Learn Chinese: Learn Chinese - Government Work Report (2005)

CHINA / Official Publication

Government Work Report (2005)

Updated: 2006-03-13 16:18

(Delivered at the Third Session of the Tenth National People's Congress
on March 5, 2005 by Wen Jiabao, Premier of the State Council)

Notes:

��1. News dispatches are embargoed until the conclusion of today's
meeting.

��2. The official version of this speech in Chinese will be released by
Xinhua News Agency.

Fellow Deputies,

��On behalf of the State Council, I now submit a report on the work of
the government for your examination and approval and also for comments
and suggestions from the members of the National Committee of the Chinese
People's Political Consultative Conference.

I. Review of the Work in 2004

��Under the leadership of the Communist Party of China (CPC), the
people of all our ethnic groups held high the great banners of Deng
Xiaoping Theory and the important thought of Three Represents, worked
together in an innovative spirit, and made major achievements worth
celebrating in the socialist modernization drive in 2004.

��We made progress while responding to new challenges and tests during
the past year. Some new problems have emerged in China's economic
activities over the last two years, mainly tight grain supply, overheated
investment in fixed assets, excessive money and credit, and shortages of
coal, electricity, petroleum and transportation. If allowed to grow
unchecked, these isolated problems could have had an overall impact.
After sizing up the situation, the CPC Central Committee and the State
Council promptly made decisions and arrangements for strengthening
macroregulation. Acting on the principles of adopting resolute and
effective measures, taking timely and appropriate steps, dealing with
problems individually and stressing practical results, they worked to
solve prominent problems threatening steady and rapid economic
development through a combination of economic and legal means, plus
administrative means when necessary. Thanks to the concerted efforts of
the whole nation, their macroregulation achieved significant results.
Destabilizing, unsound factors threatening economic performance were
contained, weak links were strengthened, and large economic fluctuations
were avoided.

��The main achievements over the past year were: the economy maintained
steady and rapid development, overall national strength increased,
significant progress was made in our reform, breakthroughs were achieved
in opening up, social development was accelerated, and people's lives
improved. China's GDP in 2004 reached 13.65 trillion yuan, an increase of
9.5% over the previous year. Government revenue came to 2.63 trillion
yuan, up 21.4%. Retail sales of consumer goods totaled 5.4 trillion yuan,
up 13.3%. The volume of imports and exports totaled US$ 1.15 trillion, an
increase of 35.7%, moving China up to third place in the world from
fourth in the previous year. Some 9.8 million urban residents entered the
workforce for the first time, a figure that exceeded the target. Urban
per capita disposable income grew by 7.7% in real terms, and rural per
capita net income rose by 6.8% in real terms. All of the above shows that
China has taken another solid step forward on the road of building a
moderately prosperous society in all respects.

��The work we accomplished during the past year mainly consisted of the
following.

��1. Adopting more direct and effective policies and measures to
stimulate increases in grain production and rural incomes.Our
macroregulatory initiative started with efforts to strengthen
agriculture. The major measures we took were reducing or exempting the
agricultural tax, rescinding all taxes on special agricultural products
except tobacco, directly subsidizing grain producers, providing subsidies
to farmers in certain areas to purchase improved crop strains and
agricultural machinery and tools, and setting a floor price for the
purchase of major cereal varieties. Investment was substantially
increased in agriculture and rural areas, particularly in major
grain-producing areas. Altogether, the central government spent 262.6
billion yuan on agriculture, rural areas and farmers, an increase of
22.5%. We also promoted agricultural restructuring to increase rural
incomes through multiple channels. The intensity of these policies and
measures and the substantial benefits to the farmers have rarely been
seen in recent years. This greatly aroused the enthusiasm of farmers,
resulting in a rebound in grain production. Grain output for 2004 totaled
469.45 billion kilograms, 38.75 billion kilograms more than the previous
year. The increases in grain production and farmers' incomes played a
crucial role in maintaining overall economic stability.

��2. Bringing excessive investment in fixed assets under control and
strengthening weak links.We curbed expansion of investment demand and the
haphazard investment and low-level, redundant construction in some
industries mainly by maintaining strict control over the twin valves of
approval for land use and availability of credit. We thoroughly rectified
and standardized order in the land market and straightened out all types
of development zones. We froze the transfer of land from agricultural to
nonagricultural purposes for six months, formulated the Decision on
Deepening Reforms for Tightening Land Management, and improved the system
for managing land and resources. We increased the reserve requirements
for commercial banks and raised the basic interest rates on deposits and
loans for financial institutions and the ceiling for interest rates on
loans. We increased the required proportion of up-front capital for
construction projects in the steel, cement, electrolytic aluminum and
real estate industries. We straightened out projects under and awaiting
construction in accordance with the law. Fixed asset investment across
the country increased by 25.8% for the whole year, 17.2 percentage points
less than the first quarter. The growth of money and credit slowed
significantly.

��Efforts were focused on restructuring, and investment was increased
in agriculture, water conservancy, energy, transportation, environmental
protection and social undertakings. A 4,000-kilometer-long pipeline to
divert natural gas from the west to the east was completed in its
entirety and put into operation. Further progress was made on major
projects such as the Three Gorges Dam Project, the West-to-East
Electricity Transmission Project, the Qinghai-Tibet Railway, and the
South-to-North Water Diversion Project. Coal production capacity was
expanded by 120 million tons, installed power-generating capacity was
increased by 50.55 million kilowatts, and an additional 1,433 kilometers
of railways and 46,000 kilometers of highways were opened to traffic in
2004.

��We continued to promote the development of the western region by
starting construction on ten key projects involving investment of 80
billion yuan. The work of revitalizing Northeast China and other old
industrial bases got off to a good start. With state support, 197
improvement or upgrading projects were undertaken. Work was begun to
bring 15 sinkholes in coalmining areas under control.

��Improved regulation of economic activities alleviated shortages of
coal, electricity, petroleum and transportation. Effective measures were
adopted to increase supply, curb irrational demand and balance supply and
demand, thus ensuring that the needs of economic and social development
and people's well-being were met.

��3. Taking advantage of opportunities to move forward with economic
restructuring and open wider to the outside world.We deepened reform of
the grain distribution system and lifted all controls on the grain
market. The reform of rural taxes and administrative charges entered a
new stage of gradually phasing out the agricultural tax. Further progress
was made in the reform of state-owned enterprises. A basic framework for
the oversight and management system for state assets was established. The
reform to turn state-owned commercial banks into stock companies
progressed smoothly. The reform of rural credit cooperatives was extended
to 29 provinces, autonomous regions and municipalities directly under the
central government. A plan for reforming the investment system was
formulated and implemented. We comprehensively implemented measures to
reform the export tax rebate mechanism, and we cleared up all old
outstanding accounts and did not allow any new ones to emerge. The VAT
reform was begun in the old industrial base of Northeast China on a trial
basis. We intensified efforts to rectify and standardize the market
order, strengthened the supervision of food and drug safety and the
protection of intellectual property rights, and resolutely cracked down
on the manufacture and sale of counterfeit and substandard goods, tax
evasion and fraud, smuggling and other illegal and criminal activities.

��To fulfill the commitments we made when we joined the World Trade
Organization (WTO), we continued to lower tariffs and opened more areas
to foreign competition. We put into effect a revised Foreign Trade Law,
lifted all controls over the right to engage in foreign trade, instituted
a "go global" strategy and participated in regional economic cooperation.
We smoothly implemented the Closer Economic Partnership Arrangement
between the mainland and Hong Kong and between the mainland and Macao.
China utilized $60.6 billion in foreign direct investment in 2004.

��4. Increasing policy support and government spending to stimulate the
development of all social undertakings.Governments at all levels
increased their support for science and technology, education, culture,
health and sports. Spending for these items amounted to 98.7 billion yuan
from the central budget and 14.7 billion yuan from the sale of treasury
bonds.

��We strengthened the national innovation system and infrastructure
development for basic research and for science and technology, as well as
primary-level scientific and technological work. Continued progress was
made on a group of major scientific and technological projects and the
industrialization of new and high technologies. We organized over 2,000
experts to study and discuss a number of strategic issues bearing on the
formulation of a national medium- and long-term program for scientific
and technological development.

