transformed. Administrative efficiency needs to rise. Formalism and bureaucratism are still pronounced. Corruption remains a serious problem in some localities, departments and areas. Tremendous effort is needed to solve all these problems. We need to focus on the overall objectives of sustaining economic growth, ensuring people's well-being and maintaining stability, and intensify the work of government self-improvement.

We will continue to run the government in accordance with the law. We will standardize government administration, ensure that our administration is based on law and reason, executed through proper procedures, highly efficient, convenient for the public, honest and trustworthy, and that authority and responsibility are united. We will thoroughly implement the Administrative Permit Law, continue to carry out reform of the administrative examination and approval system, reduce the number of items it covers, especially investment examination and approval and project approval, and ensure that enterprises make their own investment decisions. We will promote fair competition, break regional blockades and industry monopolies, and organize and mobilize all social resources to promote economic growth. By ensuring that all government departments fully and properly execute their functions, we will create a favorable environment for development, and increase enterprises' confidence in investment, individuals' confidence in consumption and people's confidence in the development of the country.

We will make decisions scientifically and democratically. In all decisions we make, the procedures need to be lawful and standardized, the process democratic and open, and the results scientific and equitable. In formulating and implementing major government policies and decisions, we need to conduct thorough research and studies, heed people's concerns, solicit their opinions, pool their wisdom, act in accordance with objective laws, and make our policies and decisions more foresighted, scientific and effective. We need to make government affairs more open and transparent. We will ensure the people's right to stay informed about, to participate in, to express views on, and to oversee government affairs, and keep them informed as to what the government is thinking and doing so that we can win their thorough understanding, wide support and active participation. The government is investing a large sum of money and launching numerous new projects this year, and we will ensure they receive proper oversight. We will prohibit image projects that waste both human and financial resources and vanity projects that are divorced from reality, and will never allow any organization or individual to exploit the surge in public spending for private gain. Governments at all levels must conscientiously subject themselves to the oversight by the people's congresses and the democratic oversight by the CPPCC committees at their corresponding levels. We will tighten professional oversight by supervision and auditing departments, and attach great importance to oversight by the public and the news media. We will strive to make sure that oversight takes place wherever administrative power is exercised and that government funds will be audited wherever they are used.

We will earnestly improve our conduct. Governments at all levels need to resolutely implement the policy decisions and arrangements of the central leadership, stay firmly grounded in reality, and work creatively to ensure all policies are carried out fully and effectively. Leading cadres need to conduct thorough research and studies to promptly discover and resolve problems, maintain close contact with the people, show concern for their sufferings, listen to their opinions, and help them solve their problems. Government employees need to always maintain high morale, embody a vigorous spirit and work with the people to meet challenges head on, break new ground through hard work and tide over bad times together.

We will strengthen our efforts to promote clean government and combat corruption. We will focus on standardizing institutions and limiting the exercise of power, and prevent and punish corruption at its source in areas and links prone to corruption. We will resolutely investigate and prosecute corruption cases and punish corruptionists in accordance with the law. We must discharge our duties with great diligence and, through our actions and achievements, build a government that is for the people and is pragmatic, clean and efficient to satisfy people's needs and win their trust.

Fellow Deputies,

Promoting unity among all ethnic groups and achieving common development and prosperity serves the fundamental interests of the people of all our ethnic groups. We will fully implement the Law on Regional Ethnic Autonomy and ensure that the policies and measures of the central government supporting economic and social development of ethnic minorities and ethnic minority areas are effectively implemented. We will continue to increase support to ethnic groups with small populations. We will expand coverage of the "bring prosperity to border areas and residents" campaign to all border counties and the Xinjiang Production and Construction Corps' regimental pastures and farms in border areas. We will support more rapid development of pastoral areas and ethnic minority mountain regions. We will unswervingly uphold national unity and further develop socialist ethnic relations based on equality, unity, mutual assistance and harmony.

We will fully implement the Party's basic principles on work related to religions and enable religious figures and people with religious belief to play a positive role in promoting economic and social development.

We will diligently implement the Party's policy on matters related to overseas Chinese nationals and support overseas Chinese nationals, returned overseas Chinese and their relatives in showing concern for and participating in the modernization and peaceful reunification of the motherland.

Last year significant progress was made in the modernization of national defense and the army. The People's Liberation Army played an important role in safeguarding China's sovereignty, security and territorial integrity, supporting its modernization drive, and completing urgent, difficult, dangerous and daunting tasks. In the coming year, we need to make our army more revolutionary, modern and standardized, focusing on enabling it to fully carry out its historic missions in the new stage and in the new century. We will strengthen ideological and political work in the army. We will effectively transform our military training based on mechanized warfare to military training for warfare under conditions of greater IT application, and continue to enhance the army's ability to respond to multiple security threats and accomplish a diverse array of military tasks. We will modernize weapons, equipment and logistics support across the board. We will improve defense-related research, the weapons and equipment production system, the military personnel training system, and the army's logistics support system that integrate civilian with military purposes and combine military efforts with civilian support. We will actively and steadily carry out reform of the army to inject more vigor and vitality into army building. We will intensify the improvement of the People's Armed Police Force to make it better able to carry out its duties, respond to emergencies, combat terrorism and safeguard stability. We will strengthen defense mobilization and reserve forces. We will strengthen and develop unity between the army and the government and between the army and the people.

Fellow Deputies,

We will unswervingly adhere to the principle of "one country, two systems" under which Hong Kong people administer Hong Kong and Macao people administer Macao with a high degree of autonomy, and fully support the Hong Kong and Macao Special Administrative Regions in actively responding to the global financial crisis and maintaining their prosperity and stability. We will increase cooperation between the mainland and the two regions, consolidate Hong Kong's position as an international financial center and promote an appropriate level of diversity in Macao's economy. We will accelerate the pilot program for the mainland, Hong Kong and Macao to use RMB as the settlement currency for trade in goods. We will constantly deepen and expand cooperation between Guangdong, Hong Kong and Macao. We will accelerate construction of infrastructure such as the Hong Kong-Zhuhai-Macao Bridge, the Hong Kong-Shenzhen Airport Rail Link and the Guangzhou-Shenzhen-Hong Kong Express Rail Link. We will give Hong Kong and Macao greater access to the mainland's service sector. We will adopt effective measures to support development of Hong Kong- and Macao-funded enterprises on the mainland, particularly small and medium-sized enterprises, and help ease their difficulties. The great motherland will always provide strong backing to Hong Kong and Macao. We firmly believe that our compatriots in Hong Kong and Macao will surmount their current difficulties and create an even brighter future.

Last year important progress was made in our Taiwan-related work. Positive changes occurred in the situation in Taiwan, and major breakthroughs were made in cross-Straits relations. Consultations between the two sides of the Taiwan Straits were resumed on the basis of the 1992 Consensus, and complete, direct and two-way mail, transport and trade links were established. The two sides enjoyed more frequent people-to-people exchanges, closer economic ties, more active cultural exchanges and broader common interests. Cross-Straits relations have embarked on the track of peaceful development. In the coming year, we will continue to adhere to the principle of developing cross-Straits relations and promoting peaceful reunification of the motherland. We will remain committed to the goal of peaceful development of cross-Straits relations, and work actively to build a framework for and strive to achieve new progress in the peaceful development of cross-Straits relations. We will continue to comprehensively strengthen cross-Straits economic cooperation to jointly respond to the global financial crisis. We will actively promote financial cooperation across the Straits, support the development of Taiwan-funded enterprises on the mainland, provide financing services for qualified ones, and encourage their independent innovation, transformation and upgrading. We will strengthen two-way investment and industrial cooperation and expand and deepen agricultural cooperation between the two sides. We will support economic development on the west coast of the Straits in Fujian Province and in other areas where Taiwan investment is concentrated. We will accelerate normalization of cross-Straits economic relations and facilitate the signing of a comprehensive agreement on economic cooperation, and gradually establish economic cooperation mechanisms tailored to both sides of the Straits. We will increase contacts between individuals, expand exchanges among all sectors of society, vigorously promote Chinese culture and consolidate the common cultural bonds between the two sides. We will work on the basis of the one-China principle to enhance mutual political trust between the two sides. Based on this, we are ready to make fair and reasonable arrangements through consultation on the issue of Taiwan's participation in the activities of international organizations. We are also ready to hold talks on cross-Straits political and military issues and create conditions for ending the state of hostility and concluding a peace agreement between the two sides of the Taiwan Straits. We are convinced that, with the concerted efforts of the people on both sides of the Straits, we will achieve complete reunification of the motherland and the great rejuvenation of the Chinese nation.

Fellow Deputies,

Significant achievements were made in our diplomatic work last year. We joined hands with the international community in tackling the global financial crisis. We successfully hosted the Asia-Europe Meeting and enhanced mutual political trust and pragmatic cooperation between Asian and European countries. We actively advanced bilateral and multilateral diplomacy, and played a constructive role in global and regional hotspot issues. We stood firm in safeguarding China's sovereignty, security and development interests and in protecting the legitimate rights and interests of Chinese nationals and corporations overseas. Further significant progress was made in carrying out all-round diplomacy, and China's international standing and influence rose to a new height. In the coming year, we will continue to hold high the banner of peace, development and cooperation, adhere to the path of peaceful development and an independent foreign policy of peace, and pursue an open strategy of mutual benefit. We will increase friendly contacts with other countries in the world to create a favorable external environment for the steady and rapid development of China's economy. We will continue to deepen pragmatic cooperation with other parties, work with them to curb the spread of the global financial crisis, promote reform of the international financial system, and oppose trade and investment protectionism, in order to help bring about an early recovery of the world economy. We will continue to take the fundamental interests of the people of China and the world as our starting point and make new contributions to the proper resolution of hotspot issues and global problems. The Chinese government and people stand ready to work with the governments and peoples of other countries to jointly respond to risks and challenges, share development opportunities, and build a harmonious world of durable peace and common prosperity.

Fellow Deputies,

The tasks we face are arduous and formidable, and the responsibilities we bear are great and glorious. Under the leadership of the Party Central Committee with Comrade Hu Jintao as General Secretary, let us strengthen our conviction for victory, boldly meet challenges, work in a down-to-earth manner and press ahead resolutely to make new achievements worthy of the times, history and the people, carry forward the great cause of reform, opening up and modernization and celebrate the 60th anniversary of the founding of the People's Republic of China.

]]> http://www.itheone.com/article.asp?id=35 frank722@126.com(Frank) Thu,25 Dec 2008 23:02:32 +0800 http://www.itheone.com/default.asp?id=35
The following is the full text of the Report on the Work of the Government delivered by Premier Wen Jiabao at the Fourth Session of the Tenth National People's Congress on March 5, 2006.

Report of the Work of the Government

(Delivered at the Fourth Session of the Tenth National People's Congress on March 5, 2006)

Wen Jiabao

Premier of the State Council

Fellow Deputies,

On behalf of the State Council, I would like to present to you the following report on the work of the government for your deliberation and approval. I also welcome comments and suggestions on my report from the members of the National Committee of the Chinese People's Political Consultative Conference.

I Review of the Work of the Past Year

Major achievements were made in 2005 in the socialist modernization drive.

-- Economic growth was fast yet steady. China's GDP reached 18.23 trillion yuan in 2005, an increase of 9.9 percent over the previous year. Government revenue exceeded 3 trillion yuan, 523.2 billion more than the previous year. The consumer price index rose by 1.8 percent. China's economy was in good shape and characterized by fast growth, improved economic returns and stable prices.

-- Major steps were taken in reform and opening up. Breakthroughs were achieved in some key areas. China's import and export volume totaled 1.42 trillion U.S. dollars, an increase of 23.2 percent. Total foreign direct investment actually used reached 60.3 billion dollars, and the country's foreign exchange reserves totaled 818.9 billion dollars at the end of 2005.

-- Continued progress was made in social programs. Science and technology, education, culture, health, sports and other undertakings developed in an all-round way. The success of the Shenzhou VI manned space flight shows that China has reached world-class levels in some key areas of science and technology.

-- People's lives continued to improve. A total of 9.7 million urban residents entered the workforce for the first time last year. Urban per capita disposable income rose to 10,493 yuan, an increase of 9.6 percent after adjusting for inflation, and rural per capita net income grew to 3,255 yuan, an increase of 6.2 percent after adjusting for inflation.

China took another substantial step forward on the road of building a moderately prosperous society in all respects.

We adopted a scientific outlook on development to guide China's overall economic and social development last year. We mainly undertook the following tasks.

1. Solving the major problems affecting economic performance. We continued to exercise effective macroeconomic regulation in accordance with the principle of taking different approaches to different situations and encouraging the growth of some sectors while discouraging the expansion of others. We used a combination of fiscal, tax, monetary and land policies to curb overheated growth in fixed asset and real estate investment and ballooning housing prices. In addition, we increased investment in weak links such as agriculture, energy, transport, and social programs to promote balanced development and provide momentum for future development. We improved economic regulation and reduced the pressure on tight supplies of coal, electricity, and petroleum and on the overloaded transportation system, thus ensuring fast yet steady growth of China's economy.

2. Promoting economic restructuring and change of the pattern of economic growth. Work related to agriculture, rural areas and farmers was further intensified. The agricultural tax was rescinded in 28 provinces, autonomous regions and municipalities directly under the central government, and the livestock tax was rescinded nationwide. We increased subsidies to grain producers and transfer payments to major grain-producing counties and financially strapped counties, set floor prices for the purchase of key grain varieties in some major grain-producing areas, and increased rural incomes through a variety of channels. Last year, 297.5 billion yuan from the central government budget was spent on agriculture, rural areas and farmers, a year-on-year increase of 34.9 billion yuan. Having risen considerably the previous year, total grain output rose again by 14.54 million tons to 484.01 million tons. The increased overall agricultural capacity, stable increase in grain production and steady increase in rural incomes provide the foundation for ensuring fast yet steady economic development and social stability.

In industrial restructuring, we formulated and implemented development programs and industrial policies for energy, important raw material production, equipment manufacturing and other sectors, and adopted policy measures to encourage development of the wholesale and retail industry. We guided and supported major industries to ensure their sound development and closed down a number of production facilities that had backward equipment, wasted energy, created serious pollution and were unsafe.

We paid particular attention to energy and resource conservation and environmental protection and laid out tasks, policies and measures for building a resource-conserving society and developing a circular economy in order to change the pattern of economic growth. We launched 178 major projects that save energy and water and comprehensively utilize resources. Management of mineral exploration and exploitation, land use, and urban and rural planning was enhanced. Last year, 15.2 billion yuan from the sale of treasury bonds was used to finance key ecological projects undertaken to prevent and control pollution in the basins of the Huai River, Tai Lake and other major rivers and lakes, protect virgin forests, return farmland to forests or grassland, and prevent and control desertification. We launched special projects to address serious environmental problems that were endangering people's health.

3. Deepening economic restructuring and opening China further to the outside world. Trials of comprehensive rural reform were carried forward. Significant progress was made in introducing a shareholding system in state-owned commercial banks and in reforming rural credit cooperatives. Reform of the shareholder structure of listed companies made steady progress. Reform of the mechanism for setting the Renminbi exchange rate was implemented smoothly. Introduction of a modern corporate structure in state-owned enterprises was accelerated. A total of 21.9 billion yuan was allocated by the central government to subsidize the policy-based closure and bankruptcy of 116 state-owned enterprises. The work of relieving enterprises of their obligation to operate social programs continued. Reform in the areas of public finance, tax, investment and pricing was deepened. Reform of the postal service system was initiated. Further progress was made in the reform of the railway and civil aviation systems. Policy measures were adopted to encourage, support and guide the growth of the non-public sector of the economy. Breakthroughs were made in reforms in some major areas.

We actively addressed new issues arising in the course of opening China to the outside world. The structure of foreign trade was improved by adjusting policies concerning export rebates, tariffs and processing trade. The export rebate mechanism was improved. Steady progress was made in opening the service sector to foreign competition. Overall arrangements were made for work after the transition period following China's entry into the WTO.

4. Accelerating the development of social programs. The central government spent 116.8 billion yuan in 2005 on science and technology, education, health and culture, an increase of 18.3 percent over the previous year. In addition, 9.54 billion yuan from the sale of treasury bonds was spent on these items.

In science and technology, we improved the national innovation system and strengthened basic research and infrastructure development. Important progress was made in major R&D projects, including those to design and develop advanced integrated circuit chips, third-generation mobile communications, high-performance composite materials, and high-grade, digitally controlled machine tools. Under the leadership of the State Council, we formulated the Outline of the National Long- and Medium-Term Program for Scientific and Technological Development based on two years of in-depth research and extensive deliberation during which the views of all concerned parties were solicited.

In education, we focused on strengthening compulsory education, especially in rural areas. Over 7 billion yuan was allocated by the central and local governments to pay tuition and miscellaneous fees, provide free textbooks, and subsidize room and board for 17 million students from poor families in 592 designated poverty-stricken counties. Free textbooks were also provided to over 17 million students from poor families in the central and western regions. As a result, many students who had dropped out of school were able to continue their studies. We continued to implement the plan to make nine-year compulsory education basically universal and to basically eliminate illiteracy among young and middle-aged adults in the western region. We built, renovated or expanded over 2,400 boarding schools in rural areas and provided distance learning equipment for 160,000 rural primary and secondary schools and learning centers over the past two years. Vocational education was further improved, and higher education continued to develop.

In health, we put great effort into improving the public health system and rural health care work. Over the past three years, the central and local governments spent 10.5 billion yuan to basically complete establishment of a disease prevention and control system that operates at the provincial, city and county levels. A total of 16.4 billion yuan was spent on setting up a medical treatment system for public health emergencies, and work is proceeding smoothly. The central government spent 3 billion yuan from the sale of treasury bonds to support the establishment of health clinics in towns and townships in the central and western regions, thus improving public health and medical treatment conditions there. Trials of a new type of rural cooperative medical care system were extended to 671 counties with a total of 177 million rural residents. We intensified efforts to prevent and treat major diseases such as AIDS and gave high priority to the prevention and control of highly pathogenic avian influenza, keeping it from spreading and infecting people. Progress was made in population work and family planning.

In culture, we launched a trial reform of the cultural system, upgraded culture-related facilities for public use, implemented the project to share cultural information, and increased cultural exchanges with other countries. Further successes were achieved in the country's athletic endeavors. Greater efforts were made to promote socialist cultural and ideological progress.

5. Striving to increase employment and improve social security work. We increased policy support and spending to expand employment and reemployment. The central government last year allocated 20.9 billion yuan to provide basic living allowances and reemployment subsidies to employees laid off from state-owned enterprises, 2.9 billion more than the year before. We did a good job providing employment for urban residents newly entering the workforce, college graduates and demobilized soldiers. A special fund was also set up in central government budget to support job training for farm laborers looking for urban employment and to assist demobilized soldiers from urban areas in finding jobs for themselves.

The social security system underwent steady improvement, and its coverage was expanded. The work of incorporating basic living allowances for workers laid off from state-owned enterprises into the unemployment benefit system was completed in 17 provinces, autonomous regions and municipalities directly under the central government. All urban residents entitled to basic living allowances are now basically receiving them. Allowances for key entitled groups were increased significantly, and 7.46 billion yuan was allocated from the central government budget for allowances for entitled groups, a 90 percent increase from the previous year. The basic framework of a social assistance system has been established in 28 provinces, autonomous regions and municipalities directly under the central government and in 2,300 counties and cities. Disaster relief and anti-poverty work was intensified. Total expenditures from the central government budget for fighting natural disasters and providing disaster relief came to 8.9 billion yuan last year, and more than 90 million people were helped. The central and local governments allocated 16.2 billion yuan for poverty alleviation, and the number of rural residents living in poverty decreased by 2.45 million.

6. Strengthening democracy and the legal system. Democracy continued to make advances at the local level, and elections for village committees were held in 21 provinces, autonomous regions and municipalities directly under the central government. The running of governments, factories and villages was made more transparent. Government decision making was made more scientific and democratic, and a system of public notices and public hearings on matters affecting the interests of the people was instituted. Much effort was put into passing government legislation. The State Council sponsored seven bills, including the revised versions of the Labor Contract Law, the Law Guaranteeing the Rights and Interests of Women, and the Individual Income Tax Law (draft), and 22 administrative regulations were drawn up and promulgated by the State Council, including the Emergency Measures for Handling Major Animal Epidemics and the Special Regulations for Preventing Coalmine Accidents. The State Council formulated and implemented the Master State Plan for Rapid Response to Public Emergencies and plans for managing specific emergencies, thus improving our ability to respond to emergencies. Oversight was strengthened through auditing and supervision. We carried out thorough preparatory work for implementing the Civil Servant Law of the People's Republic of China. The new Regulations on Petitions in the Form of Letters and Visits were implemented, improving people's access to government departments that handle such petitions and ensuring order in submitting and handling them. Steady progress was made in the reform of the judicial system. A campaign to correct irregularities and promote impartiality in law enforcement was launched to safeguard citizens' lawful rights and interests. We continued to improve all facets of public security and severely punished illegal and criminal activities in accordance with the law. The number of criminal cases dropped, and social stability was maintained.

Work related to ethnic groups, religions, overseas Chinese, and Taiwan was further improved. We continued to make progress in the modernization of national defense and the army. Significant progress was made in diplomacy.

We owe these successes to the correct overall leadership of the Central Committee with Comrade Hu Jintao as General Secretary and to the concerted efforts and hard work of government employees and the general public. On behalf of the State Council, I would now like to express our sincere thanks to the people of all ethnic groups, to the democratic parties, to all people's organizations, and to people from all walks of life. I would like to sincerely thank our compatriots from the Hong Kong and Macao special administrative regions and Taiwan, as well as overseas Chinese. I would also like to sincerely thank our friends around the world who care about and support China's modernization drive.

While acknowledging our successes, we must also clearly realize that there are still many difficulties and problems in China's economic and social activities. Many long-standing and deep-seated problems have yet to be fundamentally solved, and a number of new problems have arisen that require our attention. First, it has become difficult to further increase grain production and rural incomes. There is downward pressure on grain prices and upward pressure on the prices of agricultural supplies, making it difficult for farmers to increase their earnings and discouraging them from growing grain. Moreover, the total area of useable farmland continues to decrease, and the overall agricultural production capacity is weak. This poses a threat to the nation's food security. Second, fixed asset investment is still expanding too fast. Investment in some industries is increasing too quickly, and too many new projects have been launched. Investment is too concentrated in some areas, and there is significant pressure for a rebound in investment. Third, the adverse consequences of overheated investment in some industries are becoming apparent. The problem of excess production capacity is getting worse, causing the prices of goods to drop and inventories to increase. Corporate profits are down and losses are increasing, creating greater potential financial risks. Fourth, many problems affecting the vital interests of the people have yet to be satisfactorily solved. There is strong public concern over the difficulty and high cost of getting medical treatment and receiving an education. The people's interests are adversely affected by violations of regulations and policies in a number of areas, including land expropriation, housing demolition and resident relocation, relocation of people from reservoir areas, and corporate restructuring, as well as by environmental protection. Fifth, there are serious problems in production safety. Major coalmine and traffic accidents occur frequently, causing serious loss of life and property.

We are also aware that there are still quite a few defects and shortcomings in the work of governments at all levels. The process of transforming government functions is behind schedule, some tasks have not been adequately carried out, and efficiency is low. The problem of formalism and going through the motions is still fairly serious. Some government employees engage in fraud, some are extravagant and wasteful, and some are even corrupt.

We must heighten our sense of mission and our sense of urgency, build on our achievements, improve our work, boost our morale, work conscientiously, strive to do all government work better, and do our best to live up to people's expectations and prove ourselves worthy of the great trust the country has placed in us.

II. Major Tasks for This Year

The tasks related to reform, development and stability for 2006, the first year in the Eleventh Five-Year Plan, are huge. To do the work of the government well and get the Eleventh Five-Year Plan off to a good start, we need to adopt the following basic line of thinking: Take Deng Xiaoping Theory and the important thought of Three Represents as our guide, closely follow the guidelines set out at the Sixteenth CPC National Congress and the third through fifth plenary sessions of the Sixteenth Central Committee, fully implement a scientific outlook on development, continue to accelerate reform and opening up and stimulate independent innovation, continue to promote economic restructuring and change of the pattern of growth, always put problems affecting the vital interests of the people high on our agenda, intensify all aspects of the effort to build a socialist economy, promote development of the country politically and culturally, and create a harmonious society.

Taking all relevant factors into consideration, we have set the following major targets for economic and social development in 2006 as follows: GDP should grow by about 8 percent, and energy consumption per unit of GDP should fall by about 4 percent. The rise in consumer prices should be kept under 3 percent. Urban employment should increase by 9 million persons, and the urban registered unemployment rate should be kept under 4.6 percent. The equilibrium in the balance of payments should stay basically balanced.

We need to keep the overall situation in mind and firmly adhere to the following principles to ensure success in the work of the government this year. First is to maintain consistency in government policy and carry out fine-tuning as needed. We need to continue to properly exercise macroeconomic regulation, ensure continuity and stability in macroeconomic policies, maintain the correct orientation and strength of macroeconomic regulation, handle each case on its own merits, provide guidance tailored to the situation, and take specific measures to solve major problems in economic development. Second is to always keep the big picture in mind and pay close attention to key areas. We need to correctly balance reform, development and stability, use reform and opening up to drive all aspects of our work, and strive to solve the major problems affecting the overall situation in order to promote all aspects of economic and social development. Third is to take all factors into consideration in making overall plans and pay close attention to the well-being of the people. We need to continue to put people first, maintain the "five balances" [balancing urban and rural development, development among regions, economic and social development, development of man and nature, and domestic development and opening wider to the outside world, tr.], pay closer attention to balancing development between urban and rural areas and among regions, developing social programs, and promoting fairness and stability in society, and enable all our people to share in the fruits of reform and development. Fourth is to stay firmly rooted in the present while looking ahead to the future. We need to do a good job of this year's work, gear our work to meeting the targets set in the Eleventh Five-Year Plan, strive to make progress, refrain from taking on more than we can handle, and achieve concrete results.

We need to focus on the following aspects of our work this year.

1. Maintaining fast yet steady economic development

Looking at the current international environment and domestic conditions, we can see that there are many conditions conducive to economic development this year. But there are also a number of problems that could hold back development, as well as some uncertainties. We need to adopt sound policies to deal with these problems and uncertainties to prevent large fluctuations in the economy.

We will keep macroeconomic policies stable, mainly by continuing to follow prudent fiscal and monetary policies. Since the economy is now performing well and there is a lot of activity in non-state investment, this year we will again appropriately reduce the deficit and the amount of long-term treasury bonds for development. We plan to issue 60 billion yuan worth of long-term treasury bonds, 20 billion yuan less than last year, while increasing regular construction investment from the central government budget by 10 billion yuan. The deficit in the central government budget is projected to be 295 billion yuan, 5 billion yuan less than last year. Funds from the sale of long-term treasury bonds and budgetary investment will be mainly used to maintain adequate funding for key projects already underway and to fund an appropriate number of major new projects that impact on overall development in agriculture, forestry, water conservancy, science, education, culture, health, ecological improvement, environmental protection and development of the western region. Starting this year, China will follow standard international practices by adopting the method of outstanding balance management for its national debt. We need to administer taxes in accordance with the law, improve tax collection and management, and standardize management of non-tax revenue. We need to take all factors into consideration in making overall plans for budgetary expenditures, limit expenditures to what we can afford, ensure adequate funding for key items and economize wherever possible. We will strengthen budgetary oversight and control the rise in administrative expenses. We need to maintain appropriate growth of money supply and credit, improve the mix in loan portfolios and create new financial products. We need to increase credit support for agriculture, rural areas and farmers and for small and medium-sized businesses, employment, and students having difficulty paying educational expenses. Long- and medium-term credit should be kept at an appropriate level. We will improve the mechanisms for setting and transmitting interest rates. We will improve the system of managed floating foreign currency exchange rates and keep the Renminbi exchange rate basically stable at an appropriate and balanced level.

We will adhere to the strategy of expanding domestic consumption and focus on increasing consumption demand and strengthening the role of consumption in fueling economic development. First, we will strive to raise urban and rural incomes. We need to adjust the distribution of incomes, standardize the way income is distributed, and increase the income of people in the lower and middle income brackets. To increase rural incomes, we will continue to pursue the policy of giving more, taking less and loosening control. In particular, we need to adopt more measures to give more benefits to farmers. All local governments should make necessary adjustments to the minimum salary system and implement it strictly, and introduce a minimum hourly wage system. We need to gradually solve the problem of low wages for rural migrant workers in cities. We must establish laws and mechanisms for ensuring that wages are paid on time. We will conscientiously implement the revised Individual Income Tax Law and lower the tax burden on low- and middle-income people. This year, the government will appropriately raise basic pension benefits for retired enterprise employees, subsidies for entitled groups and subsistence allowances for urban residents. We will reform the civil servant pay system. We will establish a unified national salary system based on position and rank and a mechanism for regular pay increases and improve the system of allowances for difficult and remote border regions, all based on review and standardization of existing allowances and subsidies. In addition, we will promote reform of the income distribution system in public service institutions. Second, we will keep expected individual spending stable and encourage immediate consumption. We will address people's concerns that increasing consumption will make them unable later to meet basic living needs by accelerating efforts to improve the social security system and solve major problems in education, public health and medical care, and housing. Third, we will work hard to encourage consumption in rural areas. We will increase efforts to develop rural markets and promote the flow of goods, make full use of existing rural retail distribution networks, and support urban wholesale and retail businesses in setting up outlets in the countryside to stimulate rural consumption. Fourth, we will improve the consumption environment and consumption-related policies. We will improve housing and public transportation conditions and take active steps to further develop tourism, cultural activities, fitness centers and other services. We will effectively safeguard consumers' lawful rights and interests. We will make appropriate adjustments to the current consumption tax, standardize and develop consumer credit, promptly eliminate or revise unsuitable regulations and policies that discourage consumption, and promote more high-end consumption.

