Ladies and Gentlemen,

Good Morning!

Yesterday, Xinhua News Agency published in full the Opinions of the Central Committee of the Communist Party of China and the State Council on Policies to Strengthen the Rural Work and Improve the Overall Production Capacity of Agriculture. This represents the "2005 No.1 Document" of the CPC Central Committee. To give you a better understanding of the main purpose and basic contents of the document, I would like to provide you with some background information for your reference.

1. Agricultural and rural economic situation in 2004

At the beginning of 2004, the CPC Central Committee and the State Council also issued a No.1 Document regarding agriculture and rural issues, which was entitled "Opinions on Policies for Facilitating the Increase of Farmers' Income." The document was aimed at arousing the enthusiasm of farmers, to boost the pickup of grain production. The main policies in this document were abolishing tax levies on special farm produce except tobacco crops, reducing agricultural tax, providing direct subsidies to farmers who grow grains, providing subsidies to spread high-quality grain seeds and subsidizing farmers to purchase large agricultural equipment. With these policies, farmers have gained a direct benefit of 45.1 billion yuan. Under the conditions of rising grain prices and good climate, these policies have achieved a better result than expected. The good situation in agriculture and the rural economy in 2004 can be proved by the increase in both grain production and farmers' income. The total grain output was expected to exceed the anticipated objective of 455 billion kg, while the per-capita net income of farmers was expected to increase by over 300 yuan, with the rate of increase higher than 6.5 percent, exceeding the 5-percent increase target set at the beginning of the year. These figures show that agriculture has been strengthened during the implementation of macro regulation. And the increase of grain production and farmers' income has in turn played an active role in maintaining the stability and development of the economy and society.

2. Since there was an increase in grain production and farmers' income, why does the 2005 No.1 Document still emphasize the improvement of the overall production capacity of agriculture?

This is mainly because the basis for increase is still not solid. There were at least four factors contributing to last year's increase in grain production and farmers' income, namely, the factors of policy, work, price and climate. But the price and climate factors are not always favorable. In recent years, the area of arable land has decreased while irrigation and water conservancy facilities have been ageing without repairs. Meanwhile, there are not sufficient ready research results of agricultural science, and the system for technology promotion is not sound. Taking all these into account, the grain production capacity has actually declined compared to the end of the 1990s. Therefore, if the overall production capacity of agriculture is not improved, food security in the country will eventually be put at risk. But the emphasis on improving the overall production capacity of agriculture is not meant to merely increase grain production. It also aims to improve the efficiency and competitiveness of agriculture and to increase the income of farmers. So, the 2005 No.1 Document puts forward multiple requirements for accelerating the buildup of the overall production capacity of agriculture. They are: 1) Intensifying conservation of the arable land and improving the ecological environment; 2) stepping up the construction of irrigation and water conservancy facilities; 3) promoting the agricultural sci-tech advancement; 4) doing a good job in building infrastructure in rural areas, including the transport, telecommunications, market and farm produce testing facilities; 5) deepening the restructuring of agriculture and rural economy and sparing no efforts to develop the agricultural produce processing industry; and 6) enhancing the training for farmers to improve their skills. All these aspects, if reinforced, will be beneficial not only to a stable increase in grain production, but also to improving the efficiency and competitiveness of the agricultural sector as a whole, as well as to increasing the income of farmers.

3. Main contents of the 2005 No.1 Document

The 27 articles in nine chapters in the 2005 No.1 Document can actually be divided into five sections. In addition to emphasizing the improvement of the overall production capacity of agriculture, there are four other aspects.

First, it stresses that the effectual policies should be stable, perfected and strengthened. The policies issued in 2004, especially those regarding agricultural tax exemption and reduction and subsidies for farmers, were very popular among farmers. But they are also worried whether these policies will change after grain production and their income increased. Therefore, the document states at the very beginning that those policies will remain unchanged and further, greater efforts will be made in increasing the income of farmers and reducing their burden.

Second, it points out that with the enhancement of overall national strength, the mechanism for steadily increasing state investments in agriculture should be gradually perfected and the safeguard measures for agriculture and farmers that are in conformity with not only China's actual conditions but also WTO rules should be established.

Third, the development of education, health and other social undertakings in rural areas should be speeded up. Currently, the gap between rural and urban areas is manifested not only in the level of economic development and residents' income but also in public welfare schemes established by the government, such as compulsory education and basic medicare. Facilitating the implementation of social welfare schemes in rural areas requires the earlier establishment of a public finance system and a standard transfer payment system. The 2005 No.1 Document contains the stipulation that of the newly increased funds for education, health, culture and other social undertakings, no less than 70 percent should go to rural areas. Meanwhile, the central finance also formulated a policy that, starting from 2005, transfer payments to the counties and townships in central and western regions that have fiscal difficulties will be largely increased.

Fourth, it emphasizes that Party committees and governments at all levels should be fully aware of the importance of agricultural and rural works to the overall economic and social development and efforts should be made to strengthen the building of Party organizations in rural areas, establish or improve the system of villagers' self-governance, maintain and guarantee the economic benefits and democratic rights of farmers, and promote the overall economic and social development of rural areas.

To realize the continuous increase in grain production and farmers' income in 2005, there are still a lot of difficulties. But so long as we earnestly carry out all the policies and measures stipulated in the No.1 Document, I believe that we will overcome those difficulties and maintain the sound development momentum of agriculture and rural economy.

Now, I would like to answer your questions.