��A new round of measures to implement the Action Plan for Invigorating
Education was smoothly introduced, and we started 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 increased support for compulsory education in poor
rural areas, continued to renovate dangerous primary and secondary school
buildings in rural areas, and provided free textbooks for more than 24
million students from poor rural families receiving compulsory education
in the central and western regions. The development of vocational
education was accelerated. Work in higher education was centered on
improving quality. The financial aid system for college students from
poor families was improved.

��We accelerated the development of public health undertakings,
focusing on building a national disease prevention and control system and
a medical response system for public health emergencies. Construction on
1,410 county-level and 250 provincial- and city- (prefectural-) level
disease prevention and control centers was basically completed, and
construction on 290 emergency medical centers is underway. We intensified
our work to prevent and control serious diseases. We put a lot of effort
into building health facilities in rural areas. Pilot projects for a new
system of rural cooperative medical and health care services progressed
steadily. We adopted resolute measures to promptly halt the spread of
highly pathogenic avian flu.

��We promoted reform of the cultural system and development of cultural
undertakings and strengthened supervision over the cultural market. Funds
were appropriated in the central budget to support the construction of
533 county-level libraries and community centers, and radio and TV
facilities in 40,000 villages. The development of major state cultural
projects and the protection of natural, historical and cultural heritage
sites were intensified. We had more cultural exchanges with foreign
countries. Recreational sports activities flourished. The performances of
Chinese athletes were outstanding at the 28th Olympics and the 12th
Special Olympics.

��We intensified our work relating to land and resources, environmental
protection and ecological conservation. We strengthened protection of our
arable land. Further progress was made in preventing and controlling
pollution in key river valleys and regions. Positive results were
obtained from trials of new ways of carrying out family planning work in
rural areas.

��5. Working hard to improve people's lives and paying particular
attention to solving prominent problems relating to their vital
interests.We further implemented all policies and measures to stimulate
employment and reemployment. We continued successful efforts to provide
the "two guarantees" [guarantee of a basic living allowance for workers
laid off from state-owned enterprises and guarantee that the pensions of
retirees are paid on time and in full,tr.] and ensure needy urban
residents receive subsistence allowances. The national standards for
basic retirement benefits for workers retired from enterprises were
raised on July 1, 2004. Many local governments also promptly raised the
level of their subsistence allowances. We continued work on the pilot
projects to improve the urban social security system. A total of 146.5
billion yuan was spent from the central budget for social security last
year, an increase of 18.1% over the previous year.

��Poverty alleviation work was intensified, with 12.2 billion yuan
appropriated from the central budget for this work, thereby reducing the
number of poverty-stricken rural people by 2.9 million year-on-year. Some
areas of the country suffered serious natural disasters last year.
Governments at all levels promptly provided disaster relief and carried
out reconstruction work, assisting 68 million victims.

��We solved problems in the expropriation of rural land, the demolition
of urban housing and the transformation of enterprises that infringe on
people's interests in accordance with the law. Overdue payments owed to
farmers as compensation for expropriated land were basically cleared up.
We thoroughly solved the problem of defaults on construction costs in the
construction industry and unpaid wages for migrant workers. A total of
33.2 billion yuan of wages that had been owed for a number of years has
now been paid. Safeguarding the people's lawful rights and interests was
given greater importance in the government's work.

��6. Strengthening democracy and the legal system and doing everything
possible to safeguard social stability.Democracy at lower levels of
government was vigorously expanded, the system for making village affairs
more transparent and the system of self-governance for villagers were
strengthened, and the system of self-governance of communities and
management at the primary level in urban areas was further improved. The
government attached great importance to legislation. The State Council
formulated the Program for Comprehensively Implementing Government
Administration in Accordance with the Law, which clearly set forth the
objectives and tasks for establishing a law-based government. It also
produced revised drafts of the Company Law and the Law on the Prevention
and Control of Infectious Diseases, a draft Civil Service Law and four
other bills and enacted 32 administrative regulations. Governments at all
levels conscientiously implemented the Administrative Permission Law and
eliminated or streamlined a large number of items requiring
administrative approval. Oversight of law enforcement was strengthened,
and auditing and supervision authorities did a great deal of outstanding
work. We organized the formulation of a national master plan for
responding to public emergencies, as well as 105 special and departmental
plans for responding to emergencies such as natural disasters,
catastrophic accidents, public health emergencies and other threats to
public security. All provinces, autonomous regions and municipalities
directly under the central government also formulated their own emergency
response plans. Breakthroughs were made in building a law-based
government and fully performing government functions.

��We intensified efforts to build a clean government and combat
corruption, focusing on solving outstanding problems that threatened
people's interests. We strengthened all facets of public security and
improved the system for crime prevention and control. We severely cracked
down on criminal activities in accordance with the law and slowed down
the rise in serious crime. We strengthened and improved the work of
handling letters and visits from the people and strived to resolve all
kinds of conflicts.

��We intensified work relating to ethnic, religious and overseas
Chinese affairs. Further progress was made in modernizing national
defense and the army. Our diplomatic work entered a new phase, and
China's international standing rose higher.

��The outstanding accomplishments in all areas last year are the result
of the Central Committee with Comrade Hu Jintao as General Secretary
staying on top of the overall situation and providing correct leadership.
They are also the result of the people of all ethnic groups working
together as one and tenaciously striving to succeed. All localities and
departments did a great deal of arduous and painstaking work, and all
sectors of society and people from all walks of life made important
contributions. On behalf of the State Council, I would like to express
our sincere gratitude to all our workers, farmers, intellectuals and
cadres; to all those who work for the cause of socialism; and to the
members of the People's Liberation Army, the armed police and the public
security police. I would like to extend our heartfelt thanks to the
people of all our ethnic groups, to all the democratic parties and mass
organizations and to people from all walks of life for their trust in and
support for the work of the government. I would also like to express our
sincere thanks to all our compatriots in the Hong Kong Special
Administrative Region, the Macao Special Administrative Region and Taiwan
as well as overseas Chinese who care about and support the development
and reunification of our motherland, and to all our friends in other
countries who care about and support China's modernization drive.

��We not only made great progress in all our undertakings during the
past year, but also enhanced our understanding through a wealth of
practical experience. Governments at all levels took more initiative in
implementing the central authorities' decisions and plans and became
better able and more aware of the need to take advantage of this period
of important strategic opportunities to promote development. The main
things we have learned from our experience are as follows.

��- We must establish and implement a scientific outlook on
development.This outlook is a new development that the CPC has
incorporated into its guiding ideology for the socialist modernization
drive. It emphasizes that development is an absolute necessity, that we
should focus on economic development and improve the quality and
efficiency of economic growth, and that we should put people first and
stress 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.], in order to achieve all-round, balanced and
sustainable development of the economy and society. We must be guided by
a scientific outlook on development in solving current outstanding
problems in economic activities and in building a moderately prosperous
society in all respects, and adhere to this outlook during the entire
course of reform, opening up and modernization.

��- We must strengthen and improve macroregulation.Macroregulation has
been an important way of implementing a scientific outlook on development
over the past two years. Both macroregulation and market forces are
integral components of the socialist market economy. We need to make
better use of the basic role of market forces in allocating resources and
carry out macroregulation well. It is important to adapt the direction,
focus, timing and intensity of regulation to economic changes and to
improve the methods of exercising it, which is mainly through economic
and legal means supplemented by administrative means when necessary, in
order to promote economic stability and sustained and rapid economic
development.

��- We must continue on the path of reform and opening up. China's
economic restructuring is still at a stage where critical problems need
to be addressed. We will unswervingly deepen reform and eliminate
structural factors that impede economic development and cause economic
instability to provide an institutional guarantee for all-round, balanced
and sustainable economic and social development. We need to coordinate
political restructuring and other reforms with the ongoing economic
restructuring. We need to continue to promote reform and development
through opening up and open up even wider to the outside world in all
areas to make China's economic system more open and vigorous.

��- We must balance overall and local interests.Our national economy is
an organic whole, so we should allow different regions to fully exploit
their own advantages and mobilize the initiatives of both central and
local governments in line with the strategic concept of "coordinating all
the activities of the nation like moves in a chess game." In formulating
any principles and policies, we must consider not only the overall
interests of the country and its long-term development but also the
characteristics of each region and industry. Local governments should
give full expression to their own initiative while subordinating their
needs to those of the country as a whole and the requirements for
long-term development.