We will maintain fixed asset investment at an appropriate scale, continue to encourage the growth of some sectors while discouraging the expansion of others, improve the investment structure and prevent breakneck growth in investment. We will continue to properly control the availability of land and credit, practice the strictest possible land management system, and grant loans on the basis of proper qualifications and market access requirements. We will strictly control the number of new projects undertaken. We will strengthen weak links and key areas in economic and social development. We will continue efforts to restrict excessive real estate investment and lower overheated real estate prices in some cities. We need to adjust the types of real estate properties on the market by strictly controlling new high-end real estate projects and concentrating on building general commercial housing and low-cost housing. We will establish a sound system for renting affordable housing and a system for leasing housing. We will establish and standardize order in the real estate and construction markets, basically clear up all overdue payments related to construction projects, and promote the sound development of the real estate and construction industries.

2. Promoting the building of a new socialist countryside

Building a new socialist countryside is a major historic task set at the Fifth Plenary Session of the Sixteenth Central Committee of the Party, which will have an overall impact on building a moderately prosperous society in all respects and modernizing the country. We need to implement a policy of getting industry to support agriculture and cities to support the countryside, strengthen support for agriculture, rural areas and farmers, and continue making reforms in rural systems and innovations in rural institutions to bring about a rapid and significant change in the overall appearance of the countryside.

The first priority in developing a new socialist countryside is to develop modern agriculture and promote steady expansion of grain production and sustained increase in rural incomes. We will stabilize, improve and strengthen policies supporting agriculture. We will further increase direct subsidies to grain producers, subsidies for growing superior grain cultivars, and subsidies for agricultural machinery and tools as well as increase transfer payments to major grain-producing counties and financially strapped counties. We will continue and improve the floor price policy for key grain varieties and keep prices for agricultural supplies from rising too quickly. Central government budget expenditures for agriculture, rural areas and farmers this year will total 339.7 billion yuan, 42.2 billion yuan more than last year. We need to protect arable land, especially basic farmland, stabilize the acreage sown to grain, and expand overall grain production capacity. We will increase the country's capacity for innovation in agricultural science and technology and ability to put scientific and technological advances to practical use, and step up efforts to disseminate agricultural technology and improve agriculture-related technical services. We will accelerate reform of the veterinary medicine management system and development of the animal disease prevention and control system. We will continue to adjust the structure of agriculture by promoting development of the livestock and poultry industry, promoting the industrialization of agriculture, developing secondary and tertiary industries in rural areas, particularly for processing agricultural products, helping county economies grow, bringing about an orderly transfer of the rural workforce to nonagricultural employment in rural and urban areas, and increasing rural incomes through various channels.

In order to build a new socialist countryside, we must accelerate development of rural infrastructure. We need to resolutely work to reorient investment by shifting the government's priority in infrastructure investment to the countryside. This constitutes a major change. This mainly involves strengthening basic development of farmland, with the focus on small water conservancy facilities; improving the system of flood control, drought resistance and disaster reduction; accelerating construction of infrastructure projects such as roads, drinking water supplies, methane facilities, electric grids and communications; improving the living environment in rural areas; and accelerating development of rural public services, such as education, health and culture. The main measures we will adopt to accomplish this goal are: gradually increasing annual investment in agriculture and rural areas from the central and local government budgets and credit funds, integrating agricultural investment from all channels to improve capital performance, guiding farmers to invest capital and labor in public welfare facilities that benefit them directly, encouraging and guiding the investment of non-state funds in rural development, and gradually establish an appropriate, stable and effective investment mechanism. If we work tirelessly, we can bring about a major improvement in rural infrastructure.

In order to build a new socialist countryside, we must comprehensively carry out overall rural reform. This year, we will completely rescind the agricultural tax throughout the country, a tax that China has been collecting for 2,600 years. This is a change of epoch-making significance. The reform of rural taxes and fees has greatly benefited farmers by eliminating 33.6 billion yuan of agricultural tax, over 70 billion yuan in the form of the "three deductions" [for public reserve funds, public welfare funds and management fees, tr.] and the "five charges" [charges for rural education, family planning, militia training, rural road construction and subsidies to entitled groups, tr.], assessments for rural education and other unreasonable fees. Starting this year, the government will appropriate over 103 billion yuan annually to ensure the normal operation of town and township governments and meet the needs of rural compulsory education. This figure is comprised of more than 78 billion yuan in transfer payments from the central government budget and over 25 billion yuan from local government budgets. It must be pointed out that after the agricultural tax is completely rescinded, the task of consolidating the results of the reform of rural taxes and fees and furthering the reform will remain very difficult. The key to success is to comprehensively carry out overall rural reform, including deepening reform of government bodies in towns and townships, rural compulsory education, and county and township fiscal management systems. These reforms require adjustments in rural production relationships and directly involve changes in the rural superstructure, which makes such changes profoundly significant and difficult to achieve. However, we must unwaveringly implement them.

The building of a new socialist countryside is a long-term arduous task. We need to proceed from reality, take measures suited to local conditions, give guidance tailored to the situation and plan carefully. We need to respect the wishes of farmers, oppose formalism and coercion, and avoid the herd mentality. We need to advocate a spirit of self-reliance and hard struggle, be realistic and pragmatic, and work diligently.

3. Intensifying efforts to restructure industries, conserve resources and protect the environment

Restructuring and upgrading industries, which are our major means for improving the pattern and quality of economic growth, constitute a pressing task. First, we need to upgrade industries and improve industrial technology. We will accelerate the development of advanced manufacturing, new and high technology industries, and modern services, while continuing to improve basic industries and infrastructure such as transportation, energy and water conservancy. We will promote the application of information technology in the economy and society. The key to improving the technology used in industries lies in comprehensively improving our capacity for independent innovation. We need to promptly develop core technologies and improve systems integration in some important industries and create technologies, products and standards for which we own intellectual property rights. The main measures we will adopt are: We will strengthen the role of enterprises to make them the main source of independent innovation and build a market-oriented system for technological innovation that integrates the efforts of enterprises, universities and research institutes. We will energetically pursue a name brand strategy by encouraging development of famous brands for which we hold intellectual property rights. We will strengthen the system for protecting intellectual property rights and intensify law enforcement in this area. We will improve the mechanisms for encouraging independent innovation and adopt fiscal, tax, banking and government procurement policies that support enterprise innovation. Finally, we will improve the market climate, promote risk investment for business startups, and help small and medium-sized enterprises improve their capacity for independent innovation. Second, we need to restructure some industries that have surplus production capacity. To do this, we will use a combination of economic, legal and necessary administrative means, and take full advantage of the role of market forces. The main measures we will adopt are: We will earnestly implement all industrial policies, make the requirements for market access more rigorous, and control expansion of production capacity. We will support corporate acquisition and reorganization and joint production agreements between enterprises, and encourage competitive enterprises to grow stronger and larger to increase concentration in industries. We will, in accordance with the law, shut down enterprises that use resources destructively, contaminate the environment, or do not meet production safety standards, and close down outmoded production facilities. We will make proper and efficient use of existing production capacity by restructuring investment and expanding consumption demand. This work has wide implications and involves policy considerations, and it needs to be done in an energetic yet orderly way.

We must conserve resources. First, we need to use a combination of means, particularly pricing and taxation, to promote the rational exploitation and economical use of resources. Second, we need to work quickly to establish or improve standards for conserving energy, water, land and materials in all industries, develop key projects that save energy and materials, and promote more intensive utilization of land. We will encourage development of products that save energy and resources and construction of buildings that conserve energy and land. Third, we need to strongly promote upgrading of equipment and technology, focusing on saving energy and decreasing consumption of materials, and more quickly eliminate production processes, technologies and equipment products that waste energy, water and raw materials. Fourth, we need to work hard to develop the circular economy. A number of circular economy pilot projects will be conducted in key industries, industrial zones, and urban and rural areas. We will improve preferential tax policies for comprehensive utilization of resources and recycling of recyclable waste, and promote comprehensive utilization of waste materials and recovery and recycling of used resources. Fifth, we need to improve all facets of management, include the amount of energy and materials saved when compiling statistics on and evaluating economic and social development, and set up a system for releasing information on a regular basis. Beginning this year, the energy consumption per unit of output for all regions and major industries will be made public on an annual basis. Sixth, we need to carry out an extensive and long-term resource conservation campaign throughout the country to heighten public awareness of the need to conserve resources.

We will accelerate the development of an environment-friendly society. We will strengthen ecological protection of water sources, land, forests, grassland, oceans and other natural resources, with emphasis on preventing and treating pollution in the watersheds of the Huai, Hai, Liao and Songhua rivers, Tai, Chao and Dianchi lakes, and the Three Gorges Reservoir area, and at the sources and along the routes of the South-to-North Water Diversion Project. In addition, we will promote clean production and develop projects for treating industrial waste water. We will work hard to prevent and control air pollution nationwide and increase the proportion of sewage treated and household refuse safely disposed of in key cities. We will take comprehensive measures to control rural pollution from non-point sources and pollution from livestock and poultry farming. We will continue projects to protect the natural environment. We will promptly create a mechanism for ecological compensation. We will strengthen law enforcement and improve inspections to monitor environmental and ecological protection. We will improve the systems for monitoring and evaluating environmental protection and for determining accountability for environmental problems.

4. Continuing to promote balanced development among regions

We will carry forward the development of the western region and give special support to the development of key areas, cities and industries there. We will ensure that ongoing major projects such as the Qinghai-Tibet Railway and the third phase of the Three Gorges Project are completed and put into operation, and launch a number of major construction projects. We will consolidate and build upon progress made in returning cultivated land to forests and returning grazing land to grassland, and quickly adopt follow-up policies. We will continue ecological projects such as those for protecting virgin forests, bringing sources of dust storms under control and preventing the spread of stony deserts. We will support the development of competitive industries and bases for producing products distinctive to the area. We will speed up the development of science, technology and education. We need to intensify policy support and increase transfer payments to accelerate establishment of long-term, stable funding channels for developing the western region.

We will continue to implement the strategy of rejuvenating northeast China and other old industrial bases. We will focus on developing large grain production bases, and on promoting reform, reorganization and technological upgrading in key industries. We need to successfully transform the economies of cities whose local natural resources have been exhausted, address the problem of sinkholes in coal mining areas, turn shantytowns into new housing areas, and promptly set up mechanisms to compensate for resource depletion and to aid declining industries. We will conduct pilot projects for reforming some collectively owned factories operated by state-owned enterprises and cities. We will fully implement policy measures for opening wider to the outside world and follow a new path of rejuvenation as we accelerate the reform and opening up process.

We will energetically promote the rise of the central region. We will take full advantage of its strengths based on its geographical position, resources, industries and manpower. We will focus on developing modern agriculture, in particular developing commercial grain bases in major grain-producing areas, developing bases for producing energy and important raw materials, and developing a comprehensive modern transportation system, a modern retail distribution system and a modern market system. We will support the rejuvenation of old industrial bases and transformation of resource-dependent cities and develop bases for modern equipment manufacturing and high technology industries. We will give major cities a greater role in stimulating the development of surrounding areas.

We will encourage the eastern region to lead the country in development. It should focus on improving international competitiveness, improve and upgrade its industrial structure and enhance its capacity for independent innovation and sustainable development. It needs to pay more attention to environmental protection and the economical use of land, water, energy and other resources, ensure that development is both fast and sound, and lead the country in scientific development. The special economic zones and the Pudong New Area of Shanghai should continue to play their proper role in stimulating development. We will promote the development and opening up of the Binhai New Area of Tianjin.

We will increase support to accelerate economic and social development in old revolutionary base areas, ethnic minority regions, border areas, and poor areas. We will give more aid to ethnic groups with small populations and continue working to vitalize border areas and enrich the people living there. Developed regions should assist and stimulate the development of underdeveloped regions in various ways.

5. Implementing the strategy of reinvigorating China through science, education and human resources and promoting cultural progress

China has entered a stage in its history where it must increase its reliance on scientific and technological advances and innovation to drive social and economic development. Therefore, we must attach more strategic significance to accelerating scientific and technological development. We will fully implement the Outline of the National Program for Long- and Medium-Term Scientific and Technological Development to build an innovation-oriented country. We will work quickly to launch a number of major science and technology programs and key projects, focusing on making breakthroughs in key areas. We will continue to strengthen basic research and research in cutting-edge disciplines as well as research in technologies for public welfare applications. We will build major national science and technology infrastructure projects and laboratories for developing industrial technologies. We will strengthen the national innovation system. We will promote reform of the management system of science and technology, effectively coordinate the use of science and technology resources throughout society, and apply more scientific and technological advances in production. We will establish a mechanism to ensure stable growth of government investment in science and technology. This year the central government will allocate 71.6 billion yuan for investment in science and technology, a year-on-year increase of 19.2 percent. Local governments and enterprises also need to increase their investment in science and technology. We will further develop philosophy and the social sciences and break new ground in theoretical research.

We need to work hard to make nine-year compulsory education more widely available and consolidate past progress. Over the next two years, we will completely eliminate tuition and miscellaneous fees for all rural students receiving compulsory education. This will be done in the western region this year and extended to the central and eastern regions next year. We will also continue to provide free textbooks to students from poor families and living allowances to poor students residing on campus. Expenditures for rural compulsory education will be fully incorporated into the central and local government budgets, and a mechanism to guarantee funding for rural compulsory education through a combination of allocations from the central and local governments will be established. The main measures we will adopt are: raising the level of budgetary guarantees for common expenditures for compulsory education in both rural primary and secondary schools, setting up a mechanism to fund repair and renovation of rural primary and secondary school buildings, and improving the mechanism for guaranteeing payment of primary and secondary school teachers' salaries. To fund these measures, central government budget expenditures for compulsory education will increase by 218.2 billion yuan over the next five years. Elimination of tuition and miscellaneous fees for compulsory education in all rural areas is an important milestone in the history of the development of education in China, and it is bound to have a far-reaching impact on raising the overall quality of the people of China. We also need to solve the problems the children of low-income urban families and rural families working in cities have in receiving a nine-year compulsory education to ensure that all children have access to compulsory education. We will continue to carry out the plan to make nine-year compulsory education basically universal and to basically eliminate illiteracy among young and middle-aged adults in the western region, and ensure that the plan's target s are met by 2007 as scheduled. Developing vocational education is an important and pressing task, for which 10 billion yuan will be appropriated from the central government budget over the next five years. We will make innovations in education and in instruction models and methods in higher education, strive to improve the quality of university teaching, and promote the development of more leading universities and key disciplines. All schools need to comprehensively promote education that ensures the well-rounded development of students. We will enhance the political integrity and professional competence of teachers and train large numbers of outstanding educators.

We will follow the strategy of reinvigorating the country through human resources and intensify development of a well-trained workforce. We will increase funding for human resource development through various sources, strengthen the role of market forces in allocating human resources, and standardize management of the human resource market.

We will intensify development of socialist culture. We need to do a good job cultivating ideals and ethics, particularly among young people. We will carry out extensive public activities to promote cultural and ethical progress. We will deepen reform of the cultural system and develop cultural undertakings and cultural industries. We will strengthen efforts to build cultural facilities, paying particular attention to cultural development at the local level in rural areas, and improve the system of culture-related services for the public. We will strongly support social programs in literature, art, radio and television, film, mass media, and publishing. We will strengthen the protection of cultural and natural heritage sites. We will vigorously support folk culture and art and increase cultural exchanges with other countries. We will improve management of the culture market and steadfastly fight against pornography and illegal publications. We will launch extensive fitness programs for the general public and raise the level of competitive sports. We will continue to do a good job preparing for the 2008 Olympic Games in Beijing and the 2010 World Exposition in Shanghai.

6. Pressing ahead with reform and opening up

The decision to implement the reform and opening up policy constitutes a major policy decision bearing on the destiny of our country. Reform is now going through a very difficult period, and we must strengthen our resolve to accelerate all reforms and continue making progress in major reforms having an overall impact this year.

We need to implement the Company Law of the People's Republic of China and accelerate introduction of the shareholding system in large state-owned enterprises. We will improve their ownership structure, corporate governance, and corporate incentive and restraint mechanisms, and speed up the formation of a number of large companies and enterprise groups that are internationally competitive. We will intensify reform of wholly state-funded enterprises and monopoly industries, ease market access, and encourage investment from various sources and diversified ownership. We will strengthen the oversight system for state assets by establishing a sound operating and budget system for state capital, a sound performance evaluation system and a sound system for assigning responsibility for major losses of state assets. We will standardize the process of changing the corporate structure and transferring ownership of state-owned enterprises to prevent loss of state assets and protect the lawful rights and interests of their employees. We will promote reform and development of collectively owned enterprises. We will conscientiously implement policy measures to encourage, support and guide the development of the non-public sector and continue working to create a legal, policy and market environment that ensures fair competition for all enterprises regardless of their type of ownership.

We will accelerate reform of the financial system. First, we will firmly press ahead with the shareholding reform of state-owned commercial banks. While keeping a controlling share in the state's hands, we will work to improve the banks' ownership structure. We will introduce advanced foreign management practices, standardize corporate governance, improve internal control and management, and promote structural innovations. Second, we will vigorously develop the capital market. We will enforce the Securities Law of the People's Republic of China and take steps to effectively strengthen the structural foundation of the securities market. We will work hard to improve the performance of listed companies, continue to do a good job in overall regulation of securities companies, and enhance market supervision in accordance with the law to create an open, just, fair and transparent market environment. We will continue to reform the shareholder structure of listed companies. We will energetically yet steadily develop the market for bonds and futures. Third, we will deepen financial reforms in rural areas. We will improve the system of rural credit cooperatives, carry out reform of the Agricultural Bank of China and the Agricultural Development Bank of China and increase the pace of innovation in banking and finance in rural areas to improve the banking system and financial services there. In addition, we will deepen the reform of the insurance industry and expand the scope of allowed activities, and promote reform of policy banks, postal savings institutions and other financial institutions. We will work to strengthen and improve financial oversight and strengthen capital requirements for banks. We will rigorously prosecute parties committing illegal and criminal acts in the financial sector in accordance with the law, guard against general financial risks, and work to maintain financial stability and security.

We will deepen reform of the fiscal, tax, investment and pricing systems. Fiscal reform will focus on improving the public finance system, transfer payment system and budget management system, and implementing reform of the classification of government revenue and expenditures. We will vigorously proceed with VAT reform and adjust the resource tax. We will study how to create a unified tax system covering all types of enterprises. Reform of the investment system will focus on implementing a system that grants independence in investment coupled with responsibility for risk, improving the system of project approval and record-keeping, releasing more investment information, improving and implementing market access rules, and improving macroeconomic regulation of investment. In pricing reform, we will focus on gradually streamlining and improving the pricing mechanism for resource products and related factors of production. In doing so, we need to take into account the interests of all parties and pay particular attention to the needs of low-income people.

We will continue working to improve and standardize market order. We will improve market legislation and accelerate development of a credit system for the general public. We will severely punish, in accordance with the law, parties who engage in production and sale of counterfeit goods, commercial fraud, smuggling and selling of smuggled goods, tax evasion and tax fraud, financial and securities crimes, and violations of intellectual property rights. We will resolutely prosecute people involved in pyramid schemes, including ones in disguised forms. We will pool our resources to launch special campaigns to promote food safety, strictly control market access for food products, and strengthen oversight and management of the entire production and distribution process to assure the people of the safety of the food supply.

We will open still wider to the outside world and make better use of domestic and international markets and resources. We need to change the pattern of growth of foreign trade, improve the mix of imports and exports, and correct the imbalance between imports and exports. We will support the export of service products and high value-added products with Chinese intellectual property rights and trademarks and continue to control the export of highly polluting products, resource products and products that consume excessive quantities of energy. We will speed up the process of upgrading the processing trade and improving the geographical distribution of the processing trade industry. Imports will be expanded by a suitable amount, particularly imports of advanced technology, key equipment and resources that China lacks. We will continue to make energetic and effective use of foreign capital and strive to improve its performance. We will further open the service sector to foreign competition. We will support qualified enterprises in going global, making overseas investments, conducting international business in conformance with general international practices, and establishing processing centers, marketing and service networks and R&D centers in other countries. We will institute a policy support and service system and improve the mechanisms for coordinating overseas investment and risk management.

Since the transitional period for China's accession to the WTO will basically end this year, we need to heighten our sense of urgency to be sure we complete all related work. We will improve the system and mechanisms for managing foreign economic activities to better facilitate trade and investment. We will make use of WTO rules to make key sectors more risk-resistant and more competitive internationally. We will make the mechanism for dealing with trade disputes more efficient and handle trade frictions properly. We will carry out negotiations on regional economic cooperation and free trade zones in a step-by-step and focused manner. We will play a constructive role in the new round of WTO talks.

7. Paying close attention to solving problems related to the vital interests of the people

We must always keep in mind our obligation to run the government for the people and do everything for their benefit. We need to promptly solve practical problems concerning public interests that the people are most concerned about and that affect them most directly. In particular, we must do a good job in work related to employment, social security, medical care and production safety.

We will continue to follow the policy of expanding employment and do everything possible to do so. We will continue to create jobs for workers laid off because of economic transformation or because of enterprise reorganization, restructuring, closure or bankruptcy. Policies to support reemployment of employees laid off from state-owned enterprises will be extended for another three years, and coverage will be gradually extended to employees laid off from collectively owned urban enterprises where local conditions permit. More support will be given to the reemployment of workers laid off from the defense industry, the logging industry and other industries experiencing difficulties. A total of 25.1 billion yuan will be allocated from the central government budget this year for reemployment work, 4.2 billion yuan more than last year. Local governments should also increase budgetary allocations for this work. We will pay close attention to helping university graduates find jobs and helping demobilized army personnel return to civilian life, and we will create more jobs for urban residents entering the job market for the first time and for rural laborers coming to cities to find jobs. We will improve vocational training and employment services. We will effectively protect the lawful rights and interests of workers.

We will speed up development of the social security system. We will ensure that all social security benefits are paid on time. We will improve the system of basic old-age insurance for urban workers. We will do a good job in the pilot project to properly set up individual retirement accounts and expand the trials to more areas. We will reform the way old-age pensions are calculated and paid, and introduce incentive and restraint mechanisms to encourage more people to participate in old-age insurance programs. We will extend coverage of social security programs to more employees of enterprises under all forms of ownership and to self-employed people and people without fixed employment in urban areas. We will strengthen collection of social security contributions, strengthen oversight and management of collected funds, and raise social security funds through a variety of channels. In addition, we will step up development of the basic medical, unemployment, workers' compensation and maternity insurance systems for urban residents and continue to improve the system of urban subsistence allowances. We will work out a plan for reforming the old-age insurance system in government bodies and institutions. We will work out social security measures suitable for rural migrant workers. We will improve the system for providing food, clothing, medical care, housing and burial expenses for childless and infirm rural residents, the system for providing assistance to families in extreme poverty and the system for providing relief to disaster victims by increasing financial support and appropriately raising the level of assistance. Governments in localities where conditions permit need to look for ways to set up a system of subsistence allowances for rural residents. All local governments need to accelerate development of community-based relief systems for urban and rural residents with special needs. We will improve the work of preventing, reducing and responding to disasters. We will intensify poverty alleviation work and increase investment init to further reduce the number of people living in poverty. Preferential treatment will be given to the families of revolutionary martyrs and military personnel. We will continue to develop public welfare and charity programs and undertake various activities to solicit public contributions and participation. We must make sure that orphaned children and elderly and disabled persons with no source of income receive more care and assistance so they may experience the warmth of our large socialist family.  

We will give a high priority to medical and health care work. We will concentrate on the following three areas to gradually resolve the lack of adequate and affordable medical services. First is to speed up the development of a rural medical and healthcare system. We will launch the Program for Establishing and Developing a Rural Health Care Service System to improve the system and network of medical and health care that spans the three levels of county, township and village. The state will spend more than 20 billion yuan over the next five years on renovating hospital buildings in towns and townships and in some counties and upgrading their equipment. We will speed up the establishment of a new type of rural cooperative medical care system by extending the scope of current trials to 40 percent of the counties in China this year and by increasing the allowances paid by the central and local governments to farmers participating in the system from 20 yuan to 40 yuan. An additional 4.2 billion yuan will be allocated from the central government budget for this program. By 2008, this new system and a rural medical assistance system should be basically in place in all rural areas. We will regularly send urban medical personnel to work in rural health facilities. Second is to strengthen urban community health services. We will accelerate the establishment of a new type of community-based system of urban medical and health care services by redirecting urban medical and health resources, increasing government spending, providing more training, improving services, and promoting innovations in mechanisms. Qualified community health care clinics will be included in the urban basic medical insurance program, and we will carry out pilot projects to gradually make community clinics the first option in medical treatment for minor medical problems, leaving hospitals free to treat only more serious problems. We will explore ways to set up an urban medical assistance system. Third is to deepen reform of the medical care and health service system and fully restore and standardize order in medical services and the production and marketing of medicines.We will improve oversight and management of prices for medicines and medical services. We will standardize the medical practices of hospitals and doctors and the way they prescribe drugs, and ensure that medical ethics and the medical code of conduct are strictly observed to improve medical services and control medical costs. We will support the development of traditional Chinese medicine and make full use of it in preventing and treating diseases. We will also intensify prevention of serious diseases that endanger the health of the general public and implement measures to prevent and control major communicable diseases such as AIDS, tuberculosis and snail fever. We will give a high priority to preventing and controlling the spread of highly pathogenic avian influenza to humans.

We will maintain consistency in the current policy on family planning, keep the birthrate low, improve the health of newborns and take effective steps to correct the gender imbalance in newborns. We will extend the system for rewarding and supporting rural families that observe the family planning policy to more areas and expand the "Fewer Children Equals Faster Prosperity Project" in the western region. We will do a good job in work related to the elderly, protect the rights and interests of women and children, and launch more programs to help disabled persons.

We will continue to improve production safety. Ensuring production safety is a huge responsibility. We must not compromise production safety for the sake of economic development. We have adopted many measures in recent years to improve production safety, and safety has improved somewhat. However, it remains a major problem. The main reasons for this are: Production safety measures have not been truly implemented; enterprises do not take full responsibility for production safety; production safety equipment and facilities are backward; overheated demand for coal is straining both production and transportation facilities; basic safety work in enterprises is weak; and some enterprises commit serious violations of laws and regulations concerning production. In addition, some local officials and government employees commit serious neglect or dereliction of duty, and some go so far as to engage in corruption.

The key to improving production safety lies in addressing both symptoms and root causes of safety problems, with the focus on the latter. First, governments at all levels must give greater priority to production safety, and leading government officials must personally take overall responsibility for safety, give enterprises greater responsibility for production safety, and ensure that the responsibility system for production safety is practiced at every level. Second, we will implement economic policies that encourage safe production. We will improve the system of incentives and restraints to encourage enterprises to take production safety more seriously. Third, we will accelerate reform and reorganization of the coal industry to promote the establishment of large coal mining bases by encouraging larger coal mining enterprise groups to take over and upgrade small and medium-sized coal mines. Fourth, we will invest more in production safety. The central government will again allocate 3 billion yuan from the sale of treasury bonds this year, primarily to support pilot projects to find scientific and technological ways to comprehensively control and utilize coalmine gases. Local governments and coal enterprises also need to invest more in this area. Fifth, we will launch an extensive campaign to solve production safety problems. We will continue to work to bring coalmine gases under control and to remedy safety problems in coal mines. In addition, we will also address safety problems related to other types of mines, dangerous chemicals, fireworks, land and water transportation, construction, and fire prevention. Sixth, we will improve enterprise management. We will improve basic safety work in enterprises and improve technical and quality standards for production safety. We will increase training of production safety technicians and training of all enterprise employees in production safety techniques. We will make sure that employees play their role in strengthening and overseeing production safety. Seventh, we will improve legislation concerning production safety. We will strictly enforce the law and exercise strict supervision. We will increase efforts to identify the parties responsible for production accidents and prosecute them. We will conduct in-depth investigations into cases of dereliction of duty and corruption related to production safety and severely punish the responsible parties. We will adopt comprehensive measures to firmly halt the frequent occurrence of major incidents.

8. Strengthening democracy and safeguarding social stability

We need to consolidate and develop the current political situation of democracy, solidarity, liveliness, stability and harmony. We will improve the democratic system, enrich the forms of democracy, expand orderly citizen participation in politics, and guarantee that the people are able to participate in democratic elections, democratic decision-making, democratic management and democratic oversight in accordance with the law. We will promote law-based government administration and strengthen and improve legislative work, focusing on legislation concerning resource conservation, environmental protection, employment, social security, response to public emergencies, promotion of social stability and maintenance of market order. We will improve the mechanisms, procedures and methods for public participation in legislative work. We will do follow-up investigations on the implementation of laws and regulations. We will continue to strengthen auditing and oversight work. Education in the law will be further expanded. We will provide effective legal services and assistance to help people who cannot afford the costs of filing a lawsuit. We will implement a variety of measures for judicial restructuring to further standardize law enforcement activities and promote greater fairness in the judiciary, safeguard judicial authority, and make law enforcement strict, fair and civilized.

