III. Rectifying and Standardizing Order in the Market Economy to Create a Favorable Environment for Sound Economic Development

We must firmly resolve to clear up the chaos currently plaguing order in the market economy. This is a prevalent problem in economic activities, one which not only greatly undermines the interests of the state and the people by tarnishing the credibility of the state and the image of reform and opening up, but also seriously threatens sound economic development. There are many reasons for this chaos, including inadequate legal and regulatory footing for the market economy, lax management, ineffective supervision and poor discipline. Some lawless people and corrupt government employees have been working together to cause tremendous damage. We must make it an important part of our economic work to rectify and standardize order in the market economy. We need to deepen reform, strengthen the legal system, tackle both the symptoms and the root causes, focus on priorities, combine rectification and development and strive for initial results in about one year’s time.

Concentrating efforts on rectification. We will continue the fight against smuggling, fraudulent export tax rebates, evasion of foreign exchange repayment and obtaining foreign exchange under false pretenses and production and sale of fake and shoddy goods. Building on this base, we will rectify the commodity, financial, capital, construction and cultural product markets in an all-round way and to standardize order in business operations. Our priorities are as follows: First, we should make a conscientious and coordinated effort to crack down on criminal activities such as the production and marketing of fake and shoddy products. We should investigate key commodities, markets and areas to clear up major cases, focusing on fake and shoddy goods that make people especially indignant and threaten their health and the safety of their person and property. Second, we should intensify our campaign specifically directed against fraudulent export tax rebates, smuggling, sale of smuggled goods, evasion of foreign exchange repayment and obtaining foreign exchange through fraudulent means. We should mainly crack down on organized criminal gangs who falsify VAT receipts and obtain export tax rebates through fraudulent means as well as the criminal activities of vertically organized criminal rings. Third, we should continue to straighten out financial order. We will severely punish financial institutions involved in business activities that violate laws and regulations, abolish all illegal financial institutions and put an end to unlawful fraudulent financial activities, resolutely punishing any party who commits financial crimes in accordance with the law. Fourth, we will rectify and regulate the behavior of the major players in the market. We will outlaw enterprises with no capital, premises and facilities and businesses operating without a license, strictly investigate and deal with enterprises and intermediary institutions engaged in illegal activities such as falsifying account books, concealing income or issuing false certificates of credit. Fifth, we should rectify and standardize the construction market. We should implement the Public Bidding Law in real earnest, prohibit deception and the abuse of power to illegally interfere with public bidding and crack down on activities such as illegal subcontracting and contract transfer and under-the-counter operations. Sixth, we should put a stop to regional protectionism and market segmentation. Unfair competition should be strictly investigated and punished to break departmental monopolies and regional blockades and ensure fair competition in the market. Departments responsible for economics and trade, finances and taxation, pricing, banking, securities regulation, foreign exchange administration, customs, industry and commerce administration, quality inspection, commodity inspection and drug administration must carry out all their duties, cooperate with each other, coordinate their efforts and strengthen management in order to obtain real results.

Rectification and standardization of order in the market economy should be accompanied by efforts to bring criminals to justice and curb corruption. We must break a number of major cases that have wide implications and involve a large amount of money, heavy losses and serious negative social impact. The principal offenders in such cases as well as habitual offenders should be severely punished in accordance with the law to deter other people from committing such crimes. Corrupt state functionaries who collude with, cover up for or otherwise aid criminals should be subjected to strict investigation and prosecution.

Instituting rules and regulations and administering according to law. We must strengthen the socialist legal system, establish and develop market rules and standardize the actions of government departments, enterprises and intermediary institutions. We will review local statutes and department regulations and rescind those that run counter to the laws and statutes of the state, promptly formulating corresponding administrative and judicial interpretations. We will work in a spirit of reform in order to rectify and standardize order in the market economy, straighten out the overall system, transform the mechanism and standardize the system of credit relationships. We will work to improve the quality of personnel in charge of enforcing the law in customs, entry and exit inspection and quarantine, tax, industry and commerce administration, quality and technical supervision, drug administration, price inspection and project inspection. We will strengthen the political integrity and professional skills of law enforcement officials and judicial officials to ensure strict law enforcement and fair justice. State functionaries must perform their duties strictly within their jurisdiction and the procedures prescribed by laws and statutes.

Strictly enforcing the law, tightening discipline and strengthening supervision. We should improve supervisory and regulatory mechanisms, tighten fiscal discipline, strengthen management and supervision, plug up all loopholes and earnestly investigate and punish those guilty of fiscal indiscipline. We must practice strict economy and combat extravagance. We will strengthen regulation of the prices for the products and services of monopoly industries. We will crack down on unlawful practices such as price fraud. We will continue to review all types of fees to eliminate arbitrary fees and crack down on evasion of debt repayment in accordance with the law. Efforts to develop intermediary institutions in the market will be intensified. Intermediary institutions affiliated to government departments should gradually cut their ties with these departments and perform their functions as prescribed by law following a principle of fairness, transparency and justice. We will continue to strengthen the system of public supervision by establishing and improving a supervision system mainly composed of legal restrictions, government administration, press scrutiny and consumer participation. We should give full play to the role of TV, radio, newspapers, periodicals, the Internet and other media to facilitate supervision through public opinion.

Strengthening education to address both the symptoms and root causes. We will increase people’s awareness of the legal system for the market economy and the importance of maintaining good credit through a general education campaign so that they will become fully aware of the necessity and importance of straightening out and standardizing order in the market economy. We will rule the country both according to law and by high ethical standards. We will step up efforts to educate people in order to strengthen their work ethics, enhance their awareness of the importance of maintaining credibility and encourage them to foster a strong sense of honesty and trustworthiness and handle business matters in accordance with the law. This will create the proper atmosphere in society for combating the production and sale of fake goods, smuggling, sale of smuggled goods, evasion of foreign exchange repayment, obtaining foreign exchange under false pretenses and other crimes and encourage people to take it as their duty to develop and safeguard an orderly market economy. The State Council will soon formulate relevant laws and regulations and a decision on rectifying and standardizing order in the market economy. This decision will assign responsibility and define necessary measures to intensify rectification efforts in order to address the root causes of the chaos in the market economy.

Improving management and ensuring safe production. This is a matter that has a direct bearing on the safety of the life and property of the general public and on the sound operation of the national economy. We need to raise people’s awareness of the need for safety in production. We will continue to put safety and prevention of accidents first. We need to work hard to improve management, enforce relevant regulations, invest more in safety facilities and do more to maintain equipment and eliminate hidden hazards. We must tighten the responsibility system for safety in production, subject local authorities or organizations where major accidents occur to strict investigation and prosecution and bring to justice any offenders and leading officials who are found responsible for accidents.

Fellow Deputies,

Mankind has entered a new century. China is in a new stage in which people throughout the country are working for a comfortable life and accelerating the socialist modernization drive. We must rally closely around the Party Central Committee with Comrade Jiang Zemin at its core, hold high the great banner of Deng Xiaoping Theory and earnestly implement the guidelines set at the Fifteenth National Congress of the Party and the Fifth Plenary Session of the Party’s Fifteenth Central Committee. We must have a clear understanding of the current situation, capitalize on the favorable conditions and work diligently and with full confidence to promote sustained, rapid and sound development of the national economy and pave the way for accomplishment of the tasks set forth in the Tenth Five-Year Plan.