��- We must act in accordance with objective laws.In our modernization
drive we must always proceed from actual conditions in the country and
conscientiously abide by objective laws. We should work energetically and
seize opportunities to speed up development, but we must not ignore
reality, recklessly expand the scale of development and only pursue rapid
economic growth. If we do not keep this in mind, we could end up "just
spinning our wheels and going nowhere" or even suffering serious losses.
Whether we are doing economic work or other work, we must strive for real
results by combining our subjective initiative with adherence to
objective laws.

��- We must always put the interests of the people first.We must truly
protect the people's economic, political and cultural rights and
interests, pay particular attention to solving acute problems affecting
their vital interests, and ensure that poor urban and rural residents
have the basic necessities of life. The fundamental goal of our socialist
modernization drive is to continually meet the growing material and
cultural needs of the people. Only if we exercise power for the good of
the people can we enjoy the broadest and most reliable support from the
people and draw from them the strength for accomplishing all our
undertakings.

��In reviewing our work of the past year, we clearly see that many
problems and difficulties remain in our economic and social
development.First, although the outstanding problems in economic
activities have been somewhat alleviated, they have yet to be
fundamentally solved. Weaknesses in agriculture as the foundation of the
economy still have not improved substantially, and it has become harder
to continue increasing grain production and rural incomes. In addition,
there is the possibility of a return to overheating in fixed asset
investment, supplies of coal, electricity, petroleum and transportation
are still very tight, and there is still considerable inflationary
pressure on prices.Second, there are glaring problems in social
development. We still need to solve quite a few problems in education,
health and culture in some areas, especially rural areas. The development
gaps between urban and rural areas and between different regions and the
income gap between some members of society are all too wide. Some
low-income people lead difficult lives and there are more than a few
factors threatening social stability.Third, there are still some
longstanding and deep-seated problems in economic and social development.
The main ones are as follows. There is considerable pressure on
employment. The economic structure is irrational, the level of industrial
technology is low, and tertiary industry is developing too slowly. The
investment rate continues to be too high, and consumption remains weak.
Economic growth is still too crude, and pressure on resources and the
environment is increasing. In particular, there are still prominent
structural and mechanistic problems that hinder sound economic and social
development.

��We are also keenly aware that there are still quite a few
shortcomings in the government's work. Self-reform and transformation of
government functions are behind schedule, there are still too many items
requiring administrative approval, and social management and public
services are inadequate. The responsibilities of some departments are not
clearly defined, making effective coordination difficult; some management
practices are backward; and productivity is low. Some problems affecting
the vital interests of the people have still not been fundamentally
solved. Some government employees are not conscientious enough about
performing their duties in accordance with the law. The problems of
formalism, bureaucracy, dishonesty, extravagance and waste are relatively
severe. Corruption is serious in some localities, departments and
organizations.

��We must face the above-mentioned problems squarely and continue to
adopt measures to solve them. We have to be mindful of potential perils,
elevate our sense of responsibility, guard against arrogance and
rashness, and work hard to make our country strong and prosperous. We
must progress in the face of difficulties and unswervingly do all our
work well to ensure that we do not fail to live up to the great trust and
expectations of the people.

II. The Master Work Plan for 2005��

��This year is crucial for accomplishing all the tasks of the Tenth
Five-Year Plan [2001-2005] and for laying a solid foundation for
development during the Eleventh Five-Year Plan [2006-2010]. The basic
ideas for the work of the government this year are: to take Deng Xiaoping
Theory and the important thought of Three Represents as our guide; to
conscientiously put into practice the guidelines of the Sixteenth
National Congress of the Party and the Third and Fourth Plenary Sessions
of its Sixteenth Central Committee; to continue to guide overall economic
and social development by a scientific outlook on development; to
strengthen and improve macroregulation; to make reform and opening up the
driving force for all our work; to build a harmonious socialist society;
and to promote the simultaneous progress of socialist material, political
and spiritual civilization.

��Taking all domestic and international factors into account, we have
set our main targets for this year's economic and social development as
follows: GDP growth around 8%, 9 million new jobs for urban residents,
registered urban unemployment rate within 4.6%, rise in the consumer
price index of no more than 4%, and basic balance in international
payments.

��Maintaining steady and rapid economic development is an important
issue that the government must successfully handle. This is a period of
important strategic opportunities for China, and the economy should grow
rapidly, but not be allowed to overheat. Both drastic upturns and
downturns in economic growth are bad for economic development, reform and
opening up, and social stability. In setting the target for this year's
economic growth at around 8%, the Central Committee took into
consideration both what is necessary and what is feasible, as well as
what will be needed to meet employment, price and other targets to ensure
that the growth target accords with actual conditions. Under the
conditions of the socialist market economy, targets are only guidelines
for economic and social development and can be adjusted in line with
economic changes. All localities should set their targets for economic
and social development in line with local conditions and focus on
improving the quality and efficiency of economic growth. They should not
blindly compete with each other for the fastest pace of economic growth.

��To ensure completion of all the tasks for economic and social
development for 2005, we will pay particular attention to the following
three aspects in our guidance and planning work.First, we will
concentrate on doing our macroregulatory work well. We will continue to
eliminate destabilizing and unsound factors in our economic activities,
promote economic restructuring and transformation of the pattern of
economic growth, maintain steady and rapid economic growth, and keep
overall price levels basically stable.Second, we will press ahead with
reform and opening up. We will make reform the driving force behind all
aspects of our work, integrate efforts to deepen reform with efforts to
implement a scientific outlook on development and to tighten and improve
macroregulation, and use reform to solve institutional problems in our
development. We will open to the outside world more fully and make better
use of both domestic and international markets and resources.Third, we
will build a harmonious society. To build a socialist society that is
democratic and law-based, fair and just, trustworthy and friendly, full
of vigor and vitality, secure and orderly, and in which man and nature
are in harmony, we need to unite all forces that can be united, bring all
positive factors into full play and stimulate the creativity of the
entire society. We need to properly balance the interests of all quarters
and ensure that everyone shares the fruits of reform and development. We
also need to balance reform, development and stability and strive to
create favorable conditions and a good climate for sustained economic and
social development.

III. Continuing to Ensure Steady and Rapid Economic Development

��We need to focus on accomplishing the following four tasks for this
year's economic development.

��1. Continuing to strengthen and improve macroregulation.In the
present state of economic activities, we cannot slacken our
macroregulation. We need to follow prudent fiscal and monetary policies
and better coordinate our macroeconomic policies this year. We must
adhere more closely to the principle of dealing with different sectors
individually and expanding some of them while contracting others, and
emphasize the role of market forces and economic and legal methods in
consolidating and building on our achievements in macroregulation.

��Following a prudent fiscal policy.The central government has followed
a proactive fiscal policy since 1998 to counteract the impact of the
Asian financial crisis and boost weak domestic demand. Time has proven
that this policy is correct and that it has produced remarkable results.
However, the scale of investment in China is now quite large and the
amount of funds in the hands of the general public has increased
substantially, making it necessary and possible for us to shift from an
expansive proactive fiscal policy to an appropriately tight fiscal
policy. We will appropriately cut the budget deficit and the quantity of
long-term treasury bonds for development this year. The deficit in the
central budget for 2005 will be 300 billion yuan, 19.8 billion yuan less
than was budgeted in 2004. The central government plans to issue 80
billion yuan worth of long-term treasury bonds, 30 billion yuan less than
last year, while allocations from the 2005 central budget for investment
in regular development projects will be increased by 10 billion yuan. The
long-term treasury bonds issued this year will be used mainly to increase
investment in weak links such as agriculture, rural areas and farmers;
social development; and ecological conservation and environmental
protection. The funds will also be used to develop the western region and
rejuvenate Northeast China and other old industrial bases; to support
accelerated development in old revolutionary base areas, ethnic minority
areas, border areas, and poverty-stricken areas; and to continue support
for some on-going bond-financed projects. We need to do our fiscal and
tax work conscientiously. Tax collection and management need to be
tightened in accordance with the law by screening and standardizing all
preferential tax policies and strictly controlling tax reductions and
exemptions to ensure that government revenue rises steadily. Increases in
general spending must be strictly held in check to ensure funding for key
projects. We need to practice frugality and eliminate waste in all our
work.