We will pay close attention to social stability and make extensive and thorough going efforts to promote peace and security. We will correctly handle conflicts of interest in society in the new period and conscientiously implement all policies affecting the people's interests. We will pay particular attention to solving problems reported by the people and resolving conflicts of interest in society as they arise. We will do a good job handling people's petitions made via letters and visits. We will improve and consolidate government authority at the township level and ensure harmony in communities, villages and towns. We will improve the early warning system for disturbances to social stability and the emergency response mechanism. We will improve all facets of public security, speed up the development of a crime prevention and control system, and rigorously prosecute people who engage in violent and economic crimes, and frequently occurring crimes against property such as theft and robbery, in accordance with the law. We will strengthen efforts to safeguard national security.

It is the common wish of the people of all our ethnic groups to strengthen solidarity among ethnic groups and maintain national unity and social stability. We must fully implement the policies, laws, and regulations on ethnic minorities, conscientiously follow the State Council's regulations for implementing the Law on the Autonomy of Ethnic Minority Regions, and encourage all ethnic groups to join hands and work together for common prosperity and development. We will make great efforts to train officials and professionals in various fields from among ethnic minority groups. We will implement the Party's basic principles for work related to religious affairs and become better able to administer these affairs in accordance with the law. We will further improve our work related to overseas Chinese affairs under the new circumstances.

Fellow Deputies,

Strengthening national defense and the army is an important strategic task in China's socialist modernization drive. We must continue to take as our guide Mao Zedong's military thinking, Deng Xiaoping's thinking on improving the army in the new period, and Jiang Zemin's thinking on national defense and improving the army; take a scientific outlook on development as an important guiding principle for strengthening national defense and the army; and adhere to the fundamental principle and system of the absolute leadership of the Party over the army. In order to ensure that the army can effectively carry out its historical mission at the new stage in the new century, we need to speed up the military reform with Chinese characteristics and raise the army's overall ability to fight a defensive war fought using IT. We will pay special attention to military training to produce highly skilled military personnel. We will intensify efforts to develop and reform the military logistics system. We will improve defense-related research and development of new- and high-tech weapons and equipment. We will continue to run the army strictly in accordance with the law and raise its level of standardization. We will improve all aspects of the People's Armed Police to make it better able to enforce the law and respond to emergencies. We will improve the system and mechanisms for national defense mobilization, focusing on raising the quality of the militia and reserve forces. We will launch an extensive campaign to promote mutual support between the military and civilians. We will strengthen and develop solidarity between the army and the government and between the army and civilians.

Fellow Deputies,

We will continue to uphold the principle of "one country, two systems," under which Hong Kong people administer Hong Kong and Macao people administer Macao with a high degree of autonomy. We will strictly comply with the basic laws of the Hong Kong and Macao special administrative regions and give our full support to their chief executives and governments in administering the regions in accordance with the law. We will continue to implement the Closer Economic Partnership Arrangement the mainland has with Hong Kong and Macao and increase exchanges and cooperation between the mainland and the two of them in matters of the economy, trade, science and technology, education, culture, health and sports. We firmly believe that Hong Kong and Macao will remain prosperous and stable for a long time to come.

We adhere to the basic principles of "peaceful reunification" and "one country, two systems" and the eight-point proposal for developing cross-Straits relations and promoting China's peaceful reunification under the present circumstances. We will unswervingly uphold the one-China principle and never give up our efforts to achieve peaceful reunification. We will never change the principle of placing our hopes on the people of Taiwan. We will uncompromisingly oppose secessionist activities aimed at Taiwan independence. We will continue working with Taiwan compatriots to facilitate visits by individuals, promote economic, scientific, technological, and cultural exchanges and cooperation, and establish peaceful and stable cross-Straits relations. We will strive to resume dialogue and negotiation between the two sides under the one-China principle and promote resumption of direct links for postal, air and shipping services and trade on a comprehensive, direct and two-way basis. We will support economic development on the west shore of the Taiwan Straits in Fujian and in other areas where Taiwan investment is concentrated, protect the legitimate rights and interests of our Taiwan compatriots in accordance with the law, and serve them whole heartedly. Everyone wants cross-Straits relations to be peaceful and stable and develop to the mutual benefit of both sides. Anyone who tries to reverse this major trend will most certainly fail. It is the common wish of all Chinese people to see the ultimate realization of the great cause of national reunification, a process that no one can stop.

Fellow Deputies,

Over the last year we held high the banner of peace, development and cooperation and continued to follow an independent foreign policy of peace. We safeguarded the fundamental interests of China and its people, developed friendly ties and mutually beneficial cooperation with foreign countries, and contributed to common development and the safeguarding of world peace.

This year we will unswervingly continue to take a road of peaceful development. In international affairs, we will continue to advocate democracy and justice and promote coordination and cooperation. We will continue to safeguard security for all on the basis of harmony and mutual trust and promote common prosperity on the basis of equality and mutual benefit. China will continue to be open-minded and inclusive, promote dialogue between civilizations, and work to make the international order more just and equitable.

We will strengthen China's diplomacy in all areas on the basis of the Five Principles of Peaceful Coexistence. We will consolidate and strengthen friendly cooperation with other developing countries. We will adhere to our foreign policy of friendship and partnership with our neighbors, promote the formation of a mechanism for regional cooperation, and take cooperation in practical matters with our neighbors to a new high. We will expand common interests with developed countries, deal with differences appropriately, and promote exchange and cooperation with them. We will actively participate in and initiate multilateral diplomacy and play a constructive role in international and regional affairs. We will expand and intensify cultural exchanges with other countries to increase understanding and friendship between our peoples. We will protect the lawful rights and interests of Chinese nationals and corporations overseas. The Chinese government and people will work tirelessly with the people of all other nations for a peaceful, just and harmonious new world.

III. Explanation of the Outline of the Eleventh Five-Year Plan for National Economic and Social Development (Draft)

The Proposal of the CPC Central Committee for Formulating the Eleventh Five-Year Plan for National Economic and Social Development, adopted at the Fifth Plenary Session of the Sixteenth Central Committee, sets forth the objectives, guiding principles and main tasks for China's economic and social development for the next five years. On the basis of the Proposal, the State Council prepared the Outline of the Eleventh Five-Year Plan for National Economic and Social Development (draft), which has been submitted to this session for your examination and approval. I would now like to briefly go over several points.

1. The compilation process and major features of the Outline (draft)

The Central Committee and the State Council took the drafting of the Eleventh Five-Year Plan very seriously. The State Council began making arrangements for preparatory work for the drafting in July 2003. It organized central government departments, local governments, research institutions and experts in various fields to carry out research on major issues facing economic and social development, laying the groundwork for compiling the Outline (draft). Following the Fifth Plenary Session of the Sixteenth Central Committee, the State Council carried out in-depth research based on the Proposal of the Central Committee before compiling the Eleventh Five-Year Plan. A committee of experts from various fields was set up to carry out consultation and deliberation. Suggestions were solicited in various forms nationwide, and many suggestions were submitted by deputies to the people's congresses, members of CPPCC committees, and people from all sectors of society. Drafting the Outline was therefore a democratic, scientific policy-making process that pooled the wisdom of the Chinese people.

The Outline (draft) seeks to reflect requirements resulting from the development of the socialist market economy and implementation of the policy of reform and opening up. It is a macroscopic, strategic policy document that clearly defines the government's priorities and responsibilities. The document is original in both form and content. The content of the Outline (draft) gives specific e­xpression to the strategic philosophy of implementing a scientific outlook on development and building a harmonious socialist society. It emphasizes the need to maintain the "five balances," strengthen weak links in economic and social development, solve the problems that concern the people and affect their vital interests, and properly balance market forces and macroeconomic regulation. The targets in the Outline (draft) are divided into two types: anticipated and obligatory. Anticipated targets are those that we expect or hope to meet, mainly by guiding the actions of market players. Obligatory targets are those that must be achieved, mainly by improving management in accordance with the law and providing services. In form, the Outline (draft) consists of a main body and a number of boxes, in which development targets and key projects are listed. The content of the main text is presented in a clear and easy-to-read way.

The Outline (draft) was compiled based on data from China's first economic census. This census, which took over two years to complete, gives the clearest picture yet of the basic state of the nation's economic and social development, and shows the true GDP and the true proportions of the economy accounted for by primary, secondary and tertiary industries, thus more closely and accurately reflecting China's national conditions and strength. Because it is based on the results of the first economic census, the Eleventh Five-Year Plan better reflects China's conditions and is more scientific.

2. Major economic and social developments during the Tenth Five-Year Plan period

The past five years were an unusual period of development in China, one in which we built on our past achievements and kept pace with the times. We avoided any serious impact from the Asian financial crisis, prevailed over the SARS outbreak, and overcame major natural disasters. We lost no opportunity to further reform and opening up, strengthened the basic role of market forces in allocating resources, improved macroeconomic regulation, and maintained fast yet steady economic development. The pace of China's progress in industrialization, urbanization, market development and internationalization increased significantly; overall production capacity, overall national strength and people's living standards all reached new highs; and the appearance of both urban and rural areas underwent great changes.

China's economic strength grew significantly over the last five years. GDP was 57.3 percent higher in 2005 than in 2000, an average annual increase of 9.5 percent. Government revenue rose by 136 percent over the same period, up an average of 364.7 billion yuan per year. Agricultural production, particularly grain production, took a significant turn for the better. The output of major manufactured products grew substantially. High-tech industries expanded rapidly. Tremendous achievements were made in strengthening basic industries and infrastructure development. Construction of many major projects was completed, and many others were launched in such fields as water conservancy, energy, transportation and communications. IT application in the economy and society expanded rapidly.

Great successes were achieved in reform and opening up over the past five years. Major progress was made in rural reforms, in reform of state-owned enterprises, and in reform of the financial, fiscal, tax and investment systems as well as in developing a market economic system and a social security system. China's accession to the WTO began a new stage in opening up. The total import and export volume tripled over the last five years, and the amount of foreign direct investment actually used came to 274.08 billion dollars. A number of competitive enterprises went global.

People's living standards improved markedly over the last five years. Urban per capita disposable income rose by 58.3 percent and rural per capita net income grew by 29.2 percent, both in real terms. About 42 million new jobs were created in urban areas. Consumer spending on housing, communications, cars and services grew significantly. Rapid progress was made in science and technology, education, culture, health, sports, and other social programs.

Further progress was made in socialist political, cultural, and social development over the past five years.

These splendid achievements have greatly increased the confidence of all our ethnic groups to forge ahead on the path of socialism with Chinese characteristics.

At the same time, we also encountered many difficulties and problems in economic and social development during the Tenth Five-Year Plan period. The main problems were an unbalanced economic structure, weak capacity for independent innovation, slow change in the pattern of economic growth, excessive consumption of energy and resources, worsening environmental pollution, serious unemployment, imbalance between investment and consumption, widening gaps in development between urban and rural areas and between regions, growing disparities between certain income groups, and inadequate development of social programs. We need to work hard to solve all these problems.

3. Guiding principles and major targets for economic and social development in the Eleventh Five-Year Plan period

The Eleventh Five-Year Plan period will be a crucial time in building a moderately prosperous society in all respects. A comprehensive analysis of all factors shows that on the whole the international environment will be conducive to China's development in the coming five years, but that there are quite a few unstable factors and uncertainties. Domestically, there are many favorable conditions as well as a number of restraining factors and difficulties. We should seize opportunities, exploit favorable conditions while avoiding dangers, remain vigilant against adversity, properly handle risks and challenges, and press ahead with reform and opening up and the modernization drive.

The Outline (draft) fully reflects a scientific outlook on development and embodies the important principles laid out in the Proposal of the Central Committee. These principles are: We must sustain steady, rapid economic development, speed up change of the pattern of economic growth, improve China's capacity for independent innovation, balance development between urban and rural areas and among regions, intensify efforts to build a harmonious society, deepen reforms and open wider to the outside world. To put these principles into practice, we need to change our way of thinking about development, create a new pattern of growth, improve the quality of development, and make economic and social development more people-oriented, comprehensive, balanced, and sustainable.

Major targets for economic and social development in the Eleventh Five-Year Plan period listed in the Outline (draft) were set on the basis of the guidelines and principles set out in the Proposal of the Central Committee. These targets are designed to meet the goal of building a moderately prosperous society in all respects, and they reflect conditions of the current stage of economic and social development as well as objective requirements. Now, I would like to briefly speak about just two of these targets.

First is the economic growth rate. GDP growth for the next five years is set at an annual average of 7.5 percent in the Outline (draft). This figure is based on necessity and feasibility and was determined taking all factors into account. According to recently published data from the first national economic census and the actual results of economic growth in 2005, the GDP growth rate during the Tenth Five-Year Plan period was higher than originally projected. If the average annual growth rate is maintained at 7.5 percent during the Eleventh Five-Year Plan period, the goal of doubling the 2000 per capita GDP by 2010 set in the Central Committee's Proposal will be surpassed. This is an ambitious target, but we can attain it with hard work. It should also be pointed out that this target is based on successfully improving economic structure and efficiency and reducing energy consumption. In actual implementation, each local government should balance the growth rate with structural and performance improvement, rather than single-mindedly competing with other areas for the fastest economic growth. Both historical and recent experiences show that it is crucial to maintain fast yet steady economic development.

Second is energy conservation and environmental protection. In the Outline (draft), the target for reducing energy consumption per unit of GDP is set at about 20 percent and the target for cutting the total discharge of major pollutants is set at 10 percent. These targets are designed to address the acute problem of mounting pressure on resources and the environment. They reflect the need to build a resource-conserving and environment-friendly society and are necessitated by current conditions and long-term interests. They therefore provide a clear guide for policy making. Though achieving them will be quite difficult, we have the confidence and determination to succeed.

4. Strategic priorities and major tasks during the Eleventh Five-Year Plan period

The Outline (draft) lays out the overall arrangements for economic and social development and for reform and opening up in the Eleventh Five-Year Plan period and sets out clear tasks and policy measures.

First, we must build a new socialist countryside. Among all the strategic tasks before us, the Outline (draft) gives top priority to solving the problems facing agriculture, rural areas and farmers. There is a heavy stress in the Outline (draft) on the need to continue balancing economic and social development in urban and rural areas and to make steady progress in building a new socialist countryside by developing production, improving living standards, fostering more civil behavior, improving the overall cleanliness of villages, and exercising democratic management. We need to increase overall agricultural capacity, promote agricultural restructuring, intensify development of rural infrastructure, and increase farmers' incomes. We will focus on implementing key projects to establish large production bases for grain, cotton and edible oil, industrialize production of superior quality grain varieties, build water conservancy facilities and safe drinking water supplies, build roads and methane production facilities, and develop education, culture and health in rural areas. We must also comprehensively promote overall rural reform and basically complete reform of town and township government bodies, rural compulsory education, and fiscal management in counties and townships. We need to create a new type of farmer who has a good basic education and understands both agricultural techniques and business operations. All localities and government departments must substantially change their thinking and priorities in their economic work. More development funds need to be directed toward solving the problems of agriculture, rural areas and farmers, and public services need to be made more widely available in rural areas. All of society should energetically support rural development.

Second, we must accelerate economic restructuring and change of the pattern of economic growth. Many problems impeding China's economic development arise from an unbalanced economic structure and an extensive pattern of economic growth. We must pursue development by taking a new road toward industrialization to improve the industrial structure, conserve resources and protect the environment. The Outline (draft) calls for improving and upgrading the industrial structure to make large industries stronger. This is an important task directed at the fact that although China's industries are already large, they have poor overall performance and competitiveness. The Outline (draft) sets forth the major tasks and arrangements for promoting IT application, developing high-tech industries, revitalizing the equipment-manufacturing industry, and developing the energy and raw material industries. It also contains plans for a number of major construction projects. The Outline (draft) emphasizes the importance of speeding up the development of the service sector, especially in the fields of information, finance, insurance, distribution, tourism and community services, to increase its level and its importance in the economy.

Building a resource-conserving and environment-friendly society is given a high priority in the Outline (draft). It specifies clear tasks and measures and lists a number of key energy-saving projects, demonstration projects for developing a circular economy, and key projects to protect the ecology and improve the environment. Conscientiously fulfilling these tasks and measures will significantly increase the efficiency of resource consumption and basically halt the ecological and environmental deterioration. We must work ceaselessly if we are to create clean and pleasant living and working conditions for the people and leave our future generations with blue skies, green land, clear water and verdant mountains.

Third, we must promote balanced development among regions. The Outline (draft) defines the key tasks for the development of different regions. It calls for improving the market mechanism, the mechanism for promoting cooperation, the mechanism for mutual assistance and the support mechanism to ensure balance and interaction among different regions. The Outline (draft) groups state-owned land into four types of development priority zones -- optimal development zones, key development zones, restricted development zones and non-development zones -- based on resources, the carrying capacity of the environment, and development potential. Different policies will be adopted for different zones. In addition, the document emphasizes the need to actively and steadily promote urbanization to take full advantage of the leading role of groups of cities in driving development.

Fourth, we must strive to increase our capacity for independent innovation. This features strongly in the Outline (draft). We need to follow a policy of making independent innovations and "leapfrog" advances in key areas of science and technology and supporting and guiding future development. We need to more quickly turn China into an innovation-oriented country by comprehensively enhancing our capability to make original innovations, integrate innovations and assimilate advanced foreign technologies and further refine them. The Outline (draft) calls for launching a number of major scientific and technological projects in strategic industries such as information technology and biotechnology, and projects to address important, pressing problems in energy, resources, the environment and the health of the people, as well as technologies with both military and civilian applications. Successfully implementing these projects is of major and immediate significance and will have far-reaching importance for integrating our limited scientific and technological resources, speeding up the solution of crucial scientific and technological problems with a bearing on China's overall situation and long-term development, and raising the overall technological level in those areas. Accelerating development of education in science and technology and training professionals are essential in order to improve our capacity for independent innovation. The Outline (draft) also contains a master plan for this task.

Fifth, we must deepen reforms and open further to the outside world. None of the achievements made in China's economic and social development during the past 20 some years would have been possible if we had not resolutely carried out the reform and opening up policy. In order to complete the tasks for the present phase of development, we must unwaveringly and comprehensively deepen reforms and open still wider to the outside world. The Outline (draft) contains the requirement to speed up improvement of the socialist market economic system, and establish systems and mechanisms conducive to changing the pattern of economic growth and promoting comprehensive, balanced and sustainable development. We need to improve overall guidance and coordination for reforms and continue to promote reform of the political and cultural systems and the system of social management while carrying out economic restructuring. Reform, development and stability must be properly balanced. In line with the requirement to balance domestic development and opening to the outside world, we will follow a win-win strategy in opening the country and promote reform and development by opening wider to the outside world. In opening wider to the outside world, we must pay particular attention to safeguarding China's economic security.

Sixth, we must work hard to build a harmonious society. This is an important objective of social and economic development and guarantee for it. The Outline (draft) calls for doing a good job in population work; creating more jobs; improving the social security system, people's living standards and health and public safety; building socialist democracy; promoting cultural progress; and improving the system of social management. By working hard over the next five years, we can certainly make China a more harmonious country and enable the people to live even better lives!

Fellow Deputies,

Fulfilling all the tasks for this year and the entire period of the Eleventh Five-Year Plan places increased demands on governments at all levels. This means we must greatly intensify internal reform and self-improvement efforts.

We will accelerate reform of the administrative system and further transform government functions. We will continue to separate government functions from enterprise management, reduce the number of matters requiring administrative examination and approval, and standardize procedures for doing so. We will resolutely transfer responsibility for matters the government should not manage to the markets, enterprises, civil organizations and intermediary organizations. We will change the way the government manages the economy and improve its social management and public service functions. We will make government more open and improve the system for releasing information. We will establish a sound administrative accountability system, improve the government's ability to perform its duties and strengthen public trust.

We will work hard to build a clean government and combat corruption. We will conscientiously carry out all tasks and measures for punishing and preventing corruption. We will launch a campaign this year to combat bribery in business, focusing on unhealthy practices in construction, land transfers, property transactions, purchase and sale of drugs, and government procurement, in order to resolutely put a stop to irregular transactions, and we will investigate and prosecute cases of bribery in business in accordance with the law. We will continue to remedy improper practices that harm public interests and strive to resolve such outstanding problems as arbitrary educational charges and excessively high medical costs.

We must implement the Civil Servant Law and improve the training, supervision and oversight of civil servants. We will run the government strictly and mete out reward or punishment on clear grounds. Government employees at all levels, especially leading officials, must be devoted, diligent and responsible and serve the people wholeheartedly. They need to keep the overall picture in mind, be well disciplined, carry out administrative decrees promptly, and implement all laws, regulations, principles and policies to the letter. They need to work hard, be thrifty, and oppose waste and extravagance. They also need to be realistic and pragmatic in their approach to work, refrain from making empty promises, triumph over bureaucracy, formalism, deception and exaggeration, and fully carry out all tasks and assignments.

Fellow Deputies,

China is now standing at a new historical starting point as we march toward the goal of building a moderately prosperous society in all respects. We must unite even closer around the Central Committee with Comrade Hu Jintao as General Secretary, hold high the great banner of Deng Xiaoping Theory and the important thought of Three Represents, pool the wisdom and strength of our 1.3 billion people, work diligently and confidently to achieve success, strive to make the great Eleventh Five-Year Plan into a bright reality, and write a new chapter in the history of our socialist modernization drive. No difficulties or obstacles can impede our progress. We must achieve our goals! And we definitely can achieve them!

]]> http://www.itheone.com/article.asp?id=34 frank722@126.com(Frank) Thu,25 Dec 2008 23:01:45 +0800 http://www.itheone.com/default.asp?id=34
REPORT ON THE WORK OF THE GOVERNMENT

Delivered at the Fifth Session of the

Tenth National People's Congress on March 5, 2007

Wen Jiabao

Premier of the State Council

Fellow Deputies,

On behalf of the State Council, I would now like to present to you my report on the work of the government for your deliberation and approval. I also welcome comments and suggestions on the report from the members of the National Committee of the Chinese People's Political Consultative Conference (CPPCC).

I. Review of the Work in 2006

China began implementation of and made a good start on its Eleventh Five-Year Plan in 2006, making major achievements in economic and social development.

-The economy experienced steady and fast growth. China's GDP was 20.94 trillion yuan, an increase of 10.7% over the previous year. The consumer price index rose by 1.5%. For four years in a row, economic growth has reached or slightly exceeded 10% without significant inflation.

-Economic performance improved steadily. National revenue reached 3.93 trillion yuan, a year-on-year increase of 769. 4 billion yuan. Profits of large industrial enterprises rose 31%, an increase of 444.2 billion yuan.

-Implementation of the reform and opening up policy was deepened. Further progress was made in reforms in key areas and crucial links. China's import and export volume totaled US$ 1.76 trillion, a year-on-year increase of 23.8%. Paid-in foreign direct investment reached $69.5 billion.

-Development of social programs was accelerated. Major achievements were made in scientific and technological innovation, there was continued development of education, the public health system was improved and progress continued in cultural and sports programs.

-People's living standards improved substantially. A total of 11.84 million urban residents entered the workforce. Urban per capita disposable income rose to 11,759 yuan, an increase of 10.4% in real terms after adjusting for inflation, and rural per capita net income grew to 3,587 yuan, an increase of 7.4% in real terms after adjusting for inflation.

These achievements mark a further increase in China's overall strength and represent another solid step toward the goal of building a moderately prosperous society in all respects.

The main work accomplished in 2006 includes the following.

1. Macroeconomic regulation was strengthened and improved. The central government adopted a series of timely macroeconomic regulatory measures to address major problems affecting economic performance, such as overheated investment, excessive money and credit supply and serious trade imbalance. We strengthened land regulation by strictly controlling the expansion of land used for construction and took stern actions against violations of laws and regulations concerning land use. We strengthened supervision of money supply and credit, raised the basic interest rate on RMB loans twice and raised the reserve requirements for financial institutions three times. We strengthened the role of fiscal and tax measures in regulating economic activities. We tightened the examination and approval process, oversight and inspection of new projects to be launched on the market. We strengthened regulation and oversight of the real estate market to improve the mix of market housing available. These macroeconomic regulatory measures started to work, resulting in a drop in the growth rate in fixed asset investments and slower growth of the bank credit supply. We thus prevented rapid economic growth from becoming overheated growth and avoided drastic fluctuations.

2. Work related to agriculture, rural areas and farmers was intensified. Steady progress was made in building a new socialist countryside. Central government budgetary spending on agriculture, rural areas and farmers reached 339.7 billion yuan, a year-on-year increase of 42.2 billion yuan. We rescinded the agricultural tax and taxes on special agricultural products nationwide, ending a tax that had been collected on grain farmers in China for more than 2,600 years. We continued to increase direct subsidies to grain farmers for producing grain and subsidies for growing superior seed varieties and purchasing agricultural machinery and tools, and followed a policy of granting general subsidies for agricultural production supplies. In addition, we continued the minimum purchase price policy for key grain varieties in major grain-producing areas and increased transfer payments to counties and townships with financial difficulties and major grain-producing counties. Despite serious natural disasters, the output of major agricultural products increased steadily. Grain output reached 497.46 million tons, registering the third consecutive annual increase. We worked harder to develop rural infrastructure, including roads, water conservancy, electricity and communications, and made safe drinking water available to another 28.97 million rural residents and the use of methane available to an additional 4.5 million rural families, thereby improving working and living conditions in rural areas. We made continued progress in reducing rural poverty through development, lifting 2.17 million rural people out of poverty. We formulated and implemented policies and measures to address the difficulties rural migrant workers in cities face and strengthened protection of their legitimate rights and interests by addressing the problems of low wages and unpaid wages, standardizing labor management pursuant to the law, improving job training and expanding the social safety net.

3. Adjustment of the economic structure was accelerated. We formulated policies and measures to accelerate the development of the equipment manufacturing industry and promoted independent development of major technologies and independent production of major equipment in key areas. We began to independently manufacture mega kilowatt nuclear power generators, ultra-supercritical thermal power generating units and new types of ships, and launched major projects such as those to produce high-grade digitally controlled machine tools and key manufacturing equipment. We also formulated and implemented policies and measures to carry out structural adjustments in 11 industries, including the steel, coal and cement industries. As a result, there was significant decline in the growth rate of investment in some industries with surplus production capacity and total investment for new planned projects dropped significantly. We closed down backward coal production facilities totaling 110 million tons in capacity and electrolytic aluminum production facilities totaling 1.2 million tons. A number of projects vital to China's economy were completed and put into operation and some others were started. The Qinghai-Tibet Railway was opened to traffic, all generating units at the Three Gorges Left Power Station were completed and put into operation, and construction of the Xiangjiaba Hydropower Station on the Jinsha River began. All this will play an important role in sustaining economic development.

We placed greater emphasis on saving energy and protecting the environment. We 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 strengthened energy conservation in key industries, enterprises and projects, and conducted pilot projects to develop the circular economy. We worked hard to prevent and control water pollution in key river valleys and regions, such as the Three Gorges Reservoir area, the Songhua River, the sources and routes of the South-to-North Water Diversion Project, and the Bohai Sea. We carried out key environmental protection projects to desulphurize emissions from coal-fired power plants, treat urban sewage and dispose of waste safely. To ensure environmental safety, we launched the fourth annual nationwide campaign to punish enterprises that illegally discharge pollutants. We worked hard to protect and improve the ecosystem. Progress was made in the current stage of the campaign to restore order in and standardize the exploitation of mineral resources. Geological prospecting was intensified.

We continued to follow the overall strategy for regional development. We continued to make solid progress in the large-scale development of the western region, and the work of rejuvenating northeast China and other old industrial bases proceeded smoothly. We began implementation of the policy to boost the development of the central region. The eastern region made further achievements in leading the country in development.

4. The process of reform and opening up was accelerated. We made comprehensive plans for overall rural reform. Steady progress was made in the reform of the system of collective forest rights. Further progress was made in adjusting the distribution of the state sector of the economy, introducing the shareholding system in state-owned enterprises (SOEs), and overseeing state-owned assets. Government functions were separated from the management of postal operations, and reform of the electricity management system continued. Significant progress was made in introducing a shareholding system in state-owned commercial banks; the Bank of China and the Industrial and Commercial Bank of China were successfully listed on domestic and overseas stock exchanges, and considerable headway was made in the current stage of the reform of rural credit cooperatives. The reform of the shareholder structure in listed companies was basically completed, and the basic systems of the securities market were strengthened. Reform of the insurance industry was deepened. Reform of the foreign exchange administration system was gradually deepened. Continued improvement was made in the fiscal and tax systems. Smooth progress was made in reforming the civil servant salary system and standardizing the pattern of income distribution. A thorough campaign to improve market order was launched.

We adjusted the trade mix by improving policies concerning export tax rebates, tariffs and processing trade and by controlling the export of products whose manufacture is highly energy consuming or highly polluting. We made energetic efforts to increase imports. The structure of foreign investment use was improved, and service industries, including banking, retail sales and telecommunications, were further opened up. We deepened and expanded economic exchanges and trade with other countries. We encouraged enterprises to invest overseas and cooperate with overseas-funded enterprises. We fulfilled all the commitments we made for China's accession to the World Trade organization (WTO) and improved economic systems, laws, regulations and policies related to doing business with other countries.

5. We worked hard to develop social programs. We increased funding for social programs. The central government spent 77.4 billion yuan on science and technology, 53.6 billion yuan on education, 13.8 billion yuan on health and 12.3 billion yuan on culture, representing year-on-year increases of 29.2%, 39.4%, 65.4% and 23.9% respectively.