��Continuing to follow a prudent monetary policy.We will appropriately
control the supply of money and credit in order to support economic
development while guarding against inflation and financial risks. We will
improve financial regulation by flexibly using a variety of monetary
policy instruments. We will guide financial institutions to optimize
their credit structure, to improve their services, to provide working
capital to enterprises that are profitable and have a ready market for
their products, to provide more loans for small and medium-sized
enterprises and for rural areas, and to maintain the amount of medium-
and long-term loans at an appropriate level. To ensure safe, efficient
and stable financial operations, we must enhance supervision of financial
enterprises, vigorously yet prudently deal with all types of financial
hazards and crack down on illegal and criminal financial activities.

��Reining in the scale of fixed asset investment.We will continue to
closely monitor the two valves of approval for land use and availability
of credit. We will maintain the strictest land management system by
improving policies and intensifying law enforcement. We will improve city
planning and land management, further rectify the land market, strictly
limit transformation of farmland for use in development projects and
appropriately control the scale of urban development. We will accelerate
our work of improving the policies and plans for key industries and the
criteria for their market access. We will work hard to improve the
distribution of investment and guide non-government investment into areas
that are developing poorly. We will continue to regulate economic
activities to further alleviate tight supplies of coal, electricity,
petroleum and transportation.

��Vigorously expanding consumer demand.We will implement fiscal, tax,
financial and industrial policies that encourage consumption. Consumption
on credit and other new forms of consumption will be developed steadily.
We will improve the consumption environment, paying particular attention
to strengthening the rural infrastructure, expanding rural markets and
stimulating the distribution of agricultural products. New areas of
consumption will be fostered by such means as expanding the consumption
of services. We will guide consumer expectations and enhance consumer
confidence to increase immediate consumption.

��Keeping the overall price level basically stable.We will work hard to
keep the prices of grain and other primary farm products basically stable
at a reasonable level, focusing on curbing the excessively rapid rise in
the prices of the real estate and means of production and appropriately
handling the timing and magnitude of price adjustments for public goods
and services. Supervision of markets and prices will be improved to
resolutely put an end to price gouging.

��2. Improving our work relating to agriculture, rural areas and
farmers.Solving the problems facing agriculture, rural areas and farmers
remains a top priority of all our work. To adapt to the needs of the new
stage of our economic development, we will implement the principle of
industry nurturing agriculture and cities supporting the countryside and
rationally redirect the distribution of national revenue toward the
development of agriculture and rural areas. We will expand support for
this development in a number of ways, with the focus on expanding overall
agricultural production capacity, steadily improving grain production and
constantly increasing rural incomes.

��First, we will maintain, improve and strengthen policies to support
agriculture.The process of reducing or exempting the agricultural tax
will be accelerated. This tax will be substantially reduced or exempted
on a broad scale throughout the country, and it will be exempted in 592
key counties included in the national plan for poverty alleviation
through development. The livestock tax will be exempted throughout the
country. Revenue decreases in local budgets brought about by reduced or
exempted taxes on agriculture and livestock will be offset principally by
transfer payments from the central government. Additional expenditures of
14 billion yuan from the central budget will be needed for this purpose
this year, raising the total expenditures to 66.4 billion yuan. The
agricultural tax will be exempted throughout the country next year, which
means that what had been targeted for five years will be achieved in
three. We will continue to directly subsidize grain producers and
increase subsidies to farmers to purchase improved crop strains and
agricultural machinery and tools. Comprehensive measures will be adopted
to halt the steep price increases for the means of agricultural
production. The central government will allocate an additional 15 billion
yuan to increase transfer payments to major grain-producing counties and
to counties with financial difficulties. This policy is of great
importance for developing primary-level governments and all undertakings
in rural areas in these regions.

��Second, we will continue to make structural adjustments in
agriculture and the rural economy.We will further develop grain
production by stabilizing and increasing the acreage sown to grain,
strengthening development of grain production bases and strictly
protecting arable land, especially primary farmland. We will improve the
geographical distribution of agriculture, promote its specialized
production and industrial management, and develop distinctive
agricultural undertakings. Development of farm product processing
industries will be accelerated. We will energetically develop forestry,
animal husbandry and aquaculture. Township and village enterprises and
intra-county economies will be expanded.

��Third, we will intensify development of irrigation and water
conservancy projects and the rural infrastructure.Funding from state
investment in capital construction and the sale of treasury bonds will be
focused on developing irrigation and water conservancy projects,
improving the eco-system, upgrading low- and medium-yield farmland,
developing six categories of small rural projects [water-efficient
irrigation, potable water supplies, road building, methane production
facilities, hydroelectric plants, and pasture enclosure,tr.], expanding
dry and water-efficient farming, and constructing roads linking townships
to county seats. Greater priority will be given to major grain-producing
areas in distributing funds for overall agricultural development. We will
encourage and guide farmers to volunteer to work on small infrastructure
projects that will benefit them directly.

��Fourth, we will accelerate innovation in agricultural science and
technology and spread of the use of agricultural technology.We will
greatly increase investment in agricultural science and technology, raise
innovativeness in them, and further improve the system for expanding the
use of agricultural technology. Subsidies will be increased for expanding
the use of important agricultural technologies. We will encourage and
support scientists and technicians to go to the countryside to provide
technical consultation and services.

��Fifth, we will transfer surplus rural labor to nonagricultural jobs
in a variety of ways.Rural secondary and tertiary industries will be
developed to steadily promote urbanization and expand employment
opportunities for rural workers. We will conscientiously implement the
policies and measures for improving the environment for rural workers to
find jobs or start their own businesses in cities and provide more
vocational training for them. We will guide the movement of rural labor
to ensure that it flows in a rational and orderly way.

��3. Accelerating economic restructuring and change in the pattern of
economic growth.

��Optimizing and upgrading the industrial structure.We will stay on the
new road of industrialization. We will spur industrial restructuring by
relying on scientific and technological advances and focusing on becoming
better able to make independent innovations. We will accelerate
development of new and high technologies that can greatly stimulate
economic growth as well as broadly applicable, key and accessory
technologies that can propel the upgrading of traditional industries. We
will promptly formulate innovation targets and measures for achieving
them in key technologies in a number of important fields and make
breakthroughs as quickly as possible. We will improve the systems and
policies that encourage innovation. We will continue to introduce
advanced technologies, assimilate them, and make innovations in them,
while concentrating on enhancing our own development capacity. We will
energetically develop new and high technology industries and integrate
information technology into the national economy and society. We will
accelerate the transformation and upgrading of traditional industries
through new and high technologies and advanced applied technologies. We
will revitalize the equipment-manufacturing industry, focusing on major
projects. Guided by plans for specific projects, we will continue
strengthening basic industries like the energy industry and important raw
materials industries as well as infrastructure development in water
conservancy, transport and communications. We will vigorously develop
tertiary industries such as modern distribution services, tourism and
community services. We need to accelerate the development of capital- and
technology-intensive industries and continue to develop labor-intensive
industries.

��Promoting the reorganization and technological upgrading of
enterprises.We will take existing enterprises as our base, making good
use of reserve capacity and preventing indiscriminate construction of new
facilities. We will give more support in the areas of taxation, financing
and land use to key enterprises undergoing technological upgrading.
Efforts will be concentrated on integrating technological upgrading of
enterprises with their reform. We will support and encourage the
investment of non-government capital in the reorganization and
technological upgrading of enterprises.

��Paying close attention to conservation and rational use of energy and
resources.Efforts to alleviate the problem of tight supplies of energy
and resources needed for economic and social development must start at
home by utilizing energy and resources much more efficiently.First, we
will resolutely adhere to the policy of simultaneously developing and
conserving energy and resources, giving priority to conservation. We will
encourage the development and application of new technologies that use
less energy and resources, and institute a system requiring the
elimination of equipment and products that consume excessive quantities
of energy and materials.Second, we will promptly draw up standards and
targets for reducing energy and resource consumption in every industry,
along with policies and measures for meeting the targets. This work will
be focused on saving energy, water and materials in key industries. We
will encourage development of energy-efficient, environment-friendly
automobiles, and housing and public buildings that use less energy and
land.Third, we will energetically develop the recycling sector of the
economy. We will increase the comprehensive utilization of resources and
the recycling of resources by addressing problems concerning their
exploitation, their use in production and in society, and the utilization
of waste materials. We will also work vigorously to develop new and
renewable energy resources.Fourth, management of the exploitation of
mineral resources will be strengthened. We will rectify and standardize
the order in their exploitation. We will improve the compensation
mechanisms for the exploitation and utilization of mineral resources and
for restoration of the natural environment.Fifth, we will energetically
promote production and consumption practices that use less energy and
resources, increase public awareness of the importance of conservation,
and accelerate the development of a conservation-minded society.

��Strengthening environmental protection and ecological improvement.We
must promptly solve environmental pollution problems that seriously
affect the health of the people. Focusing on prevention and control of
water pollution, we will intensify efforts to clean up industrial and
urban pollution and rural nonpoint pollution and to protect potable water
sources. We will implement a system for strictly controlling the total
amount of pollutants discharged and increase monitoring and law
enforcement relating to environmental protection. We will energetically
promote clean production and develop environment-friendly industries. We
will continue our good work of protecting natural forests and improving
grasslands and make greater efforts to bring sources of sandstorms under
control. Our objective for this work is to ensure that people have clean
water, fresh air and a better environment in which to live and work.

��4. Promoting balanced development among different regions.Taking the
overall interests of building a moderately prosperous society in all
respects and accelerating the modernization drive as our starting point,
we formulated the general strategic plan to develop the western region,
reinvigorate Northeast China and other old industrial bases, energize the
central region and encourage faster development of the eastern region.
The plan is designed to implement a regional development strategy that
accommodates regional differences, exploits comparative advantages and
gives each its proper emphasis while maintaining close coordination. The
plan meets the need for overall balanced development while making maximum
use of each region's initiative and promoting interaction between the
eastern, central and western regions so that they can complement and help
each other and develop together.

��We need to carefully review the experience accumulated over the last
five years in implementing the strategy for developing the western
region. The state will further increase support for the region through
policies and measures, funding, deployment of industries and development
of human resources. We will continue to strengthen infrastructure
development and ecological conservation. We will carefully carry out the
work of returning farmland to forests and returning grazing lands to
grasslands. We will energetically exploit the western region's
competitive resources, develop its distinctive industries and strengthen
its processing capability. Development in key areas and zones will be
accelerated. We will vigorously open the western region wider to the rest
of the country and the rest of the world. Economic and technological
cooperation with neighboring countries and regions will be energetically
expanded. We will promptly set up permanent, stable channels to fund
development of the western region.

��We will fully implement the policies and measures of the Central
Committee and the State Council for reinvigorating Northeast China and
other old industrial bases. We will vigorously develop modern agriculture
and intensify development of state commercial grain bases. We will
accelerate the work of adjusting and upgrading the industrial structure
and reorganizing and upgrading key enterprises. We will establish a
mechanism for aiding declining industries and promoting the shift away
from a resource-based economy in cities. We will conscientiously carry
out pilot projects to reform VAT and trials to expand the urban social
security system. Northeast China and other old industrial bases should
take a new road to reinvigoration by relying mainly on innovations in
systems and mechanisms while accelerating reform and opening wider to the
outside world.

��We will promptly work out plans and measures to energize the central
region. Full advantage should be taken of the region's geographic
location and overall economic strengths to develop modern agriculture,
particularly in the main grain-producing areas, improve the overall
transportation system, build more bases for producing energy and
important raw materials, and accelerate the development of competitive
manufacturing and new and high technology industries. We will open up the
central region's large market to greatly stimulate the flow of goods. The
state will support this work through policy, funding and the deployment
of major development projects.

��Accelerating the development of the eastern region will help increase
our national strength and competitiveness, as well as support and
stimulate the development of the other regions. The eastern region needs
to lead the nation in optimizing the economic structure, deepening
institutional reforms and changing the pattern of growth. It should pay
more attention to raising the overall quality of its economy and
increasing its competitiveness in the international market, and develop a
more globally oriented economy. In addition, the region should better
balance urban and rural development as well as economic and social
development, and strengthen efforts to protect arable land, economize on
resources and improve the natural environment. It should also support the
development of the central and western regions.

��We will adopt even more effective measures to support old
revolutionary base areas, ethnic minority areas, border areas and
underdeveloped areas to accelerate their economic and social development.

IV. Vigorously Promoting Economic Restructuring and Opening Up

��We will work even harder this year to advance economic restructuring.
In particular, we will strive to make further breakthroughs in some major
areas and key links.

��1. Continuing rural reforms.The reform of rural taxes and
administrative charges constitutes a profound transformation of the rural
economic and social framework. We will exempt the agricultural tax and
eliminate all financial burdens on farmers, a complete reversal of the
practice of farmers paying grain tax to the government that has lasted
more than two millennia. Attaining this goal is only the first step in
our reform of rural taxes and administrative charges. We still need to
work harder, and we have a long way to go to solidify what we have
achieved in this reform. We will resolve new conflicts and problems as
soon as they arise in the reform, concentrating on the supporting reforms
of government institutions at the town and township level, the rural
compulsory education system, and the financial management system for
counties and townships. This will be a more important, complicated and
arduous task. In addition, we need to deepen the reform of the grain
distribution system, rural financial reforms, and the reform of the rural
land management system.

��2. Deepening the reform of state-owned enterprises.This reform
continues to be the central link in economic restructuring, and it must
proceed unwaveringly in accordance with the principles and policies set
by the Central Committee and the State Council.First, we will continue to
strategically readjust the distribution and structure of the state-owned
sector of the economy and improve the mechanism for ensuring rational
distribution of state funds by increasing investment in some areas and
pulling it out of others. We will energetically develop large enterprise
groups that own intellectual property rights, have name brand products
and are internationally competitive.Second, we will speed up the
transformation of large state-owned enterprises into stock companies. We
will improve corporate governance and change the operational mechanisms
of enterprises to meet the requirements for a modern enterprise system.
We will institute a system for annually assigning responsibility for
enterprise performance and a system for holding enterprise executives
responsible for their work during their terms of service. We will
standardize the system of benefit packages for these executives.Third,
the process of relieving state-owned enterprises of the obligation to
operate social programs will be accelerated. We will continue to carry
out policy-based closures and bankruptcy proceedings for enterprises, and
a legal mechanism will be established for declaring them bankrupt.Fourth,
we will deepen reform of the power, telecommunications and civil aviation
industries and continue reform of the postal and railway systems and
urban public utilities by liberalizing market access and instituting
competitive mechanisms. We will improve the management system and the
methods of oversight for state assets and institute a budget system for
the use of state capital. We will standardize the procedures for
transforming state-owned enterprises and for transferring state equity to
prevent erosion of state assets and protect the legitimate rights and
interests of employees. We will deepen the reform of collectively owned
enterprises and promote the development of a diversified collective
sector of the economy.

��3. Encouraging, supporting and guiding the development of the
non-public sector of the economy.We will conscientiously implement the
State Council's Guidelines for Encouraging, Supporting and Guiding the
Development of the Non-Public Sector of the Economy, Including
Self-Employed Workers and Private Companies, so as to create a legal,
policy and market environment that ensures fair competition for all
non-public enterprises. More industries and fields will be opened to
non-public capital, and financing channels for non-public enterprises
will be widened. Private property and the rights and interests of these
enterprises will be protected in accordance with the law. These
enterprises will be better served and supervised. They need to improve
their quality, and they must abide by laws, regulations and policies of
the state, conform to regulations for industrial safety and environmental
protection, and guarantee the legitimate rights and interests of their
employees.

��4. Accelerating the reform of the financial system.This is an
important task affecting the overall interests of reform and development.
We will accelerate the reform of state-owned commercial banks by carrying
forward the successful pilot program to turn them into stock companies.
The reform of policy banks and other commercial banks will be carried
forward. We will vigorously yet steadily develop financial institutions
with different forms of ownership. We will continue working hard to
implement the State Council's Guidelines for Promoting the Reform,
Opening Up and Steady Growth of the Capital Market. We will strengthen
the infrastructure of the capital market and formulate sound regulations
for it to protect the legitimate rights and interests of investors,
particularly non-government investors, thereby creating a favorable
environment for its steady and sound development. We will deepen the
reform of the insurance industry and standardize order in the insurance
market. We will steadily deregulate interest rates to leave them to
market forces, and reform the mechanism for setting the exchange rate for
the Renminbi and keep it basically stable at a proper and balanced level.
We will improve the system of financial oversight and management and
strengthen and improve our financial oversight and management work.