We promoted innovation in science and technology. The Outline of the National Program for Long- and Medium-Term Scientific and Technological Development (2006-20), which took two years to formulate, has been issued and is being implemented, and related special programs and supplementary policies and measures have been formulated. Sixteen major projects were launched, including projects to develop giant oil and gas fields and coal seam gas, design and develop a new generation wireless broadband mobile communications network, design and produce large aircraft, develop manned spacecraft and explore the moon. We made breakthroughs in key technologies such as a high-performance computer, super high-quality hybrid paddy rice, third generation mobile communications and digital television, and increased China's capacity for independent innovation.

We put education high on the development agenda. A total of 184 billion yuan was allocated by both central and local governments to fund rural compulsory education, enabling us to pay tuition and miscellaneous fees for the 52 million rural students receiving compulsory education throughout the western region and in some areas in the central region, provide free textbooks to 37.3 million students from poor families and grant living allowances to 7.8 million students staying in dormitories. Of the 410 targeted counties, 317 reached the goals of making nine-year compulsory education generally available and basically eliminating illiteracy among young and middle-aged adults. The proportion of the target population attaining these two goals in the western region increased to 96% from the 77% of 2003. The central government spent 9 billion yuan over the past three years building facilities for 7,651 rural boarding schools. Eight billion yuan was spent to develop modern primary and middle school distance education f or rural areas. The project covers over 80% of the rural primary and middle schools in the central and western regions and enables over 100 million students to have access to high-quality education resources. New enrollment at secondary vocational schools totaled 7.41 million and total attendance reached 18.09 million. Total attendance at institutions of higher education reached 25 million and the gross enrollment ratio rose to 22%.

We worked to strengthen medical and health care services. Work to set up a disease prevention and control system with a wide range of functions that covers both urban and rural areas and a medical treatment system for public health emergencies has been basically completed. Work was begun to set up a rural health service system, and 2.7 billion yuan from the sale of treasury bonds was allocated by the central government for the development of medical and health care facilities at the county, township and village levels. Trials of a new type of rural cooperative medical care system were extended to 1,451 counties, county-level cities and city districts, covering 50.7% of the country's total number of counties, county-level cities and city districts and 410 million rural residents. With 4.27 billion yuan allocated by the central government and additional local government funding, we raised the allowances for rural participants in the cooperative medical care system significantly. Development of the community-based system of urban medical services was accelerated. Subsidized medical care was improved for urban and rural residents. The central government allocated 5.1 billion yuan to support local government efforts to improve public health care services. Substantial progress was made in preventing and controlling major diseases such as AIDS.

We energetically developed culture and sports. The press and publishing, radio, television, film, literature and art, philosophy and the social sciences flourished. Culture-related facilities, especially 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 the project to build multi-use cultural centers in communities, towns and townships and the national shared database project for cultural information and resources. Reform of the cultural management system was deepened. Development of the culture industry was accelerated, and cultural exchanges with other countries were increased. Sports activities for the general public were extensively developed, and the level of competitive sports continued to improve. Efforts to promote socialist cultural and ethical progress were strengthened.

6. We worked hard to increase employment and improve social security work. We continued to improve and implement policies on employment and reemployment, and the central government allocated 23.4 billion 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 5.05 million laid-off workers find new jobs. The goal set out in 2004 to basically solve the longstanding problems of defaults on payment to construction companies and unpaid wages for rural migrant workers in the construction industry within three years was basically met. A total of 183.4 billion yuan has been paid to construction companies, paying off 98.6% of the total amount owed to them. This payment included 33 billion yuan in overdue wages for rural migrant workers.

The social safety net was strengthened. Trials to fully fund personal accounts for basic old-age insurance of enterprise employees were expanded to eight more province-level localities on the basis of the pilot project in the three provinces in northeast China. After years of effort, the work of incorporating basic cost of living allowances for workers laid off from SOEs into the unemployment insurance system has been basically completed. Basic pension benefits for retired enterprise employees were increased. The coverage of the social security system was further expanded, revenue from social security premiums increased, and oversight and management of social security funds was strengthened. The basic framework of a social assistance system for both urban and rural residents was set up, and charity programs continued to grow. The central government spent 13.6 billion yuan on basic cost of living allowances for urban residents, 2.4 billion yuan more than the previous year, and 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, county-level cities and city districts in 25 provinces, autonomous regions and municipalities directly under the central government, benefiting 15.09 million residents. Funding for providing food, clothing, medical care, housing and burial expenses for childless and infirm rural residents now mainly comes from the government budget instead of depending on rural collectives. Assistance for orphans and protection for homeless juveniles were strengthened. Allowances for all types of entitled groups were increased significantly, with an 11.2 billion yuan allocation from the central government budget, a 47% increase from the previous year. We improved the policy for compensating people whose land has been expropriated to build large or medium-sized reservoirs and for assisting people displaced for reservoir projects, benefiting 22.88 million persons. This longstanding 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 11.2 billion yuan in relief funds to help disaster victims get back on their feet.

7. We continued to strengthen democracy and the legal system. Democracy at the community level made continued progress. Government-sponsored legislation was further improved. The State Council submitted seven bills to the Standing Committee of the National People's Congress (NPC) for deliberation, including the Law on Corporate Income Tax (draft), the Antitrust Law (draft), the Law on Response to Emergencies (draft) and the revised Compulsory Education Law (draft), and promulgated 29 sets of administrative regulations, including the Regulations on AIDS Prevention and Control and the Regulations on the Administration of Overseas-Funded Banks. We accelerated development of government by the rule of law and implemented the Administrative Permit Law, the Civil Service Law, and the Program for Advancing All Aspects of Government Administration in Accordance with the Law. Oversight in the form of supervision and auditing was strengthened. Steady progress was made in reform of the judicial administrative system and its working mechanisms. The work of addressing public complaints registered by means of letters and visits was strengthened. In public security, continued improvements were made in the crime prevention and control system and extensive efforts were made to promote peace and security. Significant progress was made in work focused on improving conditions in areas with poor public security and in addressing serious public security issues. An all-out effort was made to build clean government and combat corruption and a campaign to combat bribery in business was launched. A number of major cases involving government offices and their employees were investigated and dealt with, and a number of people guilty of corruption were punished to the full extent of the law.

Work related to ethnic groups, religions, Hong Kong, Macao, Taiwan and overseas Chinese was further improved. We continued to make progress in modernizing national defense and the army. Significant progress was made in China's diplomatic work.

Looking back on our practical experience, we have come to the following conclusion: We must free our minds, follow a realistic and pragmatic approach, keep pace with the times, work hard with a pioneering and innovative spirit, unswervingly take the road of Chinese socialism, adhere to the reform and opening up policy, pursue development according to scientific principles, maintain social harmony during development and ensure peaceful development. Only by doing so can we attain the ultimate objectives we have set for modernization.

We owe our successes to the correct overall leadership of the Central Committee of the Communist Party of China (CPC) with Comrade Hu Jintao as General Secretary and to the concerted efforts and hard work of cadres and the people across the country. On behalf of the State Council, I would like to express my sincere thanks to the people of all our ethnic groups, the democratic parties, people's organizations and persons from all walks of life. I would also like to sincerely thank our compatriots from the Hong Kong and Macao special administrative regions and Taiwan as well as overseas Chinese. My sincere thanks also go out to all the friends of China around the world who care about and support China's modernization.

However, we are clearly aware that there are still many difficulties and challenges in China's economic and social development and some shortcomings and inadequacies in the work of the government.

First, there are still serious structural problems in the economy. There is a lack of proper balance among primary, secondary and tertiary industry, urban and rural development and development among different regions are not balanced, and the pattern of investment does not reflect consumer demand. Agriculture, the base of the economy, remains weak, and it is now more difficult than ever to steadily increase grain production and keep rural incomes growing. The overall scale of investment in fixed assets is still too large, the problem of excess liquidity in the banking system is serious, and the factors causing overheated investment and excess credit still remain. The trade surplus has become large, and the imbalance in international payments has worsened.

Second, the pattern of economic growth is inefficient. This can be seen most clearly in excessive energy consumption and serious environmental pollution. The targets for saving energy and reducing pollutant emissions were set forth in the Eleventh Five-Year Plan. This is of vital importance in efforts to promote the change in the pattern of economic growth and increase energy conservation and environmental protection. All local governments and government offices did a great deal of work and made much headway in these areas over the past year. While energy consumption per unit of GDP for the previous three years rose by 4.9%, 5.5% and 0.2% respectively, it dropped by 1.2% in 2006. Growth in total emission of major pollutants declined, chemical oxygen demand rose 1.2%, down from an increase of 5.6% the year before, and discharge of sulfur dioxide rose 1.8%, down from a 13.1% gain in the previous year. However, we fell short of the targets set at the beginning of last year for cutting energy consumption per unit of GDP by about 4% and total discharge of major pollutants by 2%. The main reasons were: Industrial restructuring proceeded slowly, while growth in heavy industry, especially in sectors that are high in energy consumption or are highly polluting, was still overheated. Many backward production facilities that should have been closed down are still in operation. Finally, some local governments and enterprises failed to strictly comply with laws, regulations and standards for energy saving and environmental protection, and it will take time for relevant policies and measures to produce the desired results. Meeting these two mandatory targets in the Eleventh Five-Year Plan is very important. The targets cannot be revised, so we must work resolutely to reach them. The State Council will make annual reports on the progress made in saving energy and reducing emissions to the NPC starting this year, and at the end of the Eleventh Five-Year Plan period it will report on the overall progress made over the five years.

Third, a number of serious problems affecting the people's interests have not been properly addressed. Problems in food and drug safety, medical services, education charges, housing, income distribution, public security and production safety remain a source of public concern. Problems arising in land expropriation and requisition, housing demolition, transformation of enterprises into stock companies and environmental protection that harm the interests of the people have not been fundamentally solved. Life remains difficult for many low-income people.

Fourth, the government's efforts to improve its performance still have room for improvement. Moves to change the way the government functions have not made the expected progress, non-separation of government administration and enterprise management remains a problem, and the responsibilities of some government offices are not clear, leading to low productivity. Expenses related to carrying out official duties have not been standardized, and extravagance and waste are inflating administrative costs. In some local governments and government offices and among a small number of their employees, there are problems of bureaucratism, formalism, isolation from the people, neglect or dereliction of duty and even abuse of power and corruption. The root cause of these problems lies in institutional deficiencies and poor oversight.

We must maintain a strong sense of responsibility to the country and the people and take more forceful measures to solve them in order to live up to the expectations of the people.

II. General Plan for Work in 2007

This is the last year for the term of this government, so we must do our best to carry out our duties with even greater drive and work tirelessly to do even better in all our work in order to deliver a good report to the people.

The basic approach and tasks for the work of the government are: to take Deng Xiaoping Theory and the important thought of Three Represents as our guide and fully implement the Scientific Outlook on Development; to accelerate the building of a harmonious socialist society; to conscientiously implement the principles and policies the CPC introduced since its Sixteenth National Congress; to strengthen and improve macroeconomic regulation; to speed up adjustment of the economic structure and change of the pattern of economic growth; to strengthen resource conservation and environmental protection; to advance the reform and opening up policy and independent innovation; to promote social development and resolve issues related to the people's wellbeing; and to promote all aspects of socialist economic, political, cultural and social development to create a good environment and favorable conditions for the convening of the Seventeenth National Congress of the CPC.

Taking into consideration all factors, we have decided on the following main goals for China's economic and social development this year: On the basis of structural improvement, improved productivity, reduced consumption of energy and environmental protection, GDP is forecast to grow by about 8%, the number of jobs created in urban areas should be at least 9 million, and the rate of registered urban unemployment should be kept below 4.6%. The overall price level should remain basically stable, the overall increase in consumer prices should stay below 3%, and there should be improvement in the imbalance in international payments.

It is important to mention here that in a socialist market economy, a target for GDP growth set by the government is a guide and an indicator of the anticipated level. It serves as an important basis for setting macroeconomic targets for the budget, employment and prices. Because of changes in the domestic and international economic environments including the market, the real GDP growth rate will vary a certain amount from the projected target. In setting the target for GDP growth around 8% for 2007, we have taken into account a number of factors, such as what is needed and what is feasible. The most important task for us is to promote sound and fast economic development. To attain this goal, we should guide all sectors of the economy to conscientiously put into practice the Scientific Outlook on Development, focus on improving the economic structure and economic performance, saving energy, reducing energy consumption and cutting down on the discharge of pollutants, and to avoid seeking only faster growth an d competing for the fastest growth.

In order to realize the goals and complete the tasks for this year's economic and social development, we must closely adhere to the following policies and principles:

First, we must stabilize, improve and implement policies. Stabilizing policies means ensuring the continuity and consistency of macroeconomic policy and continuing to follow prudent fiscal and monetary policies. Improving policies means promptly revising policies and measures in response to new developments in the operation of the economy and finding specific solutions to serious issues and problems. Implementing policies means conscientiously implementing all policies and measures of the central government, improving the ability to implement policies and truly putting all policy decisions into effect.

Second, we must strengthen and improve macroeconomic regulation. The focus of this work is to keep the scale of fixed asset investment and credit under control and to promote overall balance between total supply and total demand while improving the structure. We must encourage growth in some sectors and discourage it in others, treating each sector according to its specific situation, and make more use of economic levers and legal means to guide and standardize economic activity. We need to correctly balance the relationship between central and local government organizations to give full play to the initiative of each.

Third, we need to greatly improve the quality and efficiency of economic growth. We must attach greater importance to saving energy and resources, protecting the environment and using land intensively, pay close attention to improving product quality, strengthen the competitiveness of the economy and better ensure the sustainability of economic development.

Fourth, we need to pay closer attention to promoting social development and improving the people's wellbeing. We must put people first, promote faster progress in social programs, work energetically to solve the most practical problems that are of greatest concern to the people and most directly affect their interests, safeguard social fairness and justice, and ensure that all of the people share in the fruits of reform and development.

Fifth, we need to make reform and opening up the driving force behind all our work. We must continue in the direction of reform to develop the socialist market economy. In order to meet the requirements for economic and social development, we need to promote economic, political, cultural and social restructuring and accelerate the establishment of institutional guarantees for implementing the Scientific Outlook on Development and building a harmonious society. We need to make China more open to the outside world in all respects.

III. Promoting Both Sound and Fast Development of the Economy

Looking at the overall situation, we need to concentrate on the following areas in promoting this year's economic development:

1. We will continue to strengthen and improve macroeconomic regulation.

We need to continue to follow a prudent fiscal policy.

One, we will reduce the budget deficit and the amount of long-term development treasury bonds issued by an appropriate amount. The deficit for the central government budget this year is set at 245 billion yuan, down 50 billion yuan from last year. We plan to issue 50 billion yuan of long-term development treasury bonds, down 10 billion yuan from last year. We also plan to allocate 80.4 billion yuan from the central government budget for investment in regular development projects, up 25 billion yuan from last year. Total central government investment in development projects is expected to be 130.4 billion yuan.

Two, the structure of budgetary expenditures and government investment will be improved to put more emphasis on key areas. "Increase in three areas" must be ensured in the use of government funds, i.e. a year-on-year increase in investment to directly improve living and working conditions in rural areas, investment in social programs such as elementary education and public health, and investment in the large-scale development of the western region. In addition, we will increase expenditures for energy conservation, environmental protection and independent innovation.

Three, we will spend the excess revenue in the central government budget in an appropriate way. Because of the fact that actual economic growth exceeded targets plus some policy factors that increased revenue, the central government revenue has exceeded the targets in recent years by a fair amount. The average annual amount of revenue over the target for the years 2003 through 2006 was 204 billion yuan, with last year's surplus reaching 257.3 billion yuan. The excess revenue was mainly spent for the following purposes: to pay off longstanding arrears in export tax rebates and payments for returning farmland to forests, to increase tax rebates and general transfer payments to local governments in accordance with the law, to increase legally mandated expenditures for education, science and technology, and to increase expenditures for the social security fund, for policy-mandated bankruptcy of enterprises and for basic cost of living allowances for residents. Fifty billion yuan will be allocated from last year's excess revenue to establish a central budget stability fund this year. The fund makes it possible to compile the central government budget more scientifically and rationally, and helps keep it stable and preserve the continuity of fiscal policy. The use of this fund will be put under budgetary control and subject to the oversight of the NPC. We must strengthen the management of public finance, work very hard to increase revenue, reduce expenditures, practice strict economy, combat extravagance and waste, and ensure the efficient use of public funds. We must administer taxes in accordance with the law, strengthen the collection and management of tax revenue and standardize the management of non-tax government revenue.

We will continue to follow a prudent monetary policy. We must employ a full range of monetary policy tools to appropriately control the supply of money and credit and effectively address the problem of excess liquidity in the banking system. We will adjust and improve the credit structure to guide banks to increase credit support for agriculture, rural areas, farmers, small and medium-sized enterprises, energy conservation, environmental protection and independent innovation. We must continue to control long- and medium-term loans and strictly limit loans to backward enterprises that consume high quantities of energy or are highly polluting and poorly performing enterprises in industries with excess production capacity. We will promote steady reform of interest rates to better reflect market conditions. We will improve the mechanism for setting the RMB exchange rate, strengthen and improve foreign exchange administration, and actively explore and develop channels and means for appropriately using state foreign exchange reserves. We will adopt a variety of measures to gradually ease the imbalance in international payments.

We need to adjust the balance between investment and consumption. We must adhere to the principle of boosting domestic demand, focusing on expanding consumer demand. We will deepen reform of the income distribution system to narrow the increasing gaps in income levels and expand consumer demand. We will take a variety of measures to increase the incomes of both urban and rural residents, especially low- and middle-income persons. We will make appropriate adjustments in and strictly follow the minimum wage system, implement minimum wage standards for part-time workers, 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 of compliance with the minimum wage system and minimum wage standards for part-time workers. We will continue to implement the 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. High priority should be given to expanding consumer demand in rural areas, implementing policies and measures to stimulate increase in incomes and reduction of the financial burden of rural residents, and improving the distribution of goods, development of the market system, and the environment and conditions for increasing consumer spending in rural areas. We need to improve policies on consumption, vigorously develop consumption growth areas such as tourism, culture, recreation and exercise, and expand consumption.

We will maintain an appropriate rate of growth for fixed asset investment. We will improve the investment mix to increase returns on investment. We will continue to keep a firm grip on the controls over land and credit, and appropriately raise and strictly enforce the requirements for market access for development projects in terms of land use, environmental protection, energy saving, 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 development of major projects that strengthen overall economic and social development and long-term development and accelerate construction of important infrastructure projects such as large water conservancy projects, energy production bases, trunk rail lines and national trunk highways. We will encourage more investment of non-government funds in agriculture, rural areas, social programs, independent innovation, resource conservation, environmental protection and the central and western regions. We will deepen reform of the investment mechanism and improve the decision-making system and system of accountability for major investment projects.

The real estate industry plays a major role in developing the economy and improving the housing conditions of the people, and we must promote the industry's sustained and sound growth.

One, taking into consideration the fact that China has a large population and relatively little land available for building housing as well as the current level of its economic development, we need to make appropriate plans, build housing scientifically, keep consumption at an appropriate level, build environmentally friendly buildings that conserve energy and land, and develop a Chinese development and consumption model for housing.

Two, the real estate industry should focus on developing reasonably priced commercial housing for ordinary people. The government will pay particular attention to addressing the housing problems of low-income families. We will increase fiscal and tax policy support and set up a sound system of low-rent housing. We will improve and standardize the system of affordable housing.

Three, we will properly use both government regulation and market forces to maintain a reasonable scale of real estate investment, 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.

Four, we will intensify efforts to ensure order in the real estate market, strengthen oversight over it and combat in accordance with the law actions that violate laws and regulations in all links in the real estate industry, including development, sales and real estate agencies. Local governments at all levels must assume their full share of responsibility for regulation and oversight of local real estate markets.

2. We will develop modern agriculture and promote the building of a new socialist countryside.

The issues related to agriculture, rural areas and farmers have a major impact on building a moderately prosperous society in all respects and on overall modernization efforts. This year's work related to agriculture, rural areas and farmers will focus on accelerating the development of modern agriculture and effectively promoting the building of a new socialist countryside.

One, we will ensure the steady development of grain production. We must protect primary farmland, keep the area sown to grain stable, improve the structure of grain varieties grown and increase the per unit area yield of grain. We will strengthen monitoring and regulation of grain production, sale, storage, import and export, and set up a sound grain security warning system to ensure order in the grain market.

Two, we will substantially raise the overall production capacity of agriculture. We will accelerate development of agricultural facilities, improve agricultural technology and equipment, intensify agricultural research and efforts to expand application of advanced agricultural technology, improve the comprehensive system of agriculture-related services and strengthen our ability to prevent and mitigate disasters that affect agriculture. We will increase efforts to develop a system for preventing and controlling animal diseases.

Three, we will redouble efforts to boost rural infrastructure development. We will accelerate the building of water conservancy projects, roads, power grids, telecommunications, safe drinking water supplies and methane production facilities in rural areas. We will pool resources to basically complete, within two or three years, the upgrading of all large and medium-sized and key dilapidated small reservoirs in China. We will accelerate the development of safe drinking water supplies and provide safe drinking water for another 32 million people.

Four, we will increase rural incomes through a variety of channels. We will increase income in the farming, livestock, aquaculture and forestry sectors, develop secondary and tertiary industry in rural areas, particularly the processing industry for agricultural products, promote development of specialized agricultural operations, support the development of key enterprises, strengthen county economies and develop channels to increase rural employment and rural incomes. We will implement policies and measures to solve the problems rural migrant workers in cities face. We will increase efforts to relieve poverty through development and reduce the size of the poor rural population.

Five, 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, raising livestock and producing aquaculture products and to find employment outside of agriculture, and to foster the development of a new type of farmer.

To develop modern agriculture and promote the building of a new countryside, we must strengthen government policy, funding, application of science and technology, and reform.

One, we need to consolidate, improve and strengthen the policy of supporting agriculture and giving favorable treatment to farmers. We will increase direct subsidies to grain farmers for producing grain, subsidies for growing 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 budgetary difficulties and major grain-producing counties.

Two, we need to increase allocations for agriculture and rural areas. We will effectively shift the focus of state infrastructure development and development of social programs to the countryside. Budgetary support for agriculture and rural areas, state fixed asset investment in the countryside and the proportion of land transfer income used for rural development are all slated to increase at a rate higher than last year. Allocations from the central government budget for resolving issues related to agriculture, rural areas and farmers will total 391.7 billion yuan, an increase of 52 billion yuan over last year. We will energetically promote agricultural insurance and expand the scope of the trial for policy-supported agricultural insurance.

Three, we need to accelerate progress in agricultural science and technology. We will strengthen China's ability to make innovations in agricultural science and technology, support agricultural science and technology projects, accelerate application of advances in agricultural science and technology, improve local systems for increasing application of modern agricultural technology and providing technological services, and encourage the introduction of modern agricultural science and technology to individual villages and households.

Four, we need to fully promote overall rural reform. We will accelerate reform of town and township government bodies, reform of rural compulsory education and reform of the management system for county and township budgets to gradually make the administration and management system for the countryside more streamlined and efficient. We will set up a system of government-funded rural compulsory education and a system of public finance that covers both urban and rural areas. In addition, we will promote reform of the system for land expropriation and the system of collective forest rights, energetically develop specialized farmer cooperatives, and continue to pay off and reduce debts of township and village organizations.

In order to promote the building of a new socialist countryside, we must focus on developing the rural economy and increasing rural incomes. We will continue to stabilize and improve the basic system for rural operations and continue to tailor measures to suit local conditions, proceed from reality, respect the wishes of farmers, safeguard their rights and interests, and oppose formalism and the issuing of coercive orders.

3. We will take strong measures to save energy, lower energy consumption, protect the environment and use land economically and intensively.

We must make conserving energy, decreasing energy consumption, protecting the environment and using land economically and intensively the breakthrough point and main fulcrum for changing the pattern of economic growth. The focus of energy-saving and environmental protection efforts will be on the following tasks:

One is to improve and tighten enforcement of 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 that still do not meet these standards after taking corrective steps must shut down in accordance with the law.

Two is to resolutely close down backward production facilities. We plan to close down small thermal power plants with total power generating capacity of 50 million kilowatts during the Eleventh Five-Year Plan period. The target for this year is to close down small plants with a total capacity of 10 million kilowatts. In addition, we plan to close down backward iron foundries with total production capacity of 100 million tons and backward steel mills with total production capacity of 55 million tons during the same five-year period, with the targets for this year of 30 million and 35 million tons respectively. We will shut down more backward production facilities in the cement, electrolytic aluminum, ferrous alloy, coke and calcium carbide industries.

Three is to concentrate on key industries and enterprises. We will step up energy conservation and pollution reduction efforts in key industries such as steel, nonferrous metals, coal, chemicals, building materials and construction and in key enterprises that use more than 10,000 tons of standard coal annually. We will carry out a full range of key energy-saving projects, including upgrading of low-efficiency coal-fired industrial boilers and furnaces and combined heat and power facilities. We will continue giving priority to the development of urban public transport systems.

Four is to improve the system of energy conservation and environmental protection policies. We will give full play to the role of the market and make use of a full range of economic levers such as pricing, government finance, taxation and credit to promote energy saving and environmental protection. We will deepen reform of prices for major resource products and charges for pollution emission, improve the system of taxes on resources, strengthen the system of compensated exploitation of mineral resources and accelerate the establishment of a mechanism for compensating for damage to the ecosystem. We will also protect and rationally develop and utilize marine resources.

Five is to accelerate the development of energy-saving and environmentally friendly technologies. We will step up upgrading of equipment and technology designed mainly to save energy and reduce pollution, and encourage enterprises to adopt new equipment, new processes and new techniques that help save energy and protect the environment. We will attach more importance to comprehensive utilization of resources and clean production, and vigorously work to develop a circular economy and energy-saving and environmentally friendly industries.

Six is to bring pollution under control and protect the environment. We will increase funding from bond sales and central budgetary allocations to support construction of facilities for treating urban sewage and household wastes and disposing of hazardous waste. We will continue to work to control pollution in key regions and the key watersheds of the Huai, Hai, Liao and Songhua rivers, Tai, Chao and Dianchi lakes, the Bohai Sea, the Three Gorges Reservoir area and the upper reaches of the Yangtze River, and at the sources and along the routes of the South-to-North Water Diversion Project. We will prohibit the relocation of urban polluting enterprises and dispersal of urban polluting materials in the countryside, and control non-point source pollution in rural areas.

Seven is to strengthen oversight and management of compliance with the law. We will set up a more effective system for overseeing and managing energy conservation and environmental protection and resolutely punish in accordance with the law all types of actions that violate laws and regulations.

Eight is to fully implement a responsibility system for fulfilling energy-saving and environmental protection targets. We will promptly set up a sound scientific, integrated and unified system of targets, a monitoring system and an assessment system for saving energy and reducing pollution, and adhere to a rigorous accountability system.

Conserving land and using it intensively is important not only for China's current economic and social development but also for the country's long-term interests and the survival of the Chinese nation. On the issue of land, we cannot afford to make a historical mistake that cannot be corrected, one that will seriously harm future generations. We cannot cross the line and reduce the total amount of farmland in China to less than 120 million hectares. We must resolutely adhere to the strictest possible land management system.

One, we need to conscientiously follow the general plan and annual plan for land use. We will resolutely control the amount of land used for construction, strengthen the protection of agricultural land, especially primary farmland, and stop the unauthorized use of agricultural land for construction. We will conscientiously implement the newly revised regulations defining the uses for land that are prohibited and the uses that are subject to restrictions. In particular, land will not be allowed to be used to build individual houses, golf courses, and new training centers for Party and government organs, SOEs and public service institutions.

Two, we need to make a strong effort to improve and strictly follow standards for conserving and intensively using land, including the rural land used for collective buildings and private housing. We must control the increase in such uses, make the best use of land reserves, and utilize land more efficiently and intensively.

Three, we need to control industrial use of land and resolutely follow minimum price standards for the transfer of land for industrial use.

Four, we need to implement the policy for taxes and fees for the use of land for development, standardize management of revenue and expenditures for land transfers, and faithfully follow the regulations for incorporating into local budgets all the revenue and expenditures derived from the transfer of state land-use rights.

Five, we need to strictly follow the responsibility system for land management. We will implement a system for supervising land use. We will strictly investigate and prosecute all cases of land use that contravene laws and regulations.

We need to strongly advocate conservation-oriented, environmentally friendly and civilized patterns of production and consumption throughout society so that conserving resources and protecting the environment become second nature for every enterprise, village, organization and individual member of society. We need to work hard to build a resource-conserving and environmentally friendly society.

4. We will accelerate efforts to upgrade the industrial structure and make independent innovations.

We will continue to follow a new path of industrialization, concentrating on upgrading the industrial structure. The focus of this work will be to greatly develop the service industry, to improve the level and technology of industry, and to promote extensive IT application in the economy and in society. We will reform management systems, increase funding and improve economic policy to encourage and support accelerated development of services, particularly modern services such as logistics, finance, information, consulting, tourism and community services. The overall scale of China's industry is large, but the level of industry and technology is not high, which makes translating size into power a pressing task. We will accelerate development of new-and high-technology industries, reinvigorate the equipment manufacturing industry, energetically develop renewable energy sources, systematically develop alternative energy sources and widely apply advanced technologies to upgrade traditional industries. We will accelerate adjustments in industries with excess capacity. We will use economic and legal tools to strengthen industrial planning and provide effective policy guidance for improving the industrial structure.