��5. Promoting reform of fiscal and tax systems and the investment
system.We need to strengthen the public finance system and improve and
standardize the system of transfer payments from the central government.
We will improve fiscal systems at and below the provincial level. The VAT
reform will be carefully carried out on a trial basis in selected areas,
and a plan will be formulated for implementing the reform in all other
areas. The mechanism for granting export tax rebates will be improved.
Reform of the budget management system will be deepened. The government's
decision on reforming the investment system will be fully carried out,
and we will formulate methods for implementing it and improve the systems
for examining and approving projects and keeping records. We will
establish a system for regulating investment from all sectors of society
that meets the needs of the new situation. We will standardize the scope
and procedures for government investment, improve the monitoring system,
and formulate a responsibility system for investments made by government
bodies and state-owned enterprises and a system for assigning
responsibility for bad investment decisions in order to eradicate the
problem of no one being held responsible for them.

��6. Strengthening the market system.We will energetically develop the
market for factors of production. We will standardize and develop the
equity exchange market. The reform of the distribution system will be
continued, and modern distribution methods will be vigorously developed.
Price reforms will be deepened to better balance price relationships. We
will thoroughly rectify and standardize order in the market, focusing on
continuing the work of cleaning up the markets for food and medicine,
which have a direct bearing on people's health and safety. We will
continue to rectify and standardize the agricultural equipment and
supplies, construction and real estate markets. A campaign to protect
intellectual property rights will be launched. We will severely crack
down on pyramid schemes and all other types of fraudulent commercial
activities, as well as economic crimes such as smuggling, tax evasion and
fraud, and money laundering. We will accelerate the establishment of a
credit system for the general public.

��This year we are faced with many new situations as we open up the
country to the outside world. Tariffs need to be reduced to the level we
promised when China joined the WTO, most non-tariff measures need to be
eliminated, and the service sector needs to be opened wider to foreign
competition. We need to respond to these new situations to ensure success
in opening up.First, we need to speed up improvement in the growth
pattern of foreign trade. We will improve the export mix, promote
upgrading of the processing trade and ensure continued growth of exports.
We will continue to effectually import energy, important raw materials,
key technologies and major equipment. We will reform the system of port
management and simplify customs clearance procedures. We will handle
international trade frictions and disputes properly.Second, we need to
continue to utilize foreign capital energetically and rationally. We need
to improve the performance of foreign capital and better integrate
efforts to attract foreign investment with efforts to improve the
country's industrial structure and technological level. We will encourage
foreign investors to invest in new and high technology industries, modern
services, modern agriculture and the central and western regions. We will
keep the number of projects that consume excess quantities of resources
and are highly polluting to a minimum.Third, we need to further implement
the "go global" strategy. We will encourage qualified enterprises to
invest and do business in other countries, give them more credit,
insurance and foreign exchange support, and strengthen guidance and
coordination for enterprises operating abroad. We will develop a sound
system for managing and supervising state assets abroad.Fourth, we need
to do all work for the transition period of our entry into the WTO
promptly and well. We will continue to develop multilateral and bilateral
economic relations and actively participate in regional economic
cooperation.

V. Vigorously Developing Social Undertakings and Building a Harmonious
Society

��We must adopt a scientific outlook on development and implement the
strategy of reinvigorating our country through science, education and
trained personnel and the strategy of sustainable development to
accelerate the development of social undertakings. We will strive to
solve outstanding problems vital to the immediate interests of the
people, safeguard social stability and build a harmonious socialist
society.

��1. Energetically working to develop science and technology,
education, culture, health and sports, and promoting spiritual
civilization.We will accelerate reform and development of science and
technology. We will promulgate a national program for medium- to
long-term scientific and technological development this year. We will
continue the work of establishing a national innovation system. We will
strengthen basic research and research in strategic hi-tech fields and
important technologies for non-profit application. We will continue work
on a set of major science and technology projects and devote more effort
to tackling problems in key technologies. We will move forward with the
development of major science and technology infrastructure projects and
key national bases for scientific research. We will deepen the reform of
the science and technology system, and accelerate the establishment of a
management system, an innovation mechanism and a modern system of
research institutes that are compatible with our socialist market
economy. Enterprises need to play a key role in technological innovation.
We will strengthen cooperation among industries, universities and
research institutes to promote application of scientific and
technological advances in production. We will continue to attach equal
importance to the social and natural sciences and further develop
philosophy and the social sciences.

��We will genuinely make education a strategic priority. Focusing on
improving compulsory education in rural areas, we will improve the
mechanism to ensure funding for education, with government investment as
the mainstay. We will continue to implement the plan to make nine-year
compulsory education basically universal and basically eliminate
illiteracy among young and middle-aged adults in the western region.
Starting this year, students from poor farmers' families receiving
compulsory education in key counties included in the national plan for
poverty alleviation through development will be provided with free
textbooks and exempted from paying miscellaneous fees, and those staying
on campus will receive living allowances. We will extend this policy
throughout the country's rural areas by 2007 to ensure that all students
from poor families can go to school and receive compulsory education. We
will work hard to provide schooling to the children of migrant workers in
cities. We will strive to improve the quality of higher education. Great
efforts will be put into developing vocational education of all types. We
will fully implement the Party's education policy by strengthening moral
education and promoting competence-oriented education to ensure that
students develop in an all-round way. We will accelerate reform and
innovation in the course content and methods of instruction, reduce the
study burden on students and speed up the development of modern distance
education. We will continue to promote the sound development of privately
run schools. We will rigorously standardize the enrollment and fee
systems of all types of schools and tighten their financial management
and oversight.

��We will accelerate the reform and development of health care. This
year we will complete development of the system for disease prevention
and control and basically complete the medical system for handling public
health emergencies. We need to truly focus our medical and health care
work on rural areas, upgrading the health care infrastructure and raising
the overall level of medical personnel there. We will continue the pilot
project for a new system of cooperative medical and health care services
in rural areas and explore ways to set up a medical assistance system. We
will work harder to prevent and control serious infectious diseases,
endemic diseases and occupational diseases. We will conscientiously
implement measures related to AIDS prevention and the treatment and care
of HIV carriers and AIDS patients to firmly stop the spread of AIDS. We
will carry out experimental reforms of the urban medical service system.
We will strengthen urban community health services and energetically
develop traditional Chinese medicine. We will deepen the rectification
and standardization of fees for medical services and prices for medicines
to solve the problem of inadequate and overly expensive medical services.

��We will continue research on the population development strategy,
maintain the family planning policy and keep the birthrate low. We will
expand the system for rewarding and supporting rural families that
observe the family planning policy and extend the "have fewer children
and prosper quicker" project for alleviating poverty on a trial basis in
more areas. We will do our work related to the elderly well, and we will
take an interest in and support programs to help the disabled.

��We will energetically develop an advanced socialist culture. We will
emphasize ideological and moral development and promote a patriotic
national spirit, a reformist and innovative spirit of the times, and a
collectivist and socialist ideology. We will intensify the ideological
and moral education of minors and the ideological and political education
of college students. We will promote reform of the cultural system and
innovation in cultural mechanisms and accelerate the development of
cultural undertakings and industries. We will continue to ensure that
cultural undertakings flourish, while carefully managing them. We will
develop literature, art, the press, publishing, radio, TV and film, and
strengthen development and management of the Internet. We will accelerate
primary-level cultural development in rural areas and expand radio and TV
coverage with the goal of reaching all villages. We will launch mass
activities to cultivate spiritual civilization. We will fight
unremittingly against pornographic and illegal publications. We will
widely initiate fitness programs for the general public. We will continue
working hard to prepare for the 2008 Olympic Games in Beijing and the
World Expo 2010 in Shanghai.

��We will intensify development of a skilled, diversified and
multilevel workforce, focusing particularly on training, attracting and
properly using high-level and highly skilled personnel. We will promote
the rational flow of human resources and strengthen legislation
concerning the human resources market.

��2. Creating more jobs, improving social security work and raising
people's living standards.We will continue to follow a proactive
employment policy, conscientiously implement all policies and measures to
support reemployment, and expand their coverage to workers laid off from
collectively owned enterprises. This year, 10.9 billion yuan will be
allocated from the central budget for reemployment work, 2.6 billion yuan
more than last year. Local budgets will also increase reemployment
allocations. We will increase employment guidance, training and services.
We will make overall arrangements to help urban dwellers entering the job
market for the first time, college graduates, demobilized servicemen and
surplus rural laborers find employment. We will strengthen oversight over
job security work.

��We will speed up development of the social security system. We will
improve the system of basic old-age insurance for enterprise employees.
While retaining the practice of combining contributions from various
sources in society with personal employee retirement accounts, we will
ensure that personal retirement accounts are fully funded in more areas
on a trial basis. We will incorporate subsistence allowances for workers
laid off from state-owned enterprises into the unemployment insurance
system. The longstanding problem of workers being laid off from
state-owned enterprises will be basically solved in most areas of the
country this year. People laid off by enterprises in the future will
gradually be incorporated directly into the unemployment insurance system
or urban subsistence allowance program in accordance with the law. We
will expand coverage of social programs for old-age, unemployment,
medical care and work-related injury benefits in accordance with the law
by incorporating more self-employed individuals and employees of private
and foreign-funded enterprises into the social insurance system and
improving methods for including persons without fixed employment in it.
We will intensify efforts to collect social security contributions and
gradually turn over management to higher-level authorities. We will work
out a plan for reforming the retirement pension system in government
bodies and institutions. We will improve the system of subsistence
allowances for urban residents, and areas where conditions permit may
establish a system of subsistence allowances for rural residents. We will
take good care of those injured and the families of those killed in the
service of their country. We will also support the development of
charities.

��We will continue to increase the incomes of urban and rural
residents, especially low- and middle-income people. We will adopt a
variety of measures to keep farmers' incomes rising. A mechanism will be
promptly set up to ensure migrant workers in cities get paid on time and
in full, and the work of getting their back wages paid to them will be
continued. All enterprises should strictly obey the minimum wage system,
pay all wages in full and on time, and raise wages as performance
improves. The salary system for public servants will be reformed and
standardized.

��We will continue reforming the system of income distribution. We will
rectify and standardize the way income is distributed, strive to improve
the personal income tax system, regulate income distribution more
closely, gradually achieve a more balanced income distribution, and work
hard to narrow excessive income gaps between some members of society, in
order to promote social justice.

��We will pay close attention to the basic living problems of urban and
rural residents with financial difficulties. Development of
community-based relief systems for urban and rural residents with special
difficulties needs to be accelerated in all localities to help them pay
for medical treatment, housing and schooling for their children. The
system for providing food, clothing, medical care, housing and burial
expenses for childless and infirm rural residents will be improved. We
will increase investment in poverty alleviation to help people in
poverty-stricken areas cast off poverty and become prosperous. We will
reduce or exempt taxes for disaster-afflicted areas and provide relief to
disaster victims who have difficulties in production and daily life.

��3. Strengthening democracy and the legal system and safeguarding
social stability.We will energetically yet prudently promote political
restructuring and develop socialist democracy. We will further expand
democracy and improve the democratic system at the primary level. We will
do our legislative work well, focusing on strengthening legislation to
improve macroregulatory mechanisms, to respond to emergencies and to
protect workers' legitimate rights and interests. We will press ahead
with reform of the judicial system and safeguard judicial impartiality.
Governments at all levels must support judicial and procuratorial organs
in exercising their respective power independently in accordance with the
law. We will increase publicity and education concerning the law. We will
do a good job of providing legal services and legal assistance. The
legitimate rights and interests of women, minors and the disabled will be
protected as prescribed by law.

��We will fully implement the Party's policies on ethnic minorities. We
will uphold and improve the system of regional autonomy for ethnic
minorities and consolidate and develop socialist relations among ethnic
groups based on equality, solidarity and mutual assistance in order to
promote the common prosperity and progress of all our ethnic groups. We
will fully implement the Party's basic principles guiding our work
relating to religious affairs, conscientiously implement the Regulations
on Religious Affairs and do all related work well in the new
circumstances. We will further improve our work relating to overseas
Chinese affairs.

��We will pay close attention to social stability. We will handle
conflicts among the people correctly, solve problems they report promptly
and appropriately, and rectify situations detrimental to their interests
in accordance with the law. We will conscientiously implement the
Regulations on People's Letters and Visits and improve the work of
handling these letters and visits. We will develop a sound mechanism for
mediating and settling social conflicts and disputes, improve the system
of early warning and the mechanism for prompt response to emergencies to
ensure social stability, and work vigorously to forestall and properly
deal with mass disturbances. We will improve all facets of public
security and vigorously carry forward the development of a crime
prevention and control system. We will severely crack down on all kinds
of crime in accordance with the law, in particular crimes threatening
state security, violent crimes, crimes committed by Mafia-like gangs,
drug-related crimes and frequently occurring crimes against property to
give people a stronger sense of security. We will improve our ability to
safeguard public security and deal with emergencies to reduce losses
caused by natural disasters, disastrous accidents and other emergencies.
We will raise the people's awareness of state security and develop a
mechanism for safeguarding state security.

��Since last year many catastrophic accidents have occurred in some
areas and industries. These resulted in heavy loss of life and property.
We must draw on the bitter lesson they taught us and adopt still more
effective measures to improve our work to ensure production safety. We
must strictly enforce the system of responsibility for production safety,
strengthen safety supervision, and intensify inspection and law
enforcement related to production safety to remove all kinds of hazards
and prevent and minimize the occurrence of catastrophic accidents. At
present, we should give top priority to coalmining safety by improving
the systems and mechanisms for ensuring coalmining safety, investing more
in coalmining safety facilities and improving coalmining safety
technology. The State Council has decided to spend 3 billion yuan this
year to help state-owned coalmines upgrade their safety technologies.
Local governments and coalmines must also invest more in coalmining
safety. We must have a strong sense of responsibility to the people and
truly make coalmining safer.

VI. Improving the Government's Administrative Capacity and Style of Work

��Last year we took some steps toward implementing the Administrative
Permission Law, making policy decisions more scientific and democratic,
promoting law-based administration and improving social management. We
are clearly aware that there is much to be desired in the government's
self-improvement efforts. We will earnestly implement the guidelines set
forth at the Fourth Plenary Session of the Sixteenth Central Committee
and accelerate government self-reform and self-improvement.

��1. Deepening the restructuring of government bodies.To make
government bodies more streamlined, unified and efficient and meet the
requirements for better coordination in making and implementing policies
and doing oversight work, we will improve the structure of government
bodies, clarify their functions and bring their staff sizes under strict
control. This should put the responsibilities, organizational structure
and size of the government on a scientific, standard and legal basis. We
must solidify the achievements that have been made in government
restructuring and solve new problems promptly. We will speed up
restructuring of town and township governments, focusing on rationally
defining their functions, simplifying their structure and reducing the
number of their employees. We will energetically yet prudently press
ahead with the reform of institutions on a type-by-type basis and
standardize the way they are granted powers in accordance with the law.

��2. Speeding up the transformation of government functions.We will
further separate the functions of government from those of enterprises,
state assets management authorities and institutions. We will resolutely
transfer responsibility for activities that the government should not be
engaged in to enterprises, civic organizations and intermediary agencies,
and maximize the role of civic organizations, industrial associations,
chambers of commerce and intermediary agencies. The work that the
government should do, it should do well. While effectively regulating the
economy and overseeing the market, we need to pay closer attention to
social management and public services by shifting more financial,
material and other public resources to these areas and having leaders
devote more energy to developing social undertakings and building a
harmonious society. We will conscientiously implement the Administrative
Permission Law. We will continue to deepen the reform of the system of
administrative approval, further reduce the number of items requiring
administrative approval, and standardize approval procedures.

��3. Improving the methods and means of economic management.We must
thoroughly change the traditional ideas and practices of the planned
economy. In pursuing economic development, governments at all levels must
concentrate on serving market players and creating an environment
favorable to their development. They must not make decisions or work to
attract business and investment on behalf of enterprises, or directly
intervene in their production and business operations. Leading cadres at
all levels must enhance their awareness of the importance of guiding and
their ability to guide economic work in accordance with the principles of
the market economy, to act in accordance with international practices and
to regulate economic activities mainly through economic and legal means.