We will strive to make China an innovative country. We must work diligently to attain the goals and complete the tasks set forth in the Outline of the National Program for Long- and Medium-Term Scientific and Technological Development. We will launch key state science and technology projects, work hard to make breakthroughs in a number of core technologies crucial to the economy, the people's wellbeing and national security, increase independent production of major equipment through completion of key projects and strive to make breakthroughs in key areas where China holds the lead. We will increase basic research, research in cutting-edge technology and research for public benefit. We will deepen the reform of the science and technology management system. We will speed up development of a system for technological innovation in which enterprises play the leading role, and which is guided by the market and combines enterprises, universities and research institutes. We will improve the mechanism for rewarding independent innovation and implement fiscal, tax and banking policies and the government procurement system to encourage and support independent innovation. We will energetically develop venture capital investment. We will move quickly to formulate and implement a national strategy for intellectual property rights to strengthen protection for them. We will continue to implement the Action Plan to Increase the Population's Understanding of Science.

5. We will do more to promote balanced development among different regions.

We will continue to make and follow comprehensive and well-considered plans, give full play to local strengths and carry out related government policies to promote balanced development among all regions. We will conscientiously implement the Eleventh Five-Year Plan for the Large-Scale Development of the Western Region, focusing on strengthening infrastructure, improving the ecosystem, developing science, technology and education, and developing industries that take advantage of local strengths. We will intensify efforts to formulate follow-up policies to consolidate and continue progress made in returning farmland to forests and returning livestock pastures to natural grasslands. We will continue key ecological projects to protect natural forests, prevent and control sand erosion, and reverse and prevent the development of stony deserts. We will promote rejuvenation of old industrial bases such as northeast China, focusing on stepping up industrial restructuring, successfully reorganizing and upgrading major industries and enterprises, developing the equipment manufacturing industry, the raw material processing industry, new-and high-technology industries and the agricultural product processing industry, and accelerating development of commercial grain production bases. We will accelerate the trial to transform the economies of cities that are dependent on resources that are now depleted and efforts to control sinkholes in coalmining areas. We will accelerate efforts to improve conditions in shantytowns. The focus of work in the central region will be on continuing to strengthen the production capacity of major grain-producing areas and increase the region's capacity to process agricultural products and convert them into other products, strengthening energy and major raw material production bases and the overall transportation system, and supporting the development of advanced manufacturing and new- and high-technology industries. The focus of work in the eastern region will be on improving and upgrading the industrial structure, increasing the capacity for independent innovation, strengthening international competitiveness, and leading the way in carrying out reform and opening up and promoting development based on scientific principles. We will continue to make full use of the role of special economic zones and the Pudong New Area in Shanghai, and promote the development and opening up of areas with the proper conditions such as the Binhai New Area in Tianjin.

We will step up state support for underdeveloped areas, encourage developed areas to provide assistance to underdeveloped areas, and promote accelerated economic and social development in old revolutionary areas, ethnic minority areas, border areas and poverty-stricken areas. We will actively support the development of the ethnic groups with small populations. We will work to develop reservoir areas and ensure that displaced residents are properly resettled.

IV. Promoting the Building of a Harmonious Socialist Society

Social harmony and stability as well as a better life are the aspirations of all the people and an important goal for the work of the government. This year, we must conscientiously follow the guiding principles set out at the Sixth Plenary Session of the Sixteenth CPC Central Committee, adopt more effective measures and make major strides in building a harmonious socialist society.

1. We will accelerate development of education, health care, culture, sports and other social programs.

Education is the bedrock of China's development, and fairness in education is an important form of social fairness. We need to make education a strategic priority and accelerate the development of all types of education at all levels. The overall goal is to expand the availability of compulsory education and consolidate progress already made, accelerate the development of vocational education and strive to improve the quality of higher education. This year, we will completely stop collecting tuition and miscellaneous fees from all rural students receiving compulsory education. This will ease the financial burden of 150 million rural households with children attending primary and middle schools. We will continue to provide free textbooks for poor rural students receiving compulsory education and living allowances for those staying in dormitories. We will improve the mechanism for ensuring continuing funding for rural compulsory education. This year's government allocations for rural compulsory education total 223.5 billion yuan, up 39.5 billion yuan from last year. During implementation of the Eleventh Five-Year Plan, 10 billion yuan will be allocated from the central government budget to upgrade rural junior middle school facilities. Local governments should also make corresponding increases in funding in this area. In addition, we will continue working to solve the problems that students from poor urban families and children of rural migrant workers in cities have in receiving compulsory education. This year, we will ensure that the plan to make nine-year compulsory education generally available and basically eliminate illiteracy among young and middle-aged adults in the western region and the modern rural primary and middle school distance education project achieve their final objectives. We will work to ensure that all children are able to afford and attend school. We are definitely capable of reaching this goal. We need to attach more importance to developing vocational education, which is a major reform and historic task to truly make education available to all members of society. The focus of this effort will be on developing secondary vocational education and strengthening the vocational education and training network for urban and rural areas. We will deepen reform of the management of vocational education by setting up a mechanism that combines the participation of industry, enterprises and schools and promoting models of school operation that integrate work and study and enhance cooperation between schools and enterprises. We will accelerate reform of education and teaching in higher education with the focus on improving quality, keep the scale of enrollment relatively stable, increase efforts to develop leading disciplines and universities, make innovations in the model for producing capable personnel and improve the mix of capable personnel being produced in order to produce large numbers of outstanding personnel. We will support and standardize the development of non-publicly funded schools and improve conditions for non-government entities to run schools.

We are adopting two major measures to promote development of education and fairness in education.

One, a system of national scholarships and tuition assistance will go into operation this school year for regular undergraduate institutions, vocational colleges and secondary vocational schools. Funds appropriated for this purpose by the central government will be increased from the 1.8 billion yuan of last year to 9.5 billion yuan this year and 20 billion yuan next year, and local governments should allocate corresponding amounts. We will also further implement the state student loan policy to enable children from families with financial difficulties to attend college or receive vocational education. This is another major move we are taking to promote fairness in education following on the exemption of all tuition and miscellaneous fees for rural compulsory education students.

Two, we will institute free education for students majoring in education in teacher colleges directly under the Ministry of Education and set up a corresponding system. This measure is designed to demonstrate to the general public the importance of the teaching field, to create an atmosphere of respect for teachers and education in society, to increase awareness of the value of the education profession throughout society, to produce large numbers of outstanding teachers, and to encourage prominent educators to run schools and more outstanding young people to become lifelong educators.

We will continue to carry out the strategy of making China stronger by producing more outstanding personnel. We will speed up efforts to train all types of personnel, focusing on the training of high-level, highly capable personnel and strive to turn out a number of leaders in independent innovation and young and middle-aged high-level experts. We will accelerate reform of the personnel system to promote an appropriate amount of movement of personnel. We will encourage Chinese students studying overseas to return home upon completion of study to work and serve the country, and employ more high-level specialists from overseas. We will work to foster an environment of respect for labor, for knowledge, for ability and for creativity throughout society.

We will accelerate reform and development of public health programs. We will focus on four areas this year in our work to develop a system of primary health care services for both urban and rural residents.

One is to energetically promote the new type of rural cooperative medical care system. The trial area will be expanded to cover over 80% of all counties, county-level cities and city districts in China. Areas possessing the proper conditions may expand the trial faster than others. Allocations from the central government budget to subsidize this trial total 10.1 billion yuan, a 5.8 billion yuan year-on-year increase. We will carry out the program to establish and develop a rural health care service system and improve the three-tier rural health care service network at the county, township and village levels so that the government can set up a health clinic in every town and township. We will employ various steps to support the setting up of a health clinic in every incorporated village, create a rural medicine supply network and oversight network and step up the training of rural health care service workers in order to ensure that rural residents have access to safe, effective, convenient, and reasonably priced medical and health care services.

Two is to accelerate the establishment of a new type of urban health care service system based on community facilities. We will improve the distribution of urban medical and health resources, focusing on developing community health care services and implementing measures for ensuring funding for them to make it more convenient for people to prevent and receive treatment for diseases. Appropriate allocations will be made from the central government budget to support these efforts in the central and western regions.

Three is to launch the trial of basic medical insurance for urban residents that mainly covers major illnesses, with the government providing necessary assistance to the poverty-stricken population.

Four is to do a good job in work related to prevention and treatment of major communicable diseases. This year, we will expand coverage of the state immunization plan to include 15 communicable diseases that can be effectively prevented through vaccination, including hepatitis A and epidemic cerebrospinal meningitis. On the basis of free treatment for communicable diseases such as AIDS and snail fever, we will expand the scope of diseases subject to free treatment. To fund this work, 2.8 billion yuan has been allocated in the central government budget. This will have great significance for our efforts to ensure the health of the people and raise their overall level of health. We will strengthen prevention and treatment of occupational and endemic diseases. We will strongly support development of traditional Chinese medicine and the folk medicine of ethnic minorities and give full play to their important role in preventing and treating illnesses. In order to better promote reform and development of health programs, the State Council has begun formulating a plan for deepening the reform of the medicine and medical and health care systems in order to resolve the difficulty of obtaining medical service, an issue of common concern.

We will comprehensively address the issue of population and continue to follow the current policy on birth control. We will keep the birthrate low, raise the quality of newborns and take a full range of measures to address the gender imbalance in babies. We will fully follow the reward and assistance system and other similar systems for rural families that comply with family planning regulations. We will expand the scope of the rural "fewer children equals faster prosperity" project. We will improve the family planning management and service system for the floating population.

We will develop old-age programs and actively address the issue of the aging of the population. We will develop programs for women, younger children and teenagers and safeguard the rights and interests of women and minors in accordance with the law. We will continue to show concern for and support programs for physically and mentally challenged persons and create a good environment that will enable them to participate in economic and social activities on an equal basis.

We will foster the common ideal of Chinese socialism among all groups in society, launch an extensive campaign to spread the socialist concept of honor and disgrace, and develop an atmosphere in society that fosters civilized and ethical behavior. Particular attention will be paid to cultivating ideals and ethics among young people. We will accelerate the progress of cultural programs and the development of the culture industry, promote reform of the cultural management system and improve the policy on the culture industry. We will promote the growth of the press and publishing, radio, television, film, art and literature. We will further develop philosophy and the social sciences. We will uphold the cultural rights and interests of the people and work to gradually establish a system of public cultural services that covers all groups in society to meet the cultural needs of the people. We will give high priority to the project to extend radio and TV coverage to every village, the project to develop multi-use cultural centers for communities, towns and townships, the project to set up a national database for sharing cultural information and resources, the project to show movies in the countryside and the project to set up libraries in rural areas. We will continue developing a number of key cultural projects. We will strengthen efforts to develop and manage the Internet culture and effectively protect our cultural heritage, natural heritage and archives. We will ensure order in the cultural market and continue to combat pornography and illegal publications. We will energetically develop sports programs and the sports industry, step up development of urban community sports facilities and local rural sports facilities, put great effort into developing exercise activities for the general public and raise the level of competitive sports. We will increase efforts to ensure successful preparation for the Beijing Olympics and Special Olympics, do a good job in preparing for the Shanghai World Expo, and successfully host the Special Olympics World Summer Games in Shanghai.

2. We will strengthen employment work and the social safety net.

We will continue to put expansion of employment high on the government's agenda for economic and social development. We will follow fiscal, tax and banking policies that promote employment and actively support the efforts of individuals to start their own businesses or find work for themselves. The focus of our employment work will be on finding employment for people who have been laid off and are still unemployed and those who worked at enterprises that are now bankrupt. We need to actively help zero-employment households and people who have difficulty finding employment find jobs, improve guidance and services for university graduates and promote the reform of the way discharged military personnel are assisted in returning to civilian life. We will develop harmonious labor relations, fully implement the labor contract system and protect the lawful rights and interests of workers.

We will step up development of the social safety net. This year's central government budget includes allocations totaling 201.9 billion yuan for strengthening the social safety net, an increase of 24.7 billion yuan over last year. We will continue to improve the basic old-age pension system for enterprise employees and proceed with the expansion of trials to fully fund personal old-age pension accounts. We will improve the system of basic medical insurance and the system of unemployment, workers' compensation, and pregnancy and maternity insurance for urban workers. We will accelerate the establishment of a social safety net targeted at rural migrant workers in cities, with the focus on signing them up for workers' compensation insurance and medical insurance for major diseases. We will step up efforts to formulate methods for transferring social security accounts of workers moving from one region to another. We will further expand coverage for social security, particularly coverage for people employed in the non-public sector such as those working in overseas-funded or private enterprises and urban residents with flexible employment. We will collect and build social security funds through a variety of channels. We will improve the methods for collecting and managing social security premiums to raise the collection rate. We will strengthen oversight and management of social welfare funds such as social security funds and matching fund programs for housing and strictly prevent their misuse. We will energetically develop social welfare programs.

We will improve the urban and rural social welfare system. We will improve the urban basic cost of living allowance system, the urban and rural subsidized medical care system, and the assistance system for urban vagrants and beggars. We will set up a nationwide basic minimum cost of living allowance system this year for rural residents, which is another major measure in the work to resolve issues related to agriculture, rural areas and farmers and build a harmonious society. All local governments should set reasonable eligibility requirements to receive such allowances and a reasonable level for allowances based on local conditions. Areas with financial difficulties will receive appropriate assistance from the central government budget. Setting up a basic cost of living allowance system for all urban and rural residents has great and far-reaching significance for promoting social fairness and building a harmonious society. We will continue to effectively implement preferential treatment policies to appropriately resolve the practical difficulties of entitled groups. We will conscientiously do the work of preventing and mitigating disasters, providing relief for victims of disasters and helping them get back on their feet. We will support the development of charity programs. We will ensure that urban and rural residents, especially the poverty-stricken population, enjoy the benefits of public finance.

3. We will strengthen production safety and improve market order.

We must resolutely work to reduce the occurrence of large-scale major accidents and improve production safety throughout the country. We will closely follow a principle of "safety first with emphasis on prevention and overall control," improve the production safety system, implement a responsibility system to ensure safe production, increase funding for production safety work, and strengthen education and training in production safety. We will bring the problem of coalmine gas buildup under control, remedy safety problems in some coalmines and shut down others. We will carry out a campaign to improve safety in key industries and fields. We will improve public safety in schools and crowded places. We will tighten oversight for production safety in accordance with the law and investigate and prosecute cases involving industrial accidents to the full extent of the law.

We will address both symptoms and root causes to thoroughly improve market order. We will accelerate development of a credit rating system. We will improve the market management system and strengthen market oversight. We will crack down on the production and sale of counterfeit goods, false advertising, commercial fraud, pyramid schemes, including pyramid schemes in disguised forms, tax evasion, tax fraud, smuggling and sale of smuggled goods. We will carry out extensive campaigns to ensure food safety and fully restore order to the pharmaceuticals market to ensure food and drug safety for the people.

4. We will further develop socialist democracy and the socialist legal system.

Developing democracy and improving the legal system is a basic requirement of the socialist system. The most important aspect of building a harmonious society is strengthening democracy and the legal system to promote social fairness and justice. We will actively yet prudently proceed with reforms in the political system and accelerate the development of democracy with Chinese characteristics. We will improve the system for safeguarding the people's democratic rights to ensure that the people are able to manage state affairs, economic and cultural affairs, and the affairs of society in accordance with the law. We will strengthen self-governing local organizations in urban and rural areas. We will expand democracy at the community level, improve the system for transparency in government, factory and village affairs, and ensure that people are able to directly exercise their democratic rights in accordance with the law. Governments at all levels should continue to make decisions scientifically and democratic ally, improve the collective decision-making system, the expert advisory system, the system of public notices and hearings and the decision accountability system for major issues, and ensure that citizens can exercise their right to stay informed of, to participate in, to express opinions about and to oversee government affairs.

We will promote all aspects of government administration by the rule of law. We will strengthen government-sponsored legislation, particularly legislation related to developing social programs, improving the social safety net, strengthening public administration, conserving energy and resources, and protecting the ecosystem. We will implement the administrative law enforcement accountability system to strengthen and improve administrative law enforcement. Law enforcement agencies must exercise their powers and carry out their duties in strict accordance with legally specified limits of authority and procedures. We will further improve administrative oversight. Governments at all levels and their employees must take the lead in observing the Constitution and other laws and handle affairs strictly in accordance with the law. They must conscientiously accept the oversight of the people's congresses and their standing committees and the democratic oversight of the CPPCC, and carefully listen to opinions from t he democratic parties, federations of industry and commerce, persons without party affiliation and people's organizations. They must accept the oversight of the news media and the general public. They must support supervision and auditing authorities in the independent exercise of their oversight duties in accordance with the law. We will tighten checks and oversight on the exercise of state power to ensure that the powers bestowed on us by the people are used for the benefit of the people. We will carry out an extensive campaign to raise public awareness of the law and do a good job in carrying out administrative reviews and providing legal services and assistance to the public. We will continue to reform the judicial administration system to ensure justice in the judicial system.

We will improve work related to ethnic groups, religions and overseas Chinese. We will fully enforce the Law on the Autonomy of Ethnic Minority Regions to consolidate and develop socialist ethnic relations based on equality, solidarity, mutual assistance and harmony. We will faithfully follow the Party's basic principle on work related to religions and conscientiously implement the Regulations on Religious Affairs. We will faithfully follow the Party's policy on overseas Chinese affairs and bring into full play the unique role of overseas Chinese nationals, returned overseas Chinese and their relatives in promoting reunification of the motherland and rejuvenation of the Chinese nation.

5. We need to safeguard social stability and harmony.

We must take safeguarding the lawful rights and interests of the people as the starting point and objective in correctly handling social problems in the new period and promoting social stability and harmony. We will improve the mechanisms for balancing interests, reporting on complaints, identifying and handling problems, and safeguarding the rights and interests of the people. We will earnestly carry out all policies that have a bearing on people's interests and act quickly to address complaints made by the people in accordance with the law and government policy. We will work hard to correct actions that harm the interests of the people in land expropriation and requisition, housing demolition, transformation of enterprises into stock companies and environmental protection. Government employees at all levels, especially senior officials, need to visit ordinary people in their communities and take the initiative to help them solve their problems. We will improve work in communities to strengthen their networks of services and management. We will improve the handling of people's complaints made in letters or through visits and improve the responsibility system for handling them. We will improve the crime prevention and control system in public security. We will intensify efforts to address serious public security issues and improve conditions in areas with poor public security. We will crack down on crimes in accordance with the law to safeguard national security and social stability.

V. Deepening Reforms and Opening Further to the Outside World

We will unswervingly promote reform and opening up and strive for breakthroughs in key areas and crucial links.

We will deepen the reform of SOEs.

First, we need to encourage greater investment of state capital in key industries and areas that are important to national security and comprise the lifeblood of the economy in accordance with the principle of increasing state capital input to some sectors and withdrawing it from others to ensure an appropriate flow of state capital. We will continue restructuring and reorganizing enterprises and support enterprises with the right conditions in their efforts to grow stronger and larger.

Second, we need to promote the reform to introduce the shareholding system in large SOEs, improve their corporate governance and mechanisms for controlling investment risk and for internal oversight and management, and develop a mechanism for personnel hiring and placement and for incentives and restraints that meet the requirements of a modern corporate structure.

Third, we need to improve the oversight system for state-owned assets. We will put in place a budget system for the management of state capital and standardize the way profits are distributed between the state and enterprises. We will carry out a pilot project to compile budgets for the management of state capital this year. We will standardize procedures for transforming SOEs into stock companies and for transferring ownership of state-owned assets to prevent their erosion and protect the lawful rights and interests of enterprise employees.

Fourth, we need to work quickly to solve longstanding problems in SOEs. We will continue to close down or force into bankruptcy depleted mines and enterprises that have long operated in the red with debts surpassing their assets, and actively yet prudently proceed with work of policy-mandated bankruptcy of enterprises. We will further separate core businesses from secondary businesses in enterprises, converting the latter into independent companies, and relieve enterprises of their obligation to operate social programs.

We need to speed up the reform of monopoly industries. We will further relax controls over market entry, introduce a competitive mechanism and diversify the investors in and ownership of monopoly industries. We will deepen reform of the electricity, postal service, telecommunications and railway industries and steadily proceed with the reform of public utilities such as water, gas and heat.

We will encourage, support and guide the development of individual-proprietorship businesses, private companies and other components of the non-public sector of the economy. We will conscientiously implement all policies and measures adopted by the CPC Central Committee and the State Council. We will encourage the non-public sector to participate in the reform of SOEs and to invest in public utilities, infrastructure, financial services and social programs. We will improve policies concerning banking, taxation and technological innovation to improve services for non-public enterprises. We must protect their lawful rights and interests in accordance with the law and strengthen guidance and supervision of them to ensure they operate in accordance with the law.

We will proceed with the reform of the fiscal and tax systems. The timing and conditions are now ripe for unifying the enterprise income tax rates for domestic and overseas-funded enterprises in order to level the playing field. This reform required the formulation of a new law on corporate income tax -- the Law on Corporate Income Tax of the People's Republic of China. The draft of the law will be submitted to you for your deliberation and approval. We will accelerate improvement of the public finance system, improve the system for transfer payments, reform the budget management system, formulate plans and measures to comprehensively implement VAT reforms, and establish a standardized non-tax government revenue system.

We will accelerate reform of the financial system.

First, we need to deepen the reform of state-owned banks. We will consolidate progress in the reform to change state-owned commercial banks into stock companies and continue the reform. We will promote the reform to introduce a shareholding system in the Agricultural Bank of China. We will further reform policy banks, with the focus on the reform of the China Development Bank.

Second, we need to speed up reform of the rural banking system. We will set up a system of rural financial organizations with a proper division of work, diversified investment and a full range of functions that will provide efficient services. We will make full use of the major role of the Agriculture Bank of China and the Agricultural Development Bank of China as the backbone of rural banking, continue to deepen reform of rural credit cooperatives and strengthen the role of the China Postal Savings Bank in serving agriculture, rural areas and farmers. We will appropriately adjust and relax the controls for establishing rural financial institutions with banking functions and encourage capital from various sources to invest in rural financial institutions. We will explore ways to develop new types of financial organizations suitable for rural areas and intensify efforts to make innovations in financial products and services available in rural areas to eliminate the difficulties that farmers encounter in obtaining loans.

Third, we need to vigorously develop the capital markets. We will promote the development of a multi-level system for capital markets and increase the amount and proportion of direct financing. We will steadily develop the stock market, accelerate development of the bond market and actively yet prudently develop the futures market. We will further strengthen basic market systems, proceed with reforms of the system for issuing stocks and bonds to make it more responsive to market conditions, effectively raise the quality of listed companies and strengthen market oversight.

Fourth, we need to deepen the reform of the insurance sector, expand insurance coverage and improve the services of insurance companies and their ability to handle risks.

Fifth, we need to open the financial sector to foreign competition and increase the degree of openness.

Sixth, we need to strengthen and improve financial oversight, improve the mechanism for coordinating oversight and effectively guard against and defuse financial risks in order to maintain China's financial stability and security.

We will promote growth of foreign trade. Promoting economic development and increasing employment through the growth of foreign trade is a principle we must follow for a long time to come. We must optimize the mix of imports and exports, change the pattern of China's foreign trade growth and strive to reduce our excessively large trade surplus. We will support the export of high value-added products and products with Chinese trademarks, expand the export of service products and agricultural products, limit the export of products whose manufacture is highly energy consuming or highly polluting, and promote the upgrading of the processing trade. We will increase imports of energy, raw materials, advanced technology and equipment, and key spare parts and accessories. We will strengthen management, inspection and quarantine work at foreign trade ports.

We will make good use of foreign capital. We will pay close attention to improving the overall quality of foreign investment coming into the country, optimize the mix of funds, and work to bring in more advanced technology, managerial expertise and high-caliber personnel. We need to encourage multinational companies to move their high-end manufacturing facilities and R&D centers to China and guide foreign investors to invest in the central and western regions, northeast China and other old industrial bases, and in areas identified in our industrial policy. We will actively seek to contract work being outsourced by the service industries in other countries and improve the development of China's service industries. We need to improve guidance and standardization for overseas businesses in mergers and acquisitions involving Chinese firms. We will improve the investment environment. We will standardize the way enterprises attract foreign capital and correct the problem of some localities granting preferential policies to potential overseas investors in disguised forms and assigning targets for attracting overseas investment to each level of government in violation of laws and regulations.

We will guide and standardize the overseas investment and international cooperation of Chinese enterprises. We will improve fiscal, tax, credit, foreign exchange and insurance policies and measures to encourage strong, reputable and competitive Chinese enterprises with different types of ownership to go global. We need to strengthen guidance over and coordination among enterprises to avoid haphazard investment and cutthroat competition overseas. We will continue to conclude more contracts for overseas projects and labor services. We will effectively manage overseas economic and trade cooperation zones. We will promote the Doha round of trade talks under the WTO, actively participate in formulation of multilateral trade rules, and steadily promote the development of bilateral and regional free trade zones.

VI. Strengthening Government Reform and Improvement Efforts

The government must constantly work harder to reform and improve itself in order to function well under the new circumstances. We have defined three basic norms for the work of the government over the past few years, namely, scientific and democratic decision making, administration in accordance with the law and stronger administrative oversight. We have paid close attention to fully exercising the government's functions and worked to improve public administration and public services and establish sound mechanisms for responding to public emergencies. We have advanced the reform of the administrative examination and approval system. We have formulated and put into operation the Program for Advancing All Aspects of Government Administration in Accordance with the Law. Finally, we have strengthened supervision and auditing, thus intensifying efforts to combat corruption and build a clean government. The government has made important strides in reforming and improving itself.

In working harder to reform and improve the government, we must always put people first and run the government for the people, and take fulfilling, safeguarding and developing the fundamental interests of the overwhelming majority of the people as both our starting point and objective. We must proceed from China's actual conditions and fully integrate the leadership of the Party, the people's position as the masters of the country and the running of the government according to the rule of law. We must constantly improve the socialist market economy and promote comprehensive, balanced and sustainable economic and social development. We must make innovations in the systems and means of government administration, and increase transparency and public participation in government affairs. Our objective is to build a just, transparent, hard-working, efficient, honest, upright and clean government that follows a well-defined code of conduct, a government with which the people are satisfied.

For some time to come, we need to work to standardize government powers, adjust and optimize government structure and the division of responsibility, improve the methods used to administer government affairs and deliver services, actively take steps to make administrative affairs more open, accelerate the development of e-government and government websites, improve the overall quality of civil servants, comprehensively increase administrative efficiency and strengthen the public's trust in the government. All these efforts have one main purpose, namely, to transform the way the government functions. This year we will focus on the following three tasks.

One is to improve the macroeconomic regulatory system, continue the work of separating government administration from enterprise management, and deepen reform of the administrative examination and approval system to reduce the number of items subject to administrative examination and approval and improve efficiency.

Two is to improve public administration and public services, increase the government's ability to provide basic public services and strive to resolve the issues of greatest concern to the people. Three is to standardize administrative actions in accordance with the law, work hard to build a clean government and combat corruption, and improve the system for punishing and preventing corruption that combines education, regulation and oversight.

We will work vigorously to improve the government's work style. One important task we are now facing is to deal with the serious problem of extravagance and waste in some government bodies. Quite a few local governments, government offices and organizations compete with one another for lavishness and spend money hand over foot, which arouses strong public resentment. We must put a resolute stop to these unhealthy practices. We will strictly control the construction and expansion of government office buildings, absolutely stop the construction of more luxury government building projects, truly standardize official entertaining, plug up loopholes in management rules, and work to reduce government overhead and build a conservation-minded government.

Fellow Deputies,

Building a solid national defense system and a powerful people's army is a strategic task in socialist modernization. We must continue to take as our guide Mao Zedong's military thinking, Deng Xiaoping's thinking on strengthening the army in the new period, and Jiang Zemin's thinking on developing national defense and strengthening the army, and strictly follow the important guidelines of Comrade Hu Jintao on strengthening the army. We must comprehensively put into practice the Scientific Outlook on Development, effectively carry out the historic mission of the army in the new stage of the new century, continue to give high priority to raising the overall ideological and political standards of the army, energetically work for progress in military reform with Chinese characteristics, and ensure a high degree of stability, centralization and unity in the army in order to provide a solid and strong guarantee for China's security, unity and modernization. We must energetically carry out the transformation from military training based on mechanized warfare to military training for warfare under conditions of greater IT application to increase the troops' ability to fight a defensive IT war. We will intensify defense-related research and efforts to produce advanced weaponry and equipment. We will carry out development and reform of the military logistics system. We will continue to run the army in accordance with the law and high standards and work to raise its level of standardization. We must improve all aspects of the People's Armed Police to make it better able to enforce the law, respond to emergencies, combat terrorism and safeguard national stability. We will expand public education in national defense and improve the system for national defense mobilization. We will encourage government agencies and the public to support the army and give preferential treatment to families of service personnel and martyrs, urge the army to support the government and respect civilians, and support the army and the people in working together to promote cultural and ethical progress. We will consolidate and develop solidarity between the army and the government and between the army and the people.

Fellow Deputies,

We will continue to unswervingly uphold the principle of "one country, two systems," under which Hong Kong people administer Hong Kong and Macao people administer Macao with a high degree of autonomy. We will strictly comply with the basic laws of the Hong Kong and Macao special administrative regions and give our full support to their chief executives and governments in administering the two regions in accordance with the law and in their efforts to promote economic development, improve the lives of their populations and strengthen harmony. We will increase exchanges and cooperation between the mainland and Hong Kong and Macao in the areas of the economy, trade, science, technology, education, culture, health and sports. Let us work together with people from all sectors of society in Hong Kong and Macao to safeguard the long-term prosperity and stability of the two regions.

We remain committed to the basic principle of "peaceful reunification and one country, two systems" and to all the policies for developing relations between the two sides of the Taiwan Straits and promoting China's peaceful reunification under the changed circumstances. We will unite with Taiwan compatriots in firm opposition to all forms of secessionist activities such as calls for Taiwan independence through legislation. We will firmly adhere to the main goal of promoting development of peaceful cross-straits relations, vigorously expand exchanges and cooperation between the two sides, promote resumption of direct links for postal, air and shipping services and trade, and make every effort with the utmost sincerity to seek peace, development and prosperity for the people on both sides. We will continue to step up dialogue and exchanges on the basis of the one-China principle with all political parties in Taiwan that advocate development of cross-straits relations. We will strive to resume dialogue an d negotiations between the two sides as soon as possible and work for greater peace and stability in cross-straits relations. We firmly believe that with the efforts of all Chinese people, including our Taiwan compatriots, complete reunification of China will definitely be realized!

Follow Deputies,

Taking both the international and domestic situations into consideration, during the last year we actively advocated the building of a harmonious world, promoted comprehensive development of our relations with other countries, and contributed to the development of all countries and the safeguarding of world peace.

We call for and promote the building of a harmonious world, which is in line with the trend of the times in the world today and reflects the common interests and aspirations of people across the globe. This embodies a firm commitment on the part of the Chinese government and people to work for world peace and progress. In order to build a harmonious world, there must be political equality and democracy, mutually beneficial economic cooperation, and cultural exchanges that promote common progress, and countries of the world must work together in friendly cooperation to address traditional and non-traditional global security threats and bring about lasting peace and common prosperity for the whole world. In the face of a complicated and fluid international situation, we need to hold high the banner of peace, development and cooperation, firmly adhere to the path of peaceful development, steadfastly pursue an independent foreign policy of peace, maintain friendly relations with other countries based on the Five Principles of Peaceful Coexistence, safeguard China's sovereignty, security and interests, ensure that China is able to take advantage of this period of important strategic opportunities, and create a favorable external environment for building a moderately prosperous society in all respects and accelerating socialist modernization.

We will vigorously develop exchanges and cooperation with other countries in the fields of the economy, trade, science, technology, culture, education and sports, increase understanding and friendship between our peoples, develop the image of China as a peaceful, democratic, culturally advanced and progressive country, safeguard the lawful rights and interests of Chinese nationals and corporations overseas, and respect and protect the lawful rights and interests of foreign nationals in China in accordance with the law.

We will work untiringly with the people of all other countries for a harmonious world with lasting peace and prosperity for all.

Fellow Deputies,

Looking ahead, we see the future holds bright prospects for our great motherland. Our mission is lofty and sacred, and our responsibilities are both arduous and glorious. Let us unite closely around the CPC Central Committee with Comrade Hu Jintao as General Secretary, hold high the great banner of Deng Xiaoping Theory and the important thought of Three Represents, fully put into practice the Scientific Outlook on Development and accelerate the building of a harmonious socialist society. Let us work together with one heart and one mind, blaze new trails, and energetically progress with reform, opening up and socialist modernization!

]]> http://www.itheone.com/article.asp?id=33 frank722@126.com(Frank) Thu,25 Dec 2008 23:00:52 +0800 http://www.itheone.com/default.asp?id=33
REPORT ON THE WORK OF THE GOVERNMENT

Delivered at the First Session of

the 11th National People's Congress

on March 5, 2008

Wen Jiabao

Premier of the State Council

Fellow Deputies,

On behalf of the State Council, I would now like to deliver to you a report on the work of the government over the past five years and on the arrangements for its work this year for your deliberation and approval and also for comments and suggestions from the members of the Chinese People's Political Consultative Conference (CPPCC).

I. Review of the Work of the Past Five Years

The past five years since the First Session of the 10th National People's Congress was a momentous period. Under the leadership of the Communist Party of China (CPC), governments at all levels and people of all the ethnic groups in China diligently followed the guiding principles set out at the 16th CPC National Congress and worked in concert and with dedication. We vigorously responded to the complex and volatile international environment, strove to overcome various difficulties hindering economic and social development, and prevailed over the sudden and severe outbreak of SARS and catastrophic natural disasters such as the recent snow and ice storms in the south that the region has rarely seen before. We made major achievements in reform, opening up and modernization, which attracted the attention of the world.

- The economy reached a new high. China's GDP in 2007 reached 24.66 trillion yuan, an increase of 65.5% over 2002 and an average annual increase of 10.6%, rising from the sixth highest one in the world to the fourth. Total government revenue reached 5.13 trillion yuan, a 171% increase over 2002. Our foreign exchange reserves exceeded 1.52 trillion U.S. dollars.

- The agricultural tax was rescinded, ending the centuries-old practice of farmers paying taxes. China's grain output rose four consecutive years to reach 501.5 million tons in 2007.

- Major progress was made in the reform of state-owned enterprises (SOEs), the financial system, fiscal and taxation systems, the system of foreign trade and economic cooperation, and the administrative system. China has entered a new stage in developing a more open economy. Total volume of imports and exports reached 2.17 trillion dollars in 2007, raising China from the sixth largest trading nation in the world to the third largest.

- Good progress was made in efforts to make China more innovative, and a number of major scientific and technological innovations with international impact were made. Manned space flights and our first moon exploration project were successfully carried out.

- Free compulsory education was made available to all rural students, marking an important milestone in the history of the development of education in China. The basic frameworks for a public health system and a system of basic medical services covering both urban and rural areas have been put in place.

- Steady improvement was made in the urban and rural system of public cultural services. Significant progress was made in reform of the cultural management system, and the development of cultural programs and cultural industries was accelerated. The Shanghai Special Olympics was successfully held. Preparations for the 2008 Olympics and Paralympics in Beijing and the 2010 World Expo in Shanghai proceeded smoothly.

- Progress was made in developing democracy and the legal system and in enhancing law-based government. Greater efforts were made to safeguard people's rights and interests and ensure social fairness and justice.

- People's living standards improved significantly. Fifty-one million urban jobs were created over the past five years. Urban per capita annual disposable income rose from 7,703 yuan in 2002 to 13,786 yuan in 2007, and rural per capita annual net income rose from 2,476 yuan to 4,140 yuan during the same period. The basic framework for a social safety net for both urban and rural areas was put in place. The number of people living in poverty was reduced every year.

All these improvements fully demonstrate that during the past five-year period great strides were made in carrying out reform and opening up and building a moderately prosperous society in all respects. During this time the productive forces and overall national strength were significantly improved, social programs were comprehensively developed, people received even greater benefits and China's international standing and influence constantly grew.

During the past five years we established and put into practice the Scientific Outlook on Development, worked hard on economic development, deepened reform and opening up, ensured the wellbeing of the people, improved their lives, and promoted social harmony. We made great efforts and accomplished a great deal.

1. Improving macroeconomic regulation to promote steady and rapid economic development.

We endeavored to make macroeconomic regulation more proactive, responsive and effective, with the focus on resolving major problems affecting economic operation. Over the past few years, we tightened controls on the supplies of land and credit, raised market access requirements, adjusted financial and monetary policies as needed, improved industrial policies and the land policy, adjusted the economic structure, shored up weak links and effectively regulated economic operation to address problems such as overheated growth in fixed asset investment, excessive supplies of money and credit, excessively large trade surplus, and weakness in agriculture, the foundation of the economy, which could cause economic development to become unstable, unbalanced and unsustainable. In response to changes in the economy, we have repeatedly made timely adjustments in the required reserve ratio and the benchmark interest rates for savings and loans in financial institutions and rescinded or reduced export tax rebates for resource products and products whose production is energy intensive or highly polluting. These macroeconomic regulatory measures produced significant results, and China's economy maintained steady and rapid development throughout the five-year period, without experiencing major fluctuations.

We adopted a series of major measures related to institutions, policies and investment to increase grain production and rural incomes as a matter of priority and strengthen agriculture as the foundation of the economy. We completely rescinded the agricultural tax, livestock tax and tax on special agricultural products throughout China, reducing the burden on farmers by an average of 133.5 billion yuan per year. In addition, we set up a subsidy scheme for agriculture, instituting direct subsidies for grain producers, subsidies for superior crop varieties, subsidies for the purchase of agricultural machinery and tools, and general subsidies for agricultural production supplies and providing incentives to major grain-producing counties and subsidies to counties and townships with serious financial difficulties. Investment in agriculture and rural areas was greatly increased. Central government allocations for agriculture, rural areas and farmers reached 1.6 trillion yuan over the past five years, including nearly 300 billion yuan that was used for developing rural infrastructure. Local governments also substantially increased their input. During the five-year period, an additional 6.667 million hectares of farmland was equipped with water-saving irrigation facilities, methane gas was made available to 16.5 million more households, 1.3 million kilometers of rural roads were built or upgraded, and safe drinking water was provided to an additional 97.48 million rural residents. A system for the prevention and control of major animal diseases was set up, and the spread of highly pathogenic avian influenza was prevented. These measures greatly encouraged farmers to grow more, gave a strong impetus to the development of a new socialist countryside and brought historic changes to rural China to the great satisfaction of hundreds of millions of rural people. Agricultural development played an important role in ensuring the overall stability and development of China's economy and society.

We formulated the Outline of the National Program for Long- and Medium-Term Scientific and Technological Development, which contains comprehensive plans for the development of science and technology in China from 2006 through 2020 and calls for the launching of a number of major projects. This will have an important and far-reaching impact on efforts to strengthen China's capacity for independent innovation and make it an innovative country. Work in basic research and research in leading-edge technologies was intensified; a number of major innovations such as high-performance computers, third generation mobile communications, and super-hybrid rice were achieved; and a number of products that are competitive and carry Chinese intellectual property rights were developed. The central government spent 340.6 billion yuan on science and technology over the past five years. China's total investment in research, experimentation and development rose from the 128.8 billion yuan of 2002 to 366.4 billion yuan in 2007, with its share in the GDP rising from 1.07% to 1.49%. Major progress was made in developing a system for technological innovation in which enterprises play a key role. The capacity of scientific and technological innovation to sustain and boost economic and social development was markedly increased.

We formulated and implemented a series of industrial policies and special plans designed to improve and upgrade the industrial structure. Development of new and high technology industries in information, biology, aerospace, new energy sources, new materials and oceanography was accelerated. Efforts to boost the equipment manufacturing industry produced significant results. Development of modern service industries such as tourism, banking and distribution was accelerated. Great progress was made in the development of infrastructure and basic industries, marked by the completion of or smooth progress on a number of major projects. The Qinghai-Tibet Railway was opened to traffic a year ahead of time; the Three Gorges Project is fully playing its designed role in flood prevention, power generation and shipping; the projects to send electricity and gas from China's western region to the eastern region are fully operational; the project to divert water from southern China to northern China is progressing smoothly; and construction has been started on a number of major projects such as the Xiluodu Hydroelectric Plant, Hongyanhe Nuclear Power Plant, Beijing-Shanghai high-speed railway, a ten million-ton capacity oil refinery and a million-ton capacity ethylene plant. Major progress has been made in the prospecting and development of the Puguang Gas Field and the Nanpu Old field. Newly added power-generating capacity over the five years totaled 350 million KW, equivalent to all the capacity added between 1950 and 2002. A total of 192,000 kilometers of highways were built, including 28,000 kilometers of expressways. A total of 6,100 kilometers of new railway lines went into operation. An additional 568 berths that can handle ships larger than 10,000 tons were completed. The number of telecommunications users was increased by 494 million. All of the above measures effectively improved the capacity of the energy, transportation and communications sectors and strengthened the basis for further economic and social development.

We gave high priority to conserving resources and protecting the environment. Obligatory targets for saving energy and reducing emissions were set in the Outline of the Eleventh Five-Year Plan for National Economic and Social Development. In the last two years, a general work plan for saving energy and reducing emissions was introduced; a system of targets for this work, a monitoring system, a system for assessing work performance and a system of accountability for reaching the targets were put in place; and a state plan to address climate change was promulgated. A large number of backward production facilities were shut down in accordance with the law. They include small thermal power plants with a total capacity of 21.57 million KW, 11,200 small coal mines, backward iron smelting facilities with a total capacity of 46.59 million tons, backward steel plants with a total capacity of 37.47 million tons and cement plants with a total capacity of 87 million tons. Ten major energy-saving projects were launched. Breakthroughs were made in carrying out desulfurizing projects for coal-fired power plants. The central government provided financial support for 691 projects to prevent and control water pollution in major river valleys. Work continued on ecological conservation projects such as those to protect natural forests and control the factors causing sandstorms in Beijing and Tianjin. During the five-year period, the area of farmland retired for forestation and other lands planted with trees amounted to 31.91 million hectares, and grazing land returned to natural grasslands totaled 34.6 million hectares. Protection of land and water resources was strengthened, with a total of 1.526 million hectares of farmland being upgraded, reclaimed or newly developed over the last five years. Thanks to the strong efforts of the whole country, encouraging progress was made in conserving energy and reducing emissions. In 2007 there was a 3.27% year-on-year drop in energy consumption per unit of GDP, and for the first time in recent years there was a reduction in both chemical oxygen demand and the total emission of sulfur dioxide, with the former down 3.14% and the latter down 4.66% from the previous year. People became more aware of the importance of conserving resources and protecting the environment and made greater efforts in this area. We followed a master strategy for regional development. Continued progress was made in the large-scale development of the western region, with central government financial support for key projects totaling over 280 billion yuan over the last five years. Substantial progress was made in infrastructure development and ecological and environmental conservation projects, and development of key areas and industries with local advantages was accelerated. We formulated and implemented the strategy of rejuvenating the old industrial bases such as northeast China, increased efforts to develop large grain production bases, made breakthroughs in reforming, reorganizing and upgrading SOEs, made major progress in using domestically-produced key equipment in place of imports, and made smooth headway in the trial to transform the economies of cities dependent on resource exploitation. The old industrial bases are now showing new signs of vitality. We formulated and implemented policies and measures to promote development in the central region and made accelerated progress in developing modern agriculture in major grain-producing areas. Major energy and raw material industries, the equipment manufacturing industry and the overall transportation system were further developed. The eastern region continued to lead in development, with significant gains in economic strength and overall improvement. The process of developing and opening up the special economic zones, the Shanghai Pudong New Area and the Tianjin Binhai New Area was accelerated. These major measures promoted a better distribution and more balanced development of regional economies.

2. Working hard on reform and opening up, concentrating on institutional development and innovation.

Rural reforms were deepened across the board. Major progress was made in the current stage of the overall rural reform, mainly consisting of reform of town and township government bodies, reform of the rural compulsory education system and reform of the fiscal systems at the county and township levels. Government control of grain purchasing was lifted, and the purchase and sale of grain are now market based. Successful trials were carried out in reforming the system of collective forest rights. Smooth progress was made in the reform of supply and marketing cooperatives and state-owned farms.

Continued progress was made in improving the basic economic system. We consolidated and developed the public sector of the economy, made progress in reform of the management system for state-owned assets and adjustment of the distribution and structure of the state sector of the economy, and set up and improved a system for investors of state assets. We accelerated the reform to institute a stockholding system in SOEs, and a number of large companies and conglomerates with the ability to compete internationally were formed. Reform of the postal service system proceeded smoothly, and encouraging progress was made in reforming the power, telecommunications, civil aviation and railway industries. The total value of assets of Chinese SOEs in 2006 grew by 60.98% compared to 2002, their total profits increased by 223%, and their tax contributions grew by 105%. The vitality of the state sector and its impact and influence on the economy as a whole were greatly enhanced. We formulated and implemented a series of policies and measures to foster a legal framework and market environment conducive to fair competition, and encouraged, supported and guided the development of the nonpublic sector, which includes individual-proprietorship businesses and private enterprises. As a result, the nonpublic sector of the economy is playing an increasingly bigger role in stimulating economic growth, creating jobs, increasing tax revenue, and invigorating the market.

We vigorously promoted reform of the banking, fiscal and taxation systems. We resolutely carried out reform addressing the poor performance and greater financial risks of state-owned commercial banks. The Industrial and Commercial Bank of China, the Bank of China, the China Construction Bank and the Bank of Communications were turned into stockholding companies and listed on stock markets. This brought about significant improvement in the quality of their assets and profitability as well as major changes in the banking industry. We resolutely carried out reform of the shareholder structure in listed companies and resolved this longstanding institutional problem that hindered the development of the securities market. Key state-owned insurance firms were reorganized and went public, promoting rapid development of the insurance industry. Substantive progress was made in making interest rates more market-based. We reformed the RMB exchange rate regime to gradually make the exchange rate more flexible. Comprehensive progress was made in reform of the system for managing foreign exchange. Reform of the fiscal and taxation systems was deepened, and the system of transfer payments and the system of public finance were steadily improved. The central government turned over 4.25 trillion yuan in transfer payments to local governments from 2003 to 2007, with 87% of it allocated to the central and western regions. A budget system for managing state capital was introduced in some enterprises on a trial basis. We launched and expanded trials to reform the value-added tax. The income tax systems for domestic and overseas-funded enterprises were unified. A unified state civil servant salary system based on both position and rank was set up, and the system of subsidies and allowances was basically standardized. Further progress was made in reform of the investment system and pricing system.

Work to develop the market system was intensified. Market forces played an increasingly important role in trade in the factors of production. The modernization of commodity distribution was accelerated. Significant achievements were made in the effort to rectify order in the markets for land and mineral resources and improve the quality of products and the safety of food and drugs. Protection of intellectual property rights was strengthened, and we severely cracked down on violations of the law such as the production and sale of counterfeit goods, pyramid schemes, commercial fraud, piracy and infringement on others' rights.

We continued to open China wider to the outside world. We honored all the commitments we made when we entered the World Trade organization and made all the required adjustments for the transition period. We deepened reform of the externally oriented economic system to facilitate trade and investment. We lifted controls over access to foreign trade, greatly lowered tariffs, rescinded non-tariff measures such as import quotas and permits, and opened banking, commerce, telecommunications and other service sectors wider. There was gradual improvement in the mix of imports and exports. There was further improvement in the utilization of foreign capital. The "go global" strategy was resolutely implemented and significant results were obtained in mutually beneficial economic cooperation with other countries.

3. Strengthening all aspects of social development, ensuring the wellbeing of the people and improving their lives.

We steadfastly carried out overall planning for economic and social development, accelerated the development and reform of social programs in education, health, culture and sports and worked hard to resolve problems affecting the vital interests of the people.

Education. Public expenditures on education in China reached 2.43 trillion yuan over the five-year period, a 126% increase compared to the previous five-year period. Funding for rural compulsory education is now fully provided by the government budget. All the 150 million students receiving compulsory education in rural areas are exempt from paying tuition and miscellaneous fees and are supplied with free textbooks, and living allowances are provided to the 7.8 million students from poor families who stay in school dormitories. The plan to make nine-year compulsory education basically universal and to basically eliminate illiteracy among young and middle-aged adults in the western region was implemented on schedule. The state allocated special funds to support the renovation of dilapidated buildings at more than 22,000 rural primary and secondary schools and the building of more than 7,000 schools with student dormitory facilities. Distance education now covers 360,000 rural primary and middle schools, making quality education available to more rural students. Greater efforts were made to develop vocational education, with the student population reaching 20 million at secondary vocational schools and 8.61 million at vocational colleges in 2007. A total of 11.44 million students were enrolled in undergraduate and graduate programs in regular institutions of higher learning. More effort was put into developing key disciplines in institutions of higher learning. A system of government scholarships and financial aid to students in regular undergraduate institutions, vocational colleges and secondary vocational schools was instituted and improved, and its funding from the central government budget was increased from 2.05 billion yuan in 2006 to 9.8 billion yuan in 2007. This enabled over 20% of the students in institutions of higher learning and more than 90% of the students in secondary vocational schools to benefit from financial aid and allowed schools to greatly raise the amount of aid offered. An experiment to provide free education to education students at normal universities directly under the Ministry of Education was launched in 2007. Major progress was made in providing equitable education opportunities for all.

The strategy of reinvigorating China through development of human resources was extensively applied. Great efforts were made to train Chinese personnel, bring in needed personnel from other countries and make wise use of skilled personnel of all types, thus strengthening the ranks of high-caliber, highly skilled personnel in China.

Health. Total government expenditures on medical and health care in China over the five-year period reached 629.4 billion yuan, a 127% increase compared to the previous five-year period. The funding was mainly used to develop the public health service system, the medical service system and the medical security system, and basically complete the formation of the disease prevention and control system and emergency medical response system with a fairly comprehensive range of functions, covering both urban and rural areas. The number of diseases covered by the state plan for immunization and disease prevention was increased from 7 to 15, and AIDS, tuberculosis, schistosomiasis and other major communicable diseases are now treated free of charge. The state allocated funds to renovate or build 18,800 town and township health clinics, 786 county hospitals, 285 county traditional Chinese medicine hospitals and 534 county health centers for women and children, and equip 11,700 town and township health clinics with medical equipment, significantly improving conditions for providing medical and health care services in the countryside. More than 24,000 community health clinics were set up in China, further improving the new system of medical and health care services in urban areas. Further progress was made in carrying out population and family planning programs, and the birthrate remained stable at a low level. People's health continued to improve, infant and maternal mortality rates dropped significantly, and average life expectancy reached 73 years in 2005. These are momentous achievements for China, a developing country with a population of 1.3 billion.

Employment. The government continued to follow and improve the policy that strongly promotes employment and to adopt fiscal, taxation and financial measures to increase employment. Expenditures for employment programs from the central government budget in the form of subsidies totaled 66.6 billion yuan over the five-year period. Urban and rural systems for providing public employment services were further strengthened. Efforts were intensified to increase employment and reemployment in a well-planned way, and training in vocational skills was comprehensively strengthened. As a result, more than ten million urban people got jobs and eight million rural workers found work in nonagricultural sectors per year on average. The problem of finding other employment opportunities for workers laid off from SOEs was basically solved, and the work of incorporating basic cost of living allowances for laid-off workers into the unemployment insurance system was completed. The employment situation remained basically stable despite a large increase in the total workforce and great pressure on employment.

Social safety net. Governments at all levels spent a total of 1.95 trillion yuan on building up the social safety net over the five-year period, a 141% increase compared to the previous five-year period. Continued improvement was made in the basic old-age insurance system for urban workers, with the number of participating workers exceeding 200 million in 2007, an increase of more than 54 million compared to 2002. Trials to fully fund personal accounts for basic old-age insurance were expanded to 11 province-level administrative units. Basic pensions for enterprise retirees were raised three years in a row beginning in 2005. A total of 329.5 billion yuan was allocated for old-age insurance programs from the central government budget in the form of subsidies over the last five years. The number of urban workers participating in basic medical insurance reached 180 million in 2007, nearly twice the number in 2002. The trial of basic medical insurance for urban residents was launched in 88 cities. Continued improvement was made in the new system of rural cooperative medical care, which now covers 86% of all counties and 730 million rural residents in China. Funds to support the national social safety net totaled 414 billion yuan, an increase of 289.8 billion yuan over 2002. Establishment of the urban and rural emergency aid system was basically completed. The system of basic cost of living allowances for urban residents was improved, with gradually rising standards and allowances. A system of basic cost of living allowances was established in all rural areas of China in 2007, covering 34.519 million rural residents. The systems provide a fundamental institution to assist poor people in urban and rural areas to meet basic living expenses. Further progress was made in developing social welfare, providing special assistance to entitled groups and developing charity programs and programs to help people with physical and mental disabilities. Efforts to combat disasters and provide disaster relief were greatly strengthened, with total expenditures from the central government budget reaching 55.1 billion yuan for the five-year period. This helped restore normal working and living conditions for disaster victims.

Culture and sports. Government expenditures for culture and sports programs totaled 310.4 billion yuan for the five-year period, a 130% increase over the previous five-year period. The basic elements of a public cultural services system at the county and township levels were put in place, and basically every county now has a library and cultural center. Substantive progress was made in setting up local cultural facilities such as the projects to set up a national shared databank of cultural information and resources and extend radio and television coverage to all villages. Philosophy, the social sciences, the press and publishing, radio, film and television, literature and art thrived. Protection of cultural relics and intangible cultural heritage was strengthened. Cultural exchanges with other countries were intensified. Development of public sports facilities in urban and rural areas was accelerated, mass sports activities developed vigorously, and Chinese athletes did well in international competitions.

Personal income and consumer spending. Vigorous efforts were made to increase the incomes of urban and rural residents, especially low-income persons. The minimum wage was increased. The problem of arrears in the wages of rural migrant workers in urban areas was basically resolved. The standards for financial aid to key entitled groups were increased four times, and plans were implemented to resolve the practical problems of demobilized military personnel. The tax on interest earnings from individual savings deposits was lowered and the earnings threshold for the individual income tax was raised. There was a general increase in family assets. Upgrading of consumer spending proceeded at a faster pace, and there was a great increase in the number of family-owned cars and rapid spread in the use of cell phones, computers and Internet services. The number of people going on vacations increased several fold. There was further improvement in housing conditions, encouraging progress was made in improving conditions in shantytowns, and much more public services were made available to urban and rural residents.

Public administration. Work in this area was concentrated on protecting the legitimate rights and interests of the people and resolving social tensions. We formulated and implemented policies and measures for protecting the legitimate rights and interests of rural migrant workers in urban areas. We devoted a great deal of effort to resolving infringements on the interests of the public related to land expropriation and requisition, housing demolition, enterprises converting to a stockholding system and environmental protection. Improvement was made in the handling of complaints made by individuals through letters and visits. We paid very close attention to improving workplace safety and the safety oversight system, instituted a responsibility system for workplace safety and improved related legislation. The public security system for crime prevention and control was further strengthened, and overall crime control work was intensified. We combated criminal activities in accordance with the law, effectively protected China's security and maintained law and order.

Taking advantage of the rapid development of the economy and significant improvement of public finance, we worked hard to resolve some longstanding problems. We sold off nonperforming assets of state-owned commercial banks, made alternate arrangements for nonperforming loans and long-term non-paying accounts of rural credit cooperatives, eased the long-term debts of SOEs, gradually eased policy-related losses of state-owned grain enterprises, cleared up overdue tax rebates for exports, and improved the policy for paying compensation for requisition of land for large and medium-sized reservoirs and assisting people displaced by reservoir projects. Resolution of these problems played an important role in promoting economic and social development.

We made major progress over the past five years in enhancing democracy and the legal system, building national defense and the military, doing our work related to Hong Kong, Macao and Taiwan, and conducting diplomacy.

We made steady progress in improving socialist democracy and the socialist legal system. Governments at all levels conscientiously accepted the oversight of the people's congress and its standing committee at the corresponding level; voluntarily accepted the democratic oversight by CPPCC committees; carefully listened to the views of the democratic parties, federations of industry and commerce, persons without party affiliation and people's organizations; solicited suggestions of experts, scholars and the general public in a variety of forms; and accepted the oversight of the media and all sectors of society. Governments at all levels made public announcements and held public hearings before making major decisions. We stepped up efforts to develop autonomy in urban community and village administrative bodies and further improved the democratic system at the local level. During the past five years the State Council submitted 39 bills to the Standing Committee of the National People's Congress and formulated or revised 137 administrative regulations. We explored ways to set up mechanisms and systems for orderly public participation in government legislation and published 15 draft laws and drafts of administrative regulations to solicit comments from the public. We carried out a thorough review of current administrative rules and regulations. We adhered to the Law on Regional Ethnic Autonomy and carried forward the programs to promote unity and progress among ethnic groups. The policy on freedom of religious belief was comprehensively implemented, and the administration of religious affairs was put on a more solid legal footing and further standardized. We comprehensively implemented the policy on matters related to overseas Chinese nationals and protected the legitimate rights and interests of overseas Chinese nationals, returned overseas Chinese nationals and their relatives.

We stepped up all efforts to modernize the military. We vigorously pressed ahead with the revolution in military affairs with Chinese characteristics. We adjusted and reformed the military's structure and staffing and its related policies and systems and smoothly cut its size by 200,000 personnel. We made historic achievements in strengthening national defense and the military. The People's Liberation Army and the People's Armed Police Force made major contributions to safeguarding China's sovereignty, security and territorial integrity and to promoting social harmony and stability.

We adhered to the principle of "one country, two systems" and acted in strict accordance with the Basic Law of the Hong Kong Special Administrative Region and the Basic Law of the Macao Special Administrative Region. We implemented the Closer Economic Partnership Arrangement between the mainland and the regions of Hong Kong and Macao. Both regions remained thriving and stable.

We resolutely opposed and foiled secessionist activities aimed at Taiwan independence, thereby protecting China's sovereignty and territorial integrity and safeguarding peace in the Taiwan Straits. We carried out a number of measures to make it easier for people to visit between the two sides and for economic, scientific, educational, cultural and sports exchanges to take place in order to promote the peaceful and steady development of cross-Straits relations.

We actively promoted exchange and cooperation with other countries, made major progress in conducting diplomacy on all fronts, and resolutely safeguarded and developed China's interests. China stepped up dialogue with the major countries and increased trust and expanded cooperation with them. China-U.S. relations developed steadily, the China-Russia partnership of strategic coordination reached a new height, China-Europe cooperation in all areas went from strength to strength, and China-Japan relations improved. Good-neighborly relations with surrounding countries were further strengthened, further achievements were made in regional cooperation, and China's solidarity and cooperation with other developing countries entered a new stage. We successfully carried out a series of major multilateral diplomatic activities. We appropriately responded to new challenges in the international arena, actively and responsibly participated in efforts to resolve global issues, and played an important and constructive role in the resolution of issues concerning international and regional hotspots.