��4. Working hard to build a service-oriented government.We need to
make innovations in our style of government and focus management on
providing services to lower-level governments, enterprises and the
general public. Administrative resources need to be better integrated and
administrative costs lowered to improve administrative efficiency and the
level of services. Government departments should not only strive to do
their own work well but also improve coordination and cooperation with
each other. We will improve the systems of public notifications and
public hearings to expand participation of the general public in the
management of public affairs. We will energetically make government
affairs more open and strengthen efforts to develop e-government. We will
increase the transparency of government work and boost popular confidence
in government.

��5. Improving our ability to perform our duties in accordance with the
law.We will conscientiously implement the basic policy of governing the
country by law and the Program on Performing Official Duties in
Accordance with the Law promulgated by the State Council, and speed up
work to build a law-based government. Governments at all levels and their
departments must strictly abide by the Constitution and laws, exercise
their powers and perform their duties within their stipulated scope of
authority and on the basis of the procedures defined by laws, and accept
oversight. We will implement a responsibility system for enforcement of
administrative laws and put a stop to overlapping jurisdiction and unfair
practices in law enforcement. We will strengthen the administrative
accountability system and investigate and prosecute administrative
improprieties in accordance with the law. All departments must strengthen
their internal management, actively cooperate with and support auditing
offices and supervision departments in the performance of their duties in
accordance with the law, and conscientiously correct any problems
discovered in the process. The scope of public and media oversight of the
government and its departments will be expanded.

��6. Making great efforts to improve the government's style of work.We
will adhere to the principle of "people first and government for the
people." We will maintain a scientific outlook on development and a
correct attitude toward our performance, and be realistic and pragmatic
in our work. We must strictly enforce the Statistics Law. We will work to
establish a scientific system for evaluating government performance and a
system for comprehensively evaluating economic and social development. We
must resolutely oppose formalism and the practices of falsifying reports.
We cannot build any more "image projects" or "vanity projects" that waste
both money and manpower. We will reduce the number of meetings and
documents and improve their style. We should conscientiously follow the
guiding principles of the State Council's Third Conference on Clean
Government and intensify our efforts to build a clean government and
combat corruption, focusing on reforms and institutional development. In
conjunction with the Education Campaign to Preserve the Advanced Nature
of Party Members, we will strengthen the education, management and
oversight of public servants and work hard to turn them into a contingent
of public servants with whom the people are satisfied.

Fellow Deputies,

��Strengthening national defense and developing the army constitute a
task of strategic importance to our modernization drive and an important
guarantee for safeguarding national security and reunification. Guided by
Mao Zedong's military thinking, Deng Xiaoping's thinking on army building
in the new period and Jiang Zemin's thinking on national defense and army
building, we will improve army building in all its aspects. We will
enable our army to fulfill its historic mission for the new century and
new period, focusing on the two historic objectives of ensuring that the
army is capable of winning any war it fights and that it never
degenerates. We will always assign paramount importance to the
ideological and political development of our army to ensure that the
orientation of its development is correct. Taking the military strategy
for the new period as our overall guide, we will actively promote the
revolution in military affairs with Chinese characteristics and enhance
the army's ability to use IT in fighting integrated warfare in defense of
the country. We will intensify scientific and technological training for
soldiers to turn out a new type of highly competent military personnel.
We will greatly strengthen defense-related research and modernize our
weaponry and equipment. We will continue to carry out the reform and
development of our defense-related science and technology industries. We
will complete the task of reducing the size of the army by 200,000
troops. We will improve the army's logistics to strengthen its support
capability. The army must be run strictly in accordance with the law and
made more standardized. We will make the People's Armed Police more
proficient and more capable of responding to emergencies. We will raise
the people's awareness of the importance of national defense, improve the
national defense mobilization system and strengthen the army reserves.
Governments at all levels must vigorously support the development of
national defense and army building and strengthen the solidarity between
the army and the government and between the army and civilians.

��We will unswervingly implement 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 we will act
in strict accordance with the basic laws of the Hong Kong and Macao
special administrative regions. We will give our full support to the
chief executives and governments of the two regions in administering the
regions in accordance with the law and in enhancing their governance
capability. We will increase the mainland's exchanges and cooperation
with Hong Kong and Macao in the fields of the economy, trade, education,
science and technology, culture and health, and promote the long-term
prosperity, stability and development of the regions.

��We will adhere to the basic principles of "peaceful reunification"
and "one country, two systems" and the eight-point proposal for the
current stage of efforts to develop cross-Straits relations and promote
peaceful reunification of the motherland, safeguard peace in the Taiwan
Straits and facilitate steady development of cross-Straits relations. We
will encourage and promote visits by individuals and economic and
cultural exchanges and cooperation across the Straits. We will encourage
and facilitate establishment of the "three direct links" between the two
sides. We will continue working to restore consultation and negotiation
between the two sides under the one-China principle and on the basis of
equality. We will make the greatest possible effort to do anything
conducive to the development of cross-Straits relations and the country's
peaceful reunification. The Anti-Secession Law (draft), which will be
submitted for your examination and approval, provides a full expression
of our unvarying position, which is that we are working most sincerely
and energetically to bring about peaceful reunification. This law
represents the common will and strong determination of the entire Chinese
people to safeguard the sovereignty and territorial integrity of the
country and never allow secessionist forces working for "Taiwan
independence" to separate Taiwan from China under any name or by any
means. We will work together with our Taiwan compatriots to accomplish
the great undertaking of reunifying the motherland.

VII. Following the Road of Peaceful Development and an Independent
Foreign Policy of Peace

��The international situation is undergoing complex and profound
changes. Peace and development remain the themes of our times. The road
of China's socialist modernization drive is a road of peaceful
development. China's intentions in taking this road are to take advantage
of favorable conditions presented by world peace to develop itself and
better safeguard and promote world peace through its development. China
bases its development mainly on its own resources and its own
restructuring and innovation efforts, while also taking an active part in
economic globalization and regional cooperation. China will continue the
process of opening up and promote cooperation with all other countries on
the basis of equality and mutual benefit, concentrate on development and
work to preserve a long-term peaceful international environment and an
excellent neighboring environment. China will never seek hegemony and
will always remain a staunch force safeguarding world peace and promoting
common development.

��In taking the road of peaceful development, we must unswervingly hold
high the banner of peace, development and cooperation, always follow an
independent foreign policy of peace, and maintain friendly relations with
all other countries on the basis of the Five Principles of Peaceful
Coexistence.

��We energetically worked to develop foreign relations on all fronts
last year. We strove to develop and maintain a peaceful and stable
international environment, a friendly neighboring environment, a
cooperative environment based on equality and mutual benefit, and a
public opinion environment that is objective and friendly. We played a
constructive role in dealing with a series of major issues with a bearing
on world and regional security and development, and increased friendly
contacts and mutually beneficial cooperation with other countries in the
world. The friendship between the Chinese people and peoples of other
countries grew. We made further contributions to safeguarding world peace
and promoting common development.

��This year we will continue to promote world multipolarization,
democracy in international relations and diversity in development models,
and encourage the progress of economic globalization in a direction
conducive to the common prosperity of all nations. We will vigorously
advocate multilateralism and a new concept of security, and oppose
hegemony, power politics, and terrorism in all its manifestations. We
will work for a new international order that is peaceful, stable, fair
and equitable. We will deepen mutually beneficial cooperation with
developing countries and safeguard the common interests we share with
them. We will adhere to our policy of friendship and partnership with
neighboring countries, strengthen friendly relations and cooperation with
them and deepen regional cooperation. We will strengthen relations with
developed countries, strive to expand areas of common interests and deal
with differences appropriately. We will actively participate in
international and multilateral diplomacy, safeguard and strengthen the
authority and leading role of the United Nations and the UN Security
Council, and work constructively in international and regional
organizations. We will intensify economic diplomacy and expand cultural
exchanges with other countries. We will vigorously protect the lives and
legitimate rights and interests of Chinese nationals living abroad.

��The Chinese government and people stand ready to work unremittingly
with the people of all other nations to safeguard and promote the cause
of world peace, development and progress.

Follow Deputies,

��The people of all our ethnic groups are marching forward in high
spirits on the road of socialism with Chinese characteristics. We have
full confidence in the bright future of our great motherland. Under the
leadership of the Central Committee with Comrade Hu Jintao as General
Secretary, let us hold high the great banners of Deng Xiaoping Theory and
the important thought of Three Represents, unite with one heart and one
mind, continue our concerted and unyielding efforts, and achieve further
successes in reform, opening up and the modernization drive!

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