We paid close attention to self-reform and self-improvement of the government during the five-year period. This government took scientific and democratic policy-making, law-based administration and better administrative oversight as the three basic principles for its work. We formulated the Program for Advancing All Aspects of Government Administration in Accordance with the Law and promoted change in the way the government functions and innovations in management, thereby improving public administration and public services. We diligently carried out the Administrative Permit Law and promoted reform of the system of administrative examination and approval. As a result, departments of the State Council eliminated or streamlined a total of 692 items requiring examination and approval. We promoted greater openness in government affairs, improved the system for releasing information, and increased the application of e-government. Establishment of a national emergency response management system was basically completed. Oversight work such as supervision and auditing was quite effective. Further improvement was made in education and training of civil servants and in developing a legislative framework for civil-service administration. We worked unceasingly to combat corruption and improve the conduct of the government, made good progress in combating bribery in business, uncovered a number of violations of laws and regulations and cases of neglect and dereliction of duty, and punished corrupt persons.

We learned many valuable lessons in our experiences over the last five years. The main ones are as follows.

First, we must continue to liberate our thinking. Liberating our thinking and following a realistic and pragmatic approach is the Party's ideological line. We must proceed from reality in everything we do, eliminate superstition, break the shackles of outdated ideas, respect the people's pioneering spirit, boldly explore new ways, take concrete action, be creative, and keep up with the times to ensure that the cause of socialist modernization retains its great vitality.

Second, we must steadfastly apply the Scientific Outlook on Development. This is a major strategic concept for developing socialism with Chinese characteristics and an important guiding principle for China's economic and social development. We must continue to take development as the top priority, concentrate on changing the way the economy develops, and adjust the economic structure to improve the quality and efficiency of economic growth. We must always put people first, attach great importance to overall planning, and promote comprehensive, balanced and sustainable development. Only by thoroughly applying the Scientific Outlook on Development can we achieve sound and rapid economic and social development and promote social harmony.

Third, we must adhere to the reform and opening up policy. Reform and opening up is a major and crucial choice that is shaping the destiny of contemporary China. We need to unswervingly promote reform in economic and political institutions, develop socialist democracy, improve the socialist market economy, liberate and develop the productive forces, promote social fairness and justice, and achieve all-round personal development. Opening up is also a kind of reform, and a nation cannot become strong if it is not open and inclusive. We must continue to pursue reform and opening up throughout the course of socialist modernization and never deviate from this policy.

Fourth, we must continue to exercise effective macroeconomic regulation. Both macroeconomic regulation and market forces are components of the socialist market economy. We need to make better use of the basic role of market forces in allocating resources, revitalize enterprises and improve their competitive edge. At the same time, we need to improve macroeconomic regulation, continue to carry out macroeconomic regulation mainly through economic and legal means, and get the complete range of government policies to fully play their role. We must continue to deal with each situation on its own merits, encourage growth in some sectors and discourage it in others as the situation requires, and refrain from taking a uniform approach to different situations or putting on the brakes without good reason. We must continue to draw lessons from our experiences, make policy adjustments as needed and be result-oriented. We must integrate the use of market forces with macroeconomic regulation in order to ensure that the economy remains vigorous, performs well, and develops in a sustainable, healthy and balanced way.

Fifth, we must continue to run the government for the people. All the power of the government comes from the people, and running the government for them is a lofty mission of governments at all levels. We must never forget that serving the people wholeheartedly is our purpose, and make sure that the aim and outcome of the work of the government is to fulfill, safeguard and develop the fundamental interests of the overwhelming majority of people. We need to attach greater importance to ensuring the well-being of the people and improving their lives, in particular showing concern for urban and rural residents with low incomes and helping them make ends meet in their daily lives, in order to ensure that all of the people share in the fruits of reform and development. We must always keep in mind that everything belongs to the people, do everything for their benefit, rely on them in everything we do and attribute all our successes to their efforts. Only by doing so can we enjoy the broadest and most reliable support from the people and draw from them the strength for ensuring success in all our endeavors.

Sixth, we must continue to run the government in accordance with the law. Abiding by the Constitution and laws is a fundamental principle for all the work of the government. We need to exercise our power and perform our functions and responsibilities within the jurisdiction stipulated by law and in accordance with legal procedures, improve government legislative work, standardize administrative law enforcement, improve administrative oversight, develop law-based government and enhance our ability to carry out administrative functions in accordance with the law. We must ensure that government administration fully complies with the law, that power comes with responsibility, that there is proper oversight on the exercise of power, that reparation is paid for infringement of rights, that any violation of the law is prosecuted, and that power is exercised in a transparent manner. This is the only way to ensure that the power entrusted to us by the people is always exercised in their interests.

We are also clearly aware that there are still many problems affecting China's economic and social development and the work of the government, and that changes in the domestic and international environment present many new challenges and risks.

- There are still some prominent issues and deep-rooted problems affecting economic performance. China has experienced overheated growth in fixed asset investment, excessive supplies of money and credit, and imbalance in its international payments in recent years. Longstanding structural problems and the extensive pattern of growth remain serious problems. There is a lack of balance between investment and consumption, with the investment rate still running too high. Development of primary, secondary and tertiary industries is not in balance, with too much investment in primary industry, particularly heavy industry, but too little investment in the service industry. China's capacity for independent innovation is still weak and the price paid for economic growth in terms of resource consumption and environmental pressure is too great. Agriculture, the foundation of the economy, remains weak. The difficulty of maintaining steady agricultural development and keeping the incomes of farmers increasing has grown, and the growing development gap between urban and rural areas and between regions has not been checked. In particular, the institutional factors hindering economic development remain serious, making institutional reform a daunting task.

- More work needs to be done to resolve problems affecting the vital interests of the people. The current price hikes and increasing inflationary pressures are the biggest concern of the people. Last year's consumer price index (CPI) rose by 4.8% year-on-year, mainly due to large increases in the cost of food and housing. There are a variety of factors behind the price increases. Though the domestic prices of farm products have remained low for many years and some of the recent price increases were therefore overdue and somewhat reasonable, price increases nevertheless have a great impact on people's lives, especially on the lives of the low-income sector of the population. The prices of primary commodities on the international market have risen considerably in recent years, which directly puts upward pressure on domestic prices. Because factors driving prices up are still at work, upward pressure on prices will remain great this year. In addition, prices of the means of production have continued to rise and real estate prices have risen steeply, making the task of holding down inflation difficult. There are still quite a few problems in employment, the social safety net, education, medical and health care, income distribution, housing, product quality and safety, workplace safety and public security, and we need to work harder to resolve them.

- Both uncertainties in the international economic environment and potential risks have increased. As economic globalization proceeds, the Chinese economy becomes increasingly tied to the world economy. The current imbalance in the global economy is only getting worse and global economic growth is slowing, making international competition even fiercer. The impact of the U.S. sub-prime mortgage crisis is expanding, the value of the dollar is continuing to fall, and there is greater risk in international financial markets. Grain prices are rising and prices for petroleum and other primary products remain high in the international market. Trade protectionism has gotten worse, and trade frictions have increased. The effect of certain political factors in the international arena on world economic trends cannot be overlooked. All this could adversely affect China's economic development. China is now in a critical period in its reform and development, and we must be fully prepared for changes in the international environment and become better able to defuse risks.

- The government's self-improvement efforts and administration need to be strengthened. We are keenly aware that the work and accomplishments of the government still fall somewhat short of what circumstances require and the people expect. The functions of government have not been completely transformed, and public administration and public services are still weak. Some government departments have overlapping responsibilities, their powers and responsibilities are not well matched, some try to shirk their responsibilities, and their performance is poor. Some government employees have an inadequate sense of responsibility toward the public and are not competent enough. Oversight mechanisms and checks on government authority are not strong enough. The problems of formalism and bureaucratic behavior are fairly common, and fraud, extravagance and waste, and corruption are quite serious.

We must remain clear-headed at all times, be more mindful of potential danger, be highly responsible to the country and the people, maintain a high sense of mission and urgency, work even more industriously, and successfully carry out all of the government's work.

Fellow Deputies,

The achievements of the past five years have not come easily. They were built on a foundation laid through many years of reform and opening up, and are attributable to the correct leadership of the Party Central Committee with Comrade Hu Jintao as General Secretary, which has effectively managed the overall situation. Credit also goes to the hard work and concerted effort of the people of all the ethnic groups in China, and to the support and assistance of overseas Chinese nationals and foreign friends. Displaying indomitable determination, courage and will, the Chinese people have overcome untold difficulties and challenges and accomplished major tasks. On behalf of the State Council, I would like to sincerely thank the people of all the ethnic groups, the democratic parties, the people's organizations and people from all sectors of society. I would like to express my sincere thanks to our compatriots in Hong Kong and Macao special administrative regions and in Taiwan, as well as overseas Chinese nationals. I would like to thank governments of other countries, international organizations and foreign friends of China around the world for their understanding of and support for China's modernization.

II. Major Tasks for 2008

This is the first year for comprehensively implementing the guiding principles set out at the Seventeenth CPC National Congress. We face arduous tasks in reform and development, and it is very important for us to successfully carry out the work of the government.

The basic guidelines and major tasks for the government's work are as follows: we must hold high the great banner of socialism with Chinese characteristics; take Deng Xiaoping Theory and the important thought of Three Represents as our guide; fully apply the Scientific Outlook on Development; attach greater importance to improving macroeconomic regulation, promoting reform, opening up and independent innovation, adjusting the economic structure and improving the quality of development, conserving resources and protecting the environment, and improving people's lives and promoting social harmony; promote socialist economic, political, cultural and social development; and accelerate the process of building a moderately prosperous society in all respects.

We have set the following targets for economic and social development in 2008: on the basis of improving the economic structure, productivity, energy efficiency and environmental protection, the GDP should grow by about 8%, and the rise in the CPI should be held at around 4.8%. Ten million jobs should be created in urban areas, and the rate of registered urban unemployment should be kept at around 4.5%. Some improvement should be made in the balance of payments.

It is important to note here that in setting the GDP growth target at around 8% for 2008, we have taken into account a variety of domestic and international factors. Our goal is to maintain both steady and fast economic growth, and guide all sectors of society to concentrate on changing the pattern of development, deepening reform and accelerating social development. The different regions should not just seek faster growth or compete with each other to have the highest growth rate. We should promote both sound and fast economic and social development. The major considerations in setting the target for keeping the CPI this year at around 4.8% are as follows: last year's price increases are still exerting a fairly strong influence and quite a few factors are creating inflationary pressure, making it difficult to bring price increases under control. At the same time, we have to take into consideration the ability of individuals, enterprises and all sectors of society to tolerate price increases and try our best to avoid sharp price increases. To attain the targets and accomplish the tasks for this year's economic and social development, we must adhere to the following principles: we must make progress while maintaining stability and aim for fast yet steady economic development. We must give priority to the quality rather than speed of development and accelerate improvement in the pattern of economic development. We must pursue reform and opening up and attach great importance to promoting institutional improvements and innovations. We must put people first and accelerate social development, with the focus on improving people's lives. The primary task for macroeconomic regulation this year is to prevent fast economic growth from becoming overheated growth and keep structural price increases from turning into significant inflation. There are quite a few uncertainties in the current economic situation at home and abroad, so we need to keep close track of new developments and problems, properly size up situations and take prompt and flexible measures to respond to them while keeping our feet firmly rooted in reality. We need to maintain the appropriate pace, focus and intensity of macroeconomic regulation to sustain steady and fast economic development and avoid drastic fluctuations in the economy.

We need to concentrate on the following nine tasks this year:

1. Improving macroeconomic regulation to maintain fast yet steady economic development.

In view of the current domestic and international economic situation we need to follow a prudent fiscal policy and a tight monetary policy this year to accomplish the tasks for macroeconomic regulation. Continuing to follow a prudent fiscal policy means that we must ensure the continuity and consistency of fiscal policy, get public finance to fully play its important role in promoting structural adjustment and balanced development, and increase expenditures to shore up weak links, improve people's lives and deepen reform. In addition, we need to further reduce the budget deficit and the volume of long-term development treasury bonds. The deficit for the central government budget this year is set at 180 billion yuan, 65 billion yuan less than last year. We plan to issue 30 billion yuan of treasury bonds for investment, 20 billion yuan less than last year, and increase allocations from the central government budget for general development, bringing total central government investment in development projects up to 152.1 billion yuan. We will continue to adjust the structure of government spending and investment by greatly increasing spending on agriculture, rural areas and farmers, the social safety net, medical and health care, education, culture, energy conservation and emissions reduction, and construction of low-rent housing. We will work hard to increase revenue and reduce expenditures, tighten tax collection and management in accordance with the law, improve management of non-tax revenue, and control regular expenditures. We need to reform the management of government investment to improve the performance of investments.

Government revenue surplus must be used wisely. Total government revenue exceeded the targeted figure by more than 723.9 billion yuan last year, including 416.8 billion yuan in the central government budget. Surplus revenue should be concentrated on solving problems that have a direct bearing on people's lives, making institutional and structural improvements and strengthening weak links. Spending on the following items will be increased in accordance with the law: rebates on the consumption tax and value-added tax and general transfer payments to local governments; agriculture, forestry, water conservancy projects, education, culture, science, the social safety net, medical and health care, legal aid, construction of low-rent housing, energy conservation, emissions reduction and environmental protection; and resolution of debts for rural compulsory education, debts of state-owned grain enterprises and other long-overdue payments. In addition, the budget deficit should be reduced by 45 billion yuan and the central budget stability and regulation fund should be increased by 103.2 billion yuan.

The decision to follow a tight monetary policy was based on the following considerations: the strong possibility of a resurgence in fixed asset investment, continued excessive supplies of money and credit, the still-unsolved problem of excess liquidity, and considerable inflationary pressure. For these reasons, we must improve financial regulation to control the excessively rapid growth in the supplies of money and credit.

First, we will step up efforts to curb excess liquidity by using a combination of open market operations and the required deposit reserve ratio. We will make appropriate use of the lever of interest rates. We will improve the RMB exchange rate regime to make the exchange rate more flexible.

Second, with the focus on improving the credit structure, we will strictly follow requirements for granting loans and guarantee some loans while restricting others. We will limit the increase in long- and medium-term loans, particularly to enterprises that are energy intensive or highly polluting and enterprises in industries with excess production capacity. We will make innovations and improvements in bank credit services, improve the systems of guarantees and interest discounts, and increase credit support for agriculture, rural areas, farmers, service industries, small and medium-sized enterprises, independent innovation, energy conservation, environmental protection, and balancing regional development.

Third, we will deepen reform of the foreign exchange administration system. We will improve the system for foreign exchange settlements and sales and payments in foreign exchange, tighten oversight on the flow of capital across borders, and move steadily toward making the RMB convertible for capital accounts. We will develop new channels and means for using foreign exchange reserves. Comprehensive measures will be adopted to improve the balance of payments.

One major task for macroeconomic regulation this year is to prevent the overall price level from rising rapidly. To fulfill this task, we must take powerful measures to increase effective supply while curbing excessive demand.

First, we must expand production, especially the production of the basic necessities of life such as grain, vegetable oil and meat as well as other commodities in short supply. We must also earnestly implement policies and measures designed to support production and ensure coordination in the production, transport and sale of products.

Second, we must strictly control industrial use of grain and grain exports. The reckless expansion of the capacity for intensive corn processing and construction work on such projects that violate regulations must be stopped.

Third, we need to speed up improvement of the reserve system, improve methods for adjusting reserves and import and export volumes, and appropriately increase imports of major consumer goods that are in short supply on the domestic market.

Fourth, we need to ensure that the timing and the size of government adjustments to prices are appropriate, and necessary adjustment of prices of resource products and public services should also be strictly controlled to prevent waves of price increases.

Fifth, we need to improve the early-warning system to monitor supply and demand and price changes of principal agricultural products and primary products, and put in place a plan for responding to drastic changes in market supply and demand and prices.

Sixth, we must strengthen market and price oversight and pay close attention to the oversight and inspection of prices and charges related to education, medical care, drugs, agricultural supplies, agriculture, rural areas and farmers. Illegal activities such as colluding or hoarding to drive up prices will be punished in accordance with the law.

Seventh, we need to promptly improve and implement measures to aid the low-income sector of the population. In particular, we need to increase subsidies to poor people and students from poor families to ensure that their basic living standards do not drop because of price increases.

Eighth, we must work to make sure that the prices of the means of production, particularly agricultural supplies, do not rise rapidly.

Ninth, we will continue to implement the system of provincial governors assuming responsibility for the "rice bag" (grain supply) program and city mayors for the "vegetable basket" (non-staple food supply) program.

Governments at all levels must give high priority to keeping prices stable because price stability has a direct bearing on the quality of people's lives. The country currently has an adequate stock of grain, and the supply of major manufactured consumer goods exceeds demand. We can ensure adequate supply in the market and basic price stability as long as governments at all levels work to improve their leadership, diligently implement all policies and measures, and mount a concerted effort from the highest to the lowest level. The recent disaster resulting from snow and ice storms caused significant losses to China's economy and made life very difficult for disaster victims. We will continue the work of repairing the damage and minimizing losses from the disaster. Affected infrastructure will be promptly repaired, with the focus on restoring power grids. Agricultural production will be resumed as soon as possible. We will closely coordinate supplies of coal, electricity, petroleum and transportation to help disaster victims get back on their feet. In addition, we will learn from this large-scale natural disaster. We must accelerate development of infrastructure, including electricity, transportation and communications, to improve its capacity to resist disasters and maintain normal operations. We must improve the systems and mechanisms for responding to disasters to increase our ability to prevent and handle emergencies. We must step up research to better understand the features and patterns of natural disasters under modern conditions and improve our ability to prevent and mitigate them.

2. Strengthening agriculture as the foundation of the economy, promoting development of agriculture and increasing farmer incomes.

We will do everything possible to ensure a good harvest this year and work to increase farmer incomes and build a new socialist countryside. We will concentrate on the following three areas:

First, we will vigorously develop grain production and ensure the supply of agricultural products. Grain security has an overall bearing on economic and social development and affects the vital interests of the people, so we must always pay close attention to grain production. We must effectively keep the area sown to grain crops stable and increase the yield per unit area. We will increase support for major grain-producing areas and grain farmers, carry out the grain strategy project and speed up efforts to establish core grain-producing areas to enhance the overall grain production capacity and become more able to ensure adequate supplies. While working to increase agricultural output, we also need to improve the structure of grain varieties grown and promote a constant increase in the production of important agricultural products. We will conscientiously implement policies and measures to boost pig production, dairy farming and oilseed production. We will energetically develop animal husbandry and aquaculture and support and promote their large-scale development as well as healthy farming practices. We will promote standardization of agricultural production to improve the quality and safety of agricultural products.

Second, we will intensify development of the agricultural infrastructure. We will speed up efforts to reinforce large and medium-sized reservoirs and dilapidated key small reservoirs. We will improve irrigated areas, build small water conservancy facilities and work hard to develop water-efficient irrigation. We will increase efforts to develop, improve and reclaim land, upgrade low- and medium-yield farmland, improve the productivity of farmland and develop farm plots that meet high standards. We will step up rural infrastructure development in drinking water supplies, roads, power grids, telecommunications and cultural facilities, vigorously develop rural public transportation systems and improve the rural living environment. We will provide safe drinking water for another 32 million rural residents and support the building of a number of large and medium-sized methane facilities to serve an additional five million rural families.

Third, we will develop more channels to increase rural incomes. We will accelerate the development of high-yield, high-quality, high-efficiency, eco-friendly and safe agriculture and support the development of industrialized agricultural operations and pacesetting enterprises. We will increase efforts to build a modern marketing and retail distribution network for rural areas, strengthen and upgrade rural secondary and tertiary industries, develop township and village enterprises and strengthen county economies. We will step up vocational education and technical training in rural areas to make it easier for rural residents to find nonagricultural employment, and develop the labor economy. We will intensify poverty alleviation efforts through development and continue to reduce the number of poor people.

The major measures we are going to take are as follows:

First, we will greatly increase funding. This year's increases in budgetary support for agriculture, rural areas and farmers, state fixed asset investment in the countryside and the proportion of government land transfer income used for rural development will all be considerably higher than last year's increases. We will adjust the way tax revenues from the use of farmland for nonagricultural purposes are used and reform methods for using urban construction and maintenance tax receipts to increase funding for rural development. Allocations from this year's central government budget related to agriculture, rural areas and farmers total 562.5 billion yuan, a year-on-year increase of 130.7 billion yuan.

Second, we will strengthen agricultural support policies. We will increase direct subsidies for grain producers and general direct subsidies for purchasing agricultural supplies. We will expand both the size and scope of subsidies for using superior seed varieties. We will subsidize the purchase of more kinds of agricultural machinery and tools and raise such subsidies. Starting this year, eligibility for these subsidies will be expanded to all agricultural counties. We will raise the minimum grain purchase prices based on actual conditions.

Third, we will adhere to the strictest possible system for protecting farmland, and in particular we will increase protection of basic farmland. We will carefully examine and adjust the amounts and standards for land use in all types of plans in accordance with the master plan for land use, strictly follow the system for controlling land use, rigorously manage rural land used for collective and private construction projects in accordance with the law, and resolutely put a stop to illegal appropriation of arable land and forested areas.

Fourth, we will improve the system for spreading agricultural science and technology and providing agricultural technical services. We will work harder to make innovations in agricultural science and technology and apply advances in agricultural science and technology, and improve the diverse array of mainly nonprofit agricultural technical services. We will accelerate agricultural mechanization. We will improve the systems for superior seed varieties, information, and the quality and safety of agricultural products, and for preventing and mitigating disasters, and do a good job preventing and controlling animal epidemics, plant diseases and insect pests. We will expand trial soil testing to determine appropriate fertilizer formulas. Fifth, we will carry out rural reform in all areas. We will accelerate overall rural reform. We will adopt effective measures to actively yet prudently reduce the debts of townships and villages. The central and local governments will increase budgetary funding to basically clear up overdue debts for rural compulsory education in about three years. We will adhere to the basic system for rural operations and stabilize and improve land contract relationships. We will improve the market for the compensated, voluntary transfer of land contract and management rights in accordance with the law and allow diverse forms of farming operations to develop to an appropriate scale where conditions permit. We will work hard to develop specialized farmer cooperatives. We will carry out comprehensive reform of the system of collective forest rights.

3. Promoting economic adjustment and changing the pattern of development.

We will continue to boost domestic demand, adjust the balance of investment and consumption, and promote the shift from the pattern of economic growth that relies mainly on investment and exports to one that relies on a balanced combination of consumption, investment and exports. It is essential to appropriately control the scale of fixed asset investment and improve the investment structure. We will maintain strict control over the availability of land, credit and market access, and pay particular attention to strengthening and standardizing supervision of new projects to ensure they meet all the conditions for launching. Haphazard investment and unneeded development projects in energy intensive and highly polluting industries and industries with excess production capacity will be resolutely stopped, and market access will be tightened and capital requirements will be increased for industries whose development is discouraged. Work on illegal projects will be resolutely stopped. We will increase support for weak links and key areas in economic and social development and give more support to the central and western regions. We must tighten control over the amount of land used for development projects, especially for industrial purposes, and hold the total amount of land used this year to last year's level. We must respond to new conditions and situations by improving guidance, regulation and oversight for all types of investment activities in the country.

We will continue to promote independent innovation as the central link in efforts to change the pattern of development. We need to diligently implement the Outline of the National Program for Long- and Medium-Term Scientific and Technological Development and fully launch and implement key national projects, including those to develop large aircraft, control pollution in bodies of water, and develop large-scale oil and gas fields and coal seam gas operations. We will carry out plans for basic research, high-tech research, and research to provide scientific and technological support for development. We will work to make major breakthroughs in key technologies for producing vehicles powered by new energy sources, developing high-speed railway transport and saving water in industries. We will promote development of the national innovation system, focusing on building a number of national laboratories, national engineering centers, and platforms to support enterprise innovation and enterprise technology centers to strengthen China's science and technology infrastructure. We will deepen reform of the management system for science and technology and coordinate and improve resource distribution. The central government will spend 113.4 billion yuan on science and technology in 2008, a year-on-year increase of 13.4 billion yuan. We will improve and implement the policy to support independent innovation, get enterprises to fully play their role as the main parties responsible for technological innovation, and encourage and guide them to increase investment in R&D. We will integrate the efforts of enterprises, universities and research institutes and develop innovative enterprises. Government procurement of products produced through independent innovation will be increased. Trials in the use of venture capital will be expanded. We will implement the intellectual property rights strategy. We will expand scientific and technological cooperation with other countries.

We will promote improvement and upgrading of the industrial structure. We will keep to the new path of industrialization with Chinese characteristics and promote integration of IT application with industrialization. We will work to develop new- and high-technology industries, reinvigorate the equipment manufacturing industry, upgrade traditional industries and accelerate the development of service industries, particularly modern services. We will continue the major projects to apply high technologies in the production of new-type displays, broadband communications and network equipment, and biomedicine. We will get national new and high technology development zones to fully play their role in pooling resources, guiding development and boosting development in surrounding areas. We will promote domestic R&D and production of important equipment and key spare parts and components, with the focus on key areas such as large clean and highly efficient power generating units, high-grade digital machine tools and basic manufacturing equipment. We will give higher priority to geological work to improve prospecting for and exploitation of natural resources. We will strongly develop the modern energy and raw materials industries and better integrate the transportation system.

We will promote balanced development among regions. We will extensively promote the large-scale development of the western region, and launch a number of key projects and support the development of key areas on a priority basis. We will continue to protect natural forests, prevent and control desertification, and reverse and prevent the development of stony deserts, and will implement a follow-up policy to consolidate progress made in converting retired farmland to forests. We will implement the plan to reinvigorate northeast China, and support the development of advanced equipment manufacturing and modern agriculture and the economic transformation of areas depending on resources that are now exhausted. We will formulate and implement a plan to boost development of the central region and implement and improve relevant policies. We will encourage the eastern region to lead the country in development and improve its international competitiveness. We will give more support to old revolutionary areas, ethnic minority areas, border areas and poor areas to help them develop. We will adopt and implement a plan and policy for development priority zones.

4. Increasing efforts to conserve energy, reduce emissions and protect the environment, and ensuring product quality and safety.

This year is crucial for meeting the obligatory targets for energy conservation and emissions reduction set forth in the Eleventh Five-Year Plan, and we must increase our sense of urgency and intensify efforts to make greater progress.

First, we will implement the plan to close down backward production facilities in the electricity, steel, cement, coal and papermaking industries. We will also put in place a mechanism for closing down these facilities and improve and implement support policies and measures for shutting down enterprises. In addition, we will step up efforts to develop advanced production facilities in these industries in accordance with the plan.

Second, we will focus on energy conservation in key enterprises and construction of key projects. We need to accelerate work on the ten major energy conservation projects. We will increase the urban sewage treatment capacity and strive to reach the goal of 100% collection and treatment of sewage in 36 large cities within two years. Charges for discharging wastewater and for sewage treatment and garbage disposal will be appropriately raised. Building standards will be upgraded and strictly enforced to encourage the development of better wall materials and construction of energy-efficient buildings. We will make steady progress in reforming the urban heating system and public utilities.

Third, we will develop and apply advanced and appropriate technologies to save, replace and reuse resources and control pollution, and carry out projects to develop and demonstrate major energy conservation and emissions reduction technologies. We will energetically develop the energy conservation service industry and the environmental protection industry. We will develop clean and renewable energy sources such as wind power and solar energy.

Fourth, we will prevent and control pollution in key river valleys and regions, including the Huai, Hai, Liao and Songhua rivers, Tai, Chao and Dianchi lakes, the sources and routes of the South-to-North Water Diversion Project, and the Three Gorges Reservoir area. We will implement the master plan for protecting the environment of the Bohai Sea. National standards will have stricter limits for discharge of pollutants in key river valleys.

Fifth, we will intensify protection of rural drinking water sources, and work to control sewage and garbage pollution and industrial pollution in rural areas. We will also strengthen control of pollution from livestock and poultry farming and aquaculture as well as agricultural nonpoint source pollution.

Sixth, we will encourage and support the development of a circular economy and promote recycling and reuse of renewable resources. We will also promote cleaner production in all industries.

Seventh, we will strengthen efforts to protect, conserve and intensively use natural resources, including land, water, grasslands, forests and minerals, and take stern measures to combat illegal mining of mineral resources. We will effectively protect marine resources, use them wisely, and develop the marine economy. We will intensify China's basic research efforts in meteorology, earthquake science, and surveying and mapping to strengthen these areas.

Eighth, we will implement the national plan to respond to climate change to strengthen China's ability to respond to climate change.

Ninth, we will improve the mechanism for rewarding those who conserve energy and resources and protect the environment and punishing those who waste energy and resources and harm the environment. We will also employ statistical and monitoring systems for conserving energy and reducing emissions, and improve the auditing and supervision systems, increase law enforcement efforts, and tighten the accountability system for energy conservation and emissions reduction.

Tenth, we will enhance public awareness of the importance of a culture of conservation and encourage the entire nation to participate in building a resource-conserving and environmentally friendly society. Resource conservation and environmental protection must continue from generation to generation to make our mountains greener, waters cleaner and skies bluer.

We will intensify efforts to ensure product quality and safety.

First, we will accelerate efforts to formulate or update national standards for product quality and safety. This year, we will complete the formulation or updating of more than 7,700 national standards for the safety of food products, drugs and other consumer goods to put in place a sound system of standards for product safety. All requirements and testing methods for the safety and quality of food and other consumer goods will comply with international standards. China's exports will meet both international standards and the laws and regulations on technical standards of the importing countries.

Second, we will improve legal guarantees for product quality and safety. We need to promptly enact or revise laws and regulations pertaining to product quality and safety, and improve the mechanism for effectively coordinating administrative law enforcement and criminal justice to increase punishment for enterprises that violate such laws and regulations. Third, we will improve the oversight and control systems for product quality and safety. We will follow to the letter the regulations for issuing production permits and mandatory certificates and for registration and record keeping to strictly control market access. We will raise the requirements for production permits and tighten market access for products related to people's health and safety. We need to strengthen quality and safety oversight for essential products such as food and drugs, and strictly control the quality of exports and imports. We will diligently follow the accountability system for product quality and safety. It is imperative that the people feel confident about the safety of food and other consumer goods and that our exports have a good reputation.

5. Deepening economic reform and opening wider to the outside world.

It has been 30 years since China introduced the reform and opening up policy, which has brought about great historic changes to the country. However, China is still in the primary stage of socialism and will remain so for a long time to come. To further promote unfettered development of the productive forces, promote greater social fairness and justice, and attain the magnificent goals of building a moderately prosperous society in all respects and modernizing China, we must continue to unswervingly implement the reform and opening up policy. We will concentrate on the following areas this year.

We will advance the reform of SOEs and improve their ownership structure. We will continue to adjust state-owned assets and reorganize SOEs. We need to deepen the reform to convert SOEs into stockholding corporations. We will improve corporate governance, carry out policy-mandated closures and bankruptcies, separate SOEs' secondary businesses from their core businesses, and convert the former into independent companies. We will expand the experiment of setting up a budget system for managing state capital. We will deepen the reform of monopoly industries by introducing competition and strengthening government regulation and public oversight of them. We need to strictly standardize procedures for transforming SOEs into stock companies and for transferring ownership of state-owned assets to prevent their erosion. We will protect the legitimate rights and interests of workers. We will advance the reform of collectively owned enterprises and develop diverse forms of collective and cooperative economic operations. We will conscientiously implement the policies for encouraging, supporting and guiding the development of individual-proprietorship businesses and private companies in the nonpublic sector of the economy. In particular, we will help them solve problems related to market access and financial support.

We will deepen reform of the fiscal and taxation systems and accelerate improvement in the public finance system. We will reform the budget system and tighten budgetary management and oversight. We need to improve and standardize the system of transfer payments, raise the volume and proportion of general transfer payments and increase spending on public services. We will energetically push ahead with the reform of fiscal systems at and below the provincial level. The new Law on Corporate Income Tax will be comprehensively enforced. We will reform the system of resource taxes and fees, and improve the compensation systems for use of resources and for damage caused to the ecosystem. We will carry forward the trial VAT reform and formulate a plan to carry out the reform nationwide.

We will speed up reform of the financial system and strengthen financial oversight. We will continue deepening reform of the banking industry, focusing on the introduction of a shareholding system in the Agriculture Bank of China and the reform of the China Development Bank. A deposit insurance system will be set up. We will accelerate rural financial reform and strengthen the role of the Agriculture Bank of China, the Agricultural Development Bank of China and the China Postal Savings Bank in serving agriculture, rural areas and farmers. We will continue to deepen the reform of rural credit cooperatives and actively promote the development of new types of financial institutions in rural areas. We will improve the structure of the capital market, promote steady and sound development of the stock markets, strive to improve the performance of listed companies, and maintain an open, fair and equitable market environment. We will establish a market for growth enterprises, accelerate development of the bond market and steadily develop the futures market. We will deepen reform of the insurance industry, vigorously extend the scope of agricultural insurance, and successfully carry out trials of policy-supported agricultural insurance. We will take stern measures to combat violations of financial laws and regulations and guard against and defuse financial risks to maintain financial stability and security.

We will expand the breadth and depth of China's openness and make its economy more open. We will accelerate change in the pattern of foreign trade growth, improve the mix of exports, encourage the export of products with Chinese intellectual property rights and trademarks, and raise the quality, grade and added value of exports while maintaining steady export growth. We need to increase export of services and encourage foreign businesses to outsource services to China. We will energetically increase imports, with the focus on advanced technology and equipment, important raw materials, and key spare parts and components. We will improve the mix of industries using foreign investment and their geographic distribution, and steadily make service industries more open. We will limit or ban foreign investment in projects that are energy intensive or highly polluting, limit or ban foreign investment in some areas of resource exploitation, and correct illegal practices for attracting foreign investment. We will make innovations in the way we make investments and engage in cooperation overseas, and improve and implement policies and measures to support Chinese enterprises wishing to "go global." We will strengthen bilateral, multilateral and regional economic cooperation. We will continue to promote talks on free trade zones and honor the treaties we have signed. We are committed to an equitable international trade order.

In carrying out reform and opening up, we will accelerate the development of a modern market system, energetically develop modern logistics, intensify efforts to ensure orderly markets and promote the development of a credit system for individuals.

6. Paying closer attention to social development to ensure the wellbeing of the people and improve their lives.

We will continue to give priority to developing education.

First, we will make free compulsory education universally available in both urban and rural areas. We will continue increasing regular expenditures for rural compulsory education and raise the level of budgetary allocations. We will appropriately increase living allowances for poor rural students residing on campus. We will take steps to ensure that children from poor families and children of rural migrant workers in cities enjoy the same access to compulsory education as others. After running trials in selected areas, we will completely stop collecting tuition and miscellaneous fees from all urban students receiving compulsory education starting this fall. This is another major measure for promoting balanced development of compulsory education and equal access to education.

Second, we must vigorously develop vocational education. We will strengthen the basic conditions for vocational education and deepen reform of the systems for administering, running and investing in vocational education programs in order to turn out high-quality skilled personnel.

Third, we must raise the quality of higher education. We will improve the structure of academic disciplines and develop high-quality universities and key disciplines. Regular institutions of higher learning will continue to favor students in the central and western regions in expanding their enrollments. To successfully provide education of various kinds and at different levels, we must focus on the following three tasks. One, we must ensure that all students receive a well-rounded education, and promote educational reforms and innovations. We will deepen the reform of curricula, methods of instruction, the systems of examination and enrollment, and the system for evaluating educational quality, and lighten the study load of primary and secondary school students. Two, we must improve the quality of teachers, especially in rural areas, and improve and implement the system of wages, allowances and subsidies for teachers. Three, we must increase investment in education. This year, central government allocation for education will increase from last year's total of 107.6 billion yuan to 156.2 billion yuan, and local governments will also increase their spending. We will further standardize the collection of education-related fees. We will standardize nonpublic education programs and encourage their development. China cannot modernize if education is not made universally available and if its quality is not improved. We must ensure that our children receive a good education, provide education that satisfies the needs of the people and improve the overall quality of the population.

We will promote the reform and development of health care. Efforts will be focused on four areas:

First, we will accelerate the establishment of a system to ensure access to medical care for both urban and rural residents. We will expand the number of urban workers covered by basic medical insurance, and extend the trial of basic medical insurance for urban residents to over 50% of China's cities. We will fully implement the new type of rural cooperative medical care system in all rural areas. Within two years, we will raise the standard for financing from 50 yuan to 100 yuan per person per year, with central and local government contributions to be raised from 40 yuan to 80 yuan per person. We will improve the urban and rural assistance program for medical care.

Second, we will improve the public health service system. We will prevent and treat major diseases, implement policies and measures to increase the number of diseases covered in the state plan for immunization against communicable diseases, and provide free treatment for more people suffering from diseases such as AIDS, tuberculosis and schistosomiasis. We need to work harder to prevent and treat endemic, occupational and mental diseases. We must do a good job in work related to the health of women and children. We will implement a policy of granting allowances to rural women in the central and western regions giving birth in hospitals. We will improve the mechanism for ensuring adequate funding for public health services.

Third, we will continue development of the medical service systems for urban and rural areas. We will focus on improving the county, township, village three-tier rural health service network and the urban community-based medical and health service system. We will train more general practitioners, nurses and rural doctors and encourage high-caliber health workers to work in village and community clinics. Trial reform of public hospitals will be carried out. Measures will be formulated and implemented to support the development of traditional Chinese medicine and the folk medicines of ethnic minorities.

Fourth, we will set up a national system for basic drugs and a system for ensuring drug supply to ensure the quality and adequate supply of basic drugs and hold down prices. This year the central government will allocate 83.2 billion yuan to support the reform and development of health care, an increase of 16.7 billion yuan over last year, with the focus of spending on facilities at the urban community and village level.

Last year the State Council commissioned a study of the issue of how to deepen reform of the system of pharmaceuticals and health care. A preliminary plan has been produced and will soon be publicized to solicit opinions from the general public. The basic goal of the reform is to maintain the public service nature of public medical and health care services and set up a basic medical and health care system to provide people with basic medical and health care services that are safe, effective, convenient and affordable. We must resolutely carry out this reform to provide everyone with access to basic medical and health services and improve their health.

We will improve work related to population and family planning. We will adhere to the current policy of family planning, keep the birthrate low, improve the health of newborns and adopt a full range of measures to address the gender imbalance in babies. We will fully implement the special assistance system for families that comply with family planning regulations, extend the coverage of the reward system for rural families that comply with the regulations, implement the "lower birthrate equals faster prosperity" project in more areas, and raise the level of rewards and assistance. We will improve services for the floating population and tighten supervision of them to ensure that they comply with the family planning policy.

We will attach great importance to programs for the elderly, effectively protect the rights and interests of women and minors, and show concern for people with physical and mental disabilities and support programs benefiting them.

We will strive to expand employment. We will strictly enforce the Employment Promotion Law and the Labor Contract Law. We will continue to follow a vigorous employment policy, adhere to the principle of expanding employment by encouraging business startups, strengthen job training and training in how to start a business, encourage people to find jobs on their own or start their own businesses, and support the establishment of small enterprises. We will speed up development of a human resources market with uniform standards for both urban and rural areas, improve the public employment service system, and promote the creation of an employment system that treats urban and rural workers equally. We will strengthen job placement guidance and services for college graduates. We will deepen reform of the job-placement system for people leaving military service. We will improve the aid system for job seekers, carry out policies to find more jobs for people with physical and mental disabilities, and create a permanent mechanism to help zero-employment families find jobs. We will urge all types of enterprises to sign labor contracts with their employees in accordance with the law and abide by them. We will improve the handling of labor disputes and oversight for worker protection measures and severely punish illegal employment practices. Providing adequate employment opportunities in China, which has the largest population in the world, is a daunting challenge. We must redouble our efforts to increase employment, a matter that is crucial to people's well being.

We will increase urban and rural incomes. The key is to adjust the distribution of the national income, deepen reform of the income distribution system, gradually raise the proportion of the national income received by individuals and raise labor's of the primary distribution of income.

First, we will increase rural incomes through a variety of channels, ensure that rural migrant workers in cities get paid in full and on time, and appropriately increase allowances for the poor population.

Second, we will raise the wage scale for enterprise employees and create a mechanism to ensure they get regular wage increases and ensure that they are paid regularly. We will urge enterprises to establish a system for collective bargaining for wages, improve the system of wage guidelines, and improve and comply with the minimum wage system. We will reform the method of supervising SOE payroll and strengthen oversight of wages paid by enterprises in monopoly industries.

Third, we will raise the level of basic old-age benefits for retirees from enterprises every year for three years beginning Jan. 1 this year.

Fourth, we will deepen reform of the salary system for civil servants and continue efforts to standardize their subsidies and allowances. We will accelerate reform of the income distribution system in government-affiliated institutions. Fifth, we will institute a system of annual paid vacations for employees. In addition, we will further improve consumption policies, broaden the range of services available in the market, stabilize consumer expectations and increase immediate consumption. Only by appropriately spreading the fruits of economic development among the people can we win their support and maintain social harmony and stability.

We will improve the social safety net. We will follow a policy of expanding the number of people covered, guaranteeing people's basic needs and pursuing multi-level and sustainable development of the system.

First, we will expand the number of people covered by the social security system and improve collection of contributions to insurance funds. The focus of efforts will be on extending coverage to more rural migrant workers in cities, employees in the nonpublic sector of the economy and urban residents without fixed employment. Efforts will be made to provide basic medical insurance for retirees from closed or bankrupt enterprises and employees of enterprises with financial difficulties.

Second, we will push ahead with the reform of the social security system. We will improve the system of basic old-age insurance for enterprise employees, combining contributions from various sources in society with personal employee retirement accounts, and expand the trial of fully funding personal accounts for old-age insurance. In addition, we will accelerate the implementation of overall planning for old-age pensions at the provincial level and work out nationwide rules for transferring social security accounts from one region to another. We will standardize and expand enterprise retirement systems that pay annuities. We will explore ways to reform basic old-age insurance in government-affiliated institutions. We will soon work out an old-age insurance system suitable for rural migrant workers in cities, and encourage local governments to carry out experiments with a rural old-age insurance system. We will accelerate improvement in unemployment insurance, workers' compensation and maternity insurance.

Third, we will finance social security funds in various ways, strengthen their oversight, ensure their security and maintain and increase their value.

Fourth, we will improve the social assistance system. We will focus on improving the systems of basic cost of living allowances for both urban and rural residents and setting up a mechanism for adjusting the level of assistance in line with economic growth and price changes. We will improve the temporary assistance system, vigorously develop social welfare programs and encourage and support the development of charity programs. We will do a good job providing assistance to entitled groups and helping demobilized military personnel return to civilian life. We will improve the work of disaster prevention, reduction and relief. A total of 276.2 billion yuan will be appropriated this year in the central government budget to accelerate development of the social security system, 45.8 billion yuan more than last year. Establishing a sound social safety net for both urban and rural residents to ward off uncertainties for them has a direct impact on economic and social development and is a major task in the effort to build a moderately prosperous society in all respects.

We will promptly establish a system for ensuring housing for people. The general guiding principles for this work are as follows. 1) Taking into consideration the fact that China has a large population and relatively little land available for building housing, we need to foster a scientific and rational model for housing development and home ownership. We will vigorously work to build environmentally friendly buildings that conserve energy and land, increase the supply of small and medium-sized condominiums, and guide people to obtain housing they can afford. 2) We must ensure that the government and the market both play their due roles. The government's role is mainly to formulate plans and policies for housing and ensure that there is an appropriate supply of land, ensure that land is used intensively and oversee land use. Priority will be given to development of housing for low- and middle-income families. Demand for housing among high-income families will be met largely through the market. 3) We need to strengthen regulation and oversight of the real estate market, standardize and maintain order in the market and promote sustained, steady and healthy development of the real estate industry.

The following four measures will be adopted this year:

First, we will improve the system of low-rent housing, accelerate construction of low-rent housing, expand the supply of housing, and step up construction and tighten management of affordable housing to ease the housing difficulties of low-income urban residents. A total of 6.8 billion yuan will be allocated from the central government budget for the low-rent housing program this year, 1.7 billion yuan more than last year, and local governments will also increase funding in this area. In addition, we will work energetically to improve the living conditions of rural migrant workers in cities.

Second, we will increase the supply of low- and medium-price, small and medium-sized condominiums, establish a mechanism for making investments and raising funds in various ways, and help middle-income families meet their housing needs through a variety of channels. We will improve the supply structure of urban land to provide more land for building small and medium-sized condominiums.

Third, we will use a combination of tax, credit and land supply measures and improve the housing accumulation fund system to increase supply of reasonably priced housing, curb demand for high-end housing and prevent overheating in housing prices. Fourth, we will strengthen market oversight and strictly enforce the requirements for market access and the conditions for going out of business for real estate firms. We will investigate attempts to control the land and housing market through hoarding and speculation in land and housing and deal with violations in accordance with the law. In addition, we will improve planning and management of rural housing development and the safety of housing for the rural poor. We must unswervingly promote reform of the housing system and construction of housing for the benefit of the people.

7. Deepening the reform of the cultural management system and promoting the vigorous development and enrichment of culture.

We will further implement and improve the policies and measures to reform the cultural management system, promote cultural innovation, strengthen cultural improvement work, safeguard the basic cultural rights and interests of the people, and promote a flourishing cultural market to meet the people's ever-increasing and varied cultural needs. We will continue to educate the people in the latest advances in adapting Marxism to Chinese conditions, foster a common ideal of socialism with Chinese characteristics among the people, strongly promote a national spirit centered on patriotism and a spirit of the times centered on reform and innovation, and extensively promote education in the socialist concept of honor and disgrace. We will develop a culture of harmony, carry out the program for improving civic morality and foster civilized social conduct. Particular attention will be paid to cultivating ideals and ethics among young people. Extensive campaigns will be launched to encourage civilized behavior. We will maintain the orientation of serving the people and socialism and fully adhere to the principle of letting a hundred flowers blossom and a hundred schools of thought contend. We will develop philosophy and the social sciences. We will promote the vigorous development of the press and publishing, radio, film and television, literature and the arts. We will encourage the production of excellent cultural works. We will increase government funding to accelerate development of a system of public cultural services for the whole society and to promote development of basic public benefit cultural programs, particularly the building of more cultural facilities in urban communities and villages. We will accelerate development of multipurpose community centers in towns and townships. We will work on the projects to set up a national shared databank of cultural information and resources, extend radio and television coverage to all villages, and set up reading rooms and show movies in rural areas. All public museums, memorial halls and exhibition centers of a nonprofit nature will stop charging admission fees this year or next year. We will improve the policy for developing the culture sector and speed up development of bases for the culture industry and clusters of cultural industries with regional features. We will strengthen efforts to develop and manage Internet culture. We will ensure order in the cultural market and continue to combat pornography and illegal publications. We will strengthen protection of our national cultural heritage. We will expand cultural exchanges with other countries. We will step up development of public sports facilities in both urban and rural areas, launch extensive public fitness programs and raise the level of competitive sports.

The 2008 Olympics and Paralympics will be held in Beijing. All sons and daughters of the Chinese nation are looking forward to them, and they will be of great importance in promoting China's economic and social development and increasing friendship and cooperation between Chinese people and the peoples of other countries. We will prepare for and organize the Games well, strengthen cooperation with the international community, and create an excellent environment to ensure that the Games are a unique, well-run sporting event.

8. Stepping up development of socialist democracy and the socialist legal system and promoting social fairness and justice.

We will deepen reform of political institutions and advance socialist political standards. We will expand people's democracy, improve democratic institutions, diversify its forms and expand its channels, and we will carry out democratic elections, decision-making, administration and oversight in accordance with the law to ensure the people's rights to stay informed about, to participate in, to express views on, and to oversee government affairs. We will develop democracy at the community level, improve the system of governance by the people at the community level, expand the scope of their autonomy, strengthen urban and rural communities, and make the running of governments, villages and factories more transparent. We will bring into play the positive role of civic organizations in expanding public participation in government affairs and voicing the concerns of the people to improve the ability of society to govern itself.

We will fully adhere to the rule of law as a fundamental principle. We will step up the drafting of proposed legislation by the government and improve the quality of such legislation. The drafting of such legislation this year will focus on improving people's lives, promoting social development, conserving energy and resources, and protecting the ecosystem. In the course of doing so, we need to seek views from many sources. In principle, we will release drafts to the public to solicit their opinions when formulating all administrative rules and regulations that bear on the interests of the people. We will appropriately delineate and adjust the powers and duties of administrative law enforcement agencies, and strengthen oversight and fully implement the responsibility system for administrative law enforcement. We will improve the system of government administration in accordance with the law at the municipal and county levels. We will ensure that administrative charges are collected in a standardized way and reform and improve the mechanism for ensuring adequate funding for the judicial system and for law enforcement. We will improve the filing and inspection procedures for laws, rules, regulations and regulatory documents. Systems of administrative review and administrative compensation and reparation will be improved. We will ensure that people have adequate access to legal services and assistance. We will increase publicity and education concerning the law in order to create a good social environment in which the people conscientiously study, abide by and apply the law.

We will improve public administration. We will increase efforts to improve civic organizations and improve the system of public administration at the community level. We will do a good job handling complaints in the form of letters and visits from the public and improve the system for handling complaints. We will improve the mechanism for mediating social tensions and properly handle problems among the people to protect their legitimate rights and interests. We will improve the public security system for the prevention and control of crime, maintain law and order through a full range of measures and launch intensive campaigns to ensure public security. We will reform and intensify community policing in both urban and rural areas and improve services for and management of the floating population. Focusing on addressing serious public security issues and improving conditions in areas with poor public order, we will work to prevent crime and crack down on crime and illegal activities in accordance with the law to protect people's lives and property and ensure social stability. We will redouble our efforts to safeguard national security. We will strengthen efforts to ensure workplace safety. We will work harder to prevent serious and major accidents by addressing their root causes. We will consolidate and build upon progress in bringing coalmine gas buildup under control, improve coalmine safety and shut down coalmines that do not meet safety standards. We will continue to carry out campaigns to address safety problems in key industries and areas. We will work harder to identify and eliminate hidden perils, and improve the system for controlling major hazards and monitoring major sources of danger and the system for forecasting, giving early warning, preventing, responding to and mitigating disasters. We will tighten oversight for workplace safety in accordance with the law and rigorously investigate industrial accidents and prosecute those responsible for them.

9. Accelerating reform of the administrative system and intensifying government self-improvement.

Reform of the administrative system is an important link in deepening reform, an important part of the reform of political institutions, and an essential step in improving the socialist market economy. In reforming the administrative system, we should adhere to the following general principles and requirements: we must put people first and govern for the people. We should see to it that this reform proceeds in line with development of socialist democracy and the socialist market economy. Decisions must be made scientifically and democratically; the government must be run in accordance with the law, and administrative oversight needs to be strengthened. We need to make innovations in management and institutions and make full use of the initiative of both the central government and local governments. Efforts should be focused on changing functions, straightening out inter-departmental relationships, improving the structure and raising efficiency in order to develop an administrative system in which powers are commensurate with responsibilities, the division of work among departments is appropriate, decisions are scientific, enforcement is carried out smoothly and oversight is effective.

First, we must accelerate the transformation of government functions. This is central to deepening reform of the administrative system. We need to improve the division of responsibilities among government departments, ensure that all departments properly execute their functions and strive to build a service-oriented government. While improving regulation of the economy and the market, we must increase efforts to improve public administration and public services, safeguard social justice and order, and ensure equal access for all to basic public services. We will attach great importance to the role of civil organizations such as industrial associations and chambers of commerce in this area.

Second, we must deepen reform of government bodies. Our current plan for the reform of bodies of the State Council mainly centers on changing the way the government functions, appropriately dividing responsibilities among departments that exercise macroeconomic regulation, adjusting and improving bodies in charge of industrial management, and improving departments responsible for public administration and public services. The plan explores ways to establish larger departments that organically integrate the functions of smaller departments. To resolve the problem of overlapping responsibilities and of powers not being matched by responsibilities, the plan clearly defines the responsibilities and powers of each department, clarifies the relationship of responsibilities among departments, and improves the mechanism for interdepartmental coordination and cooperation. The plan will be submitted to you for deliberation and approval.

Third, we must improve the mechanism of administrative oversight. We need to use institutions to oversee the exercise of power, the handling of government affairs and the management of personnel. We will strengthen oversight of the exercise of administrative power and standardize procedures for administrative approval. We will strengthen the mutual oversight between higher- and lower-level authorities, get oversight bodies such as supervision and auditing departments to fully play their role, and conscientiously accept oversight by all sectors of society. We will adhere to the administrative accountability system and government performance management system. The competence of public servants will be strengthened. We will strictly enforce the law and the code of conduct for government employees and resolutely put a stop to non-compliance with government decrees and continued occurrences of banned practices. We will strive to make government affairs more open by enhancing the government information release system and improving the various types of administrative systems for transparency in government affairs to increase the transparency of government functions and create conditions to enable the people to oversee the government more effectively. Fourth, we will strengthen efforts to ensure clean government. We will attach even greater importance to combating corruption and encouraging integrity, and fight corruption unequivocally. We will effectively improve the system for preventing and punishing corruption in accordance with the principle of addressing both the symptoms and root causes of corruption and taking a dual approach that combines prevention and punishment, with the emphasis on prevention. In particular, we need to tackle the problems of excessive concentration of power and lack of checks on power. We will address fundamentals to improve regulations and institutions and standardize management of public resources such as transfer payments, development of land and mineral resources, government procurement and the transfer of state-owned assets. We will strengthen special campaigns to address people's pressing concerns related to problems concerning environmental protection, food and drug safety, workplace safety, land acquisition and expropriation, and housing demolition, to resolutely stop irregular practices that hurt public interests. We will strongly advocate hard work and plain living and firmly oppose extravagance and waste. We will prosecute all violations of the law and discipline, strictly curb bribery in business, resolutely bring corrupt people to justice and prosecute them to the full extent of the law.  

Fellow Deputies,

China is a unified, multiethnic country. We must promote unity among all ethnic groups and make a concerted effort to achieve prosperity and development for all. We will follow and improve the system of regional ethnic autonomy, promote economic and social development of ethnic minorities and ethnic minority areas, and consolidate and develop socialist ethnic relations of equality, unity, mutual assistance and harmony. We will faithfully follow the Party's basic principles on work related to religions, adhere to the Regulations on Religious Affairs, and enable religious figures and religious believers to play a positive role in advancing economic and social development. We need to do a good job handling affairs related to overseas Chinese nationals in the new era and make full use of the role of overseas Chinese nationals, returned overseas Chinese nationals and their relatives in China's modernization and the great cause of peaceful reunification of the motherland.

Improving national defense and the military is a strategic task in developing socialism with Chinese characteristics. We must balance economic development and national defense development to make China prosperous and the armed forces strong as we carry out modernization. We must always follow the guidance of Mao Zedong's military thinking, Deng Xiaoping's thinking on building the army in the new period and Jiang Zemin's thinking on strengthening the national defense and the army, truly implement the important guidelines of Comrade Hu Jintao on national defense and the army under the new circumstances, and take the Scientific Outlook on Development as an important guiding principle for developing national defense and the army. Our aim is to enable the army to fully carry out its historic mission in the new stage in the new century, enhance its ability to respond to security threats and accomplish a diverse array of military tasks, staunchly protect China's sovereignty, security and territorial integrity, and provide strong support for building a moderately prosperous society in all respects. We will strengthen efforts to improve the People's Armed Police Force to improve its ability to enforce the law, respond to emergencies, combat terrorism and safeguard stability. We will intensify national defense education to raise public awareness of the importance of national defense. We will improve the national defense mobilization system. We will strengthen unity between the military and the government and between the military and the people.

We will continue to unswervingly adhere to the principle of "one country, two systems," under which Hong Kong people administer Hong Kong and Macao people administer Macao with a high degree of autonomy, and act in strict accordance with the basic laws of the two special administrative regions. We will give full support to the governments of the Hong Kong and Macao special administrative regions in administering their regions in accordance with the law, and increase exchange and cooperation between the mainland and the two special administrative regions in economic and trade affairs, environmental protection, science and technology, education, culture, health and sports. We firmly believe that our compatriots in Hong Kong and Macao will be able to do even better in administering and developing their respective regions.

We will adhere to the basic principle of "peaceful reunification and one country, two systems" and follow all policies for developing relations between the two sides of the Taiwan Straits and promoting China's peaceful reunification under the current circumstances. We will pursue the goal of promoting peaceful development of cross-Straits relations, encourage compatriots on both sides to increase contacts and common understanding, actively promote cross-Straits economic and cultural exchanges, and work for the resumption of direct links of mail, transport and trade. We will implement and improve the policies and measures designed to benefit our compatriots in Taiwan and support economic development on the west coast of the Straits in Fujian Province and in other areas where Taiwan investment is concentrated. We will work for the early resumption of cross-Straits negotiations on the basis of the one-China principle to address major issues of concern to compatriots on both sides. We firmly oppose Taiwan independence secessionist activities, and will never allow anyone to separate Taiwan from the motherland in any guise or by any means. Any issue that concerns China's sovereignty and territorial integrity must be decided by all the Chinese people, including our Taiwan compatriots. The attempts of Taiwan independence secessionist forces to deny the reality that the mainland and Taiwan belong to one and the same China and to undermine peace in the Taiwan Straits are doomed to fail. Reunification of the two sides is inevitable in the course of the great rejuvenation of the Chinese nation. With the concerted efforts of all Chinese people at home and overseas, the great cause of China's reunification will surely be achieved!

In the coming year, we must continue to hold high the banner of peace, development and cooperation, follow an independent foreign policy of peace and a path of peaceful development, and adhere to the win-win strategy of opening up to promote the building of a harmonious world with durable peace and common prosperity. We will work hard to develop relations with developed countries, deepen good-neighborly relations and friendship with all neighboring countries, and redouble efforts to increase unity and cooperation with other developing countries. We will actively participate in multilateral diplomacy, work to find appropriate solutions to major hotspots and global issues, and safeguard the legitimate rights and interests of Chinese nationals and companies overseas. The Chinese government and people are ready to share development opportunities with people of all other countries and to work with them to address risks and challenges and advance the noble cause of the peace and development of humanity.

Fellow Deputies,

Looking back, we are encouraged by the achievements of the past five years. Looking ahead, we see an exciting future for China. Our great motherland has embarked upon a new historical course and the future holds even brighter prospects. Under the leadership of the CPC Central Committee with Comrade Hu Jintao as General Secretary, let us hold high the great banner of socialism with Chinese characteristics, follow the guidance of Deng Xiaoping Theory and the important thought of Three Represents, and comprehensively apply the Scientific Outlook on Development. Let us free our minds, carry out reform and innovation, and work diligently for greater achievements in the building of a moderately prosperous society in all respects!
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