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Full Text of the Report on China's Economic and Social Development Plan

Following is the full text of the Report on the Implementation of the 2003 Plan for National Economic and Social Development and on the 2004 Draft Plan for National Economic and Social Development, delivered at the Second Session of the 10th National People's Congress on March 6, 2004:




By Ma Kai, Minister of the State Development and Reform Commission


I. Implementation of the 2003 Plan for National Economic and Social Development


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



Fellow Deputies,


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


I. Implementation of the 2003 Plan for National Economic and Social Development


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


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


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


2. Structural adjustment was vigorously carried forward, and economic vitality continued to improve. The acreage devoted to high-quality crop varieties increased. The acreage sown to high- quality special wheat accounted for 38 percent of China's total acreage sown to wheat, 7 percentage points higher than the previous year. Principal crops were further concentrated in the areas with the most suitable conditions. The livestock and fishery industries continued to develop, and the output of dairy products increased by 25 percent. Smooth progress was made in major agricultural, forestry and water control projects.


Manufacturing industries with a high technological content led industrial growth. The production of electronic and information products grew by 34 percent. Treasury bonds continued to play a major role in promoting structural adjustments.


A number of projects of great importance for long-term economic and social development were completed and put into operation, and they performed well.


Water was successfully stored in the Three Gorges Reservoir; permanent locks on the Three Gorges Project were opened to navigation; and the project's first set of generators began producing power. Construction was started on the eastern and central routes of the South-to-North Water Diversion Project. An additional 46,000 kilometers of highways and 1,164 kilometers of newly completed railway lines were opened to traffic. The power industry developed more quickly. The country produced 1.9 trillion KWH of electricity in 2003, 15.5 percent more than in 2002. The generating capacity of newly started projects and projects put into operation during the year each totaled more than 30 million KW.


Tertiary industry continued to develop, and some new service industries expanded rapidly. The number of telephone subscribers reached 532 million, a year-on-year increase of 112 million.


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


3. New strides were made in developing the western region, and implementation of the strategy for reinvigorating northeast China and other old industrial bases began. Ecological conservation and environmental protection work in the western region was further intensified. Some 3.37 million hectares of farmland were returned to forests; 3.77 million hectares of barren hills and wasteland were afforested; and 6.66 million hectares of seriously degraded grassland were improved.


Greater efforts were put into infrastructure development. An additional 317 kilometers of track was laid on the Qinghai-Tibet railway line. The eastern section of the West-to-East Natural Gas Piping Project was completed, allowing natural gas to be delivered to east China. An additional power transmission capacity of over 8 million KW was installed as part of the West-to-East Electricity Transmission Project. Another 4,200 kilometers of highways connecting county seats were built or upgraded.


An adequate supply of potable water was ensured for 8.6 million more rural people. More than 300,000 rural households had access to methane. Implementation of the strategy for reinvigorating northeast China and other old industrial bases began. The eastern and central regions accelerated their development, and new areas of economic growth kept emerging.


4. There was all-round development in science, technology, education and all other social undertakings as well as continued progress in ecological conservation and environmental protection. Basic and hi-tech research was intensified.


Continued progress was made in the state innovation system. The first successful manned spaceflight by Shenzhou-V was another milestone in China's hi-tech development. Education continued to develop. Fresh progress was achieved in compulsory education.


Regular institutions of higher learning across the country enrolled 3.822 million students, 617, 000 more than the previous year. Efforts to develop public health facilities were intensified, and about 6 billion yuan from the sale of treasury bonds was allocated to develop an anti-SARS infrastructure, disease prevention and control networks at the provincial, prefectural and county levels, and a public health emergency response system.


The rate of natural population growth was 6.01. Implementation of key cultural projects proceeded smoothly. Radio, film, TV, the press, publishing, sports and other undertakings continued to develop.


Ecological conservation and environmental protection were intensified, and economical and multipurpose utilization of natural resources was promoted. Some 2.05 million hectares of forests were developed to improve ecological conditions or serve as shelterbelts. Banning or temporarily suspending animal grazing allowed for 8.6 million hectares of grassland to be effectively protected and rationally utilized.


Pollution control and treatment were accelerated in key river valleys and regions, including the drainage basins of the Huaihe, Haihe and Liaohe rivers, Taihu, Chaohu and Dianchi lakes, and the Three Gorges Reservoir. The percentage of urban sewage receiving centralized treatment, the percentage of urban household garbage safely disposed of, and the multipurpose utilization of industrial solid waste all increased moderately.


5. The various reforms pressed ahead in an orderly manner, and China continued opening wider to the outside world. Institutional restructuring of the State Council was completed smoothly, and steady progress was made in institutional restructuring of provincial-level governments. The experimental reform of rural taxes and administrative charges was carried out throughout the country.


Important steps were taken in the reform of the state-owned assets management system and state-owned enterprises. Reform of the electric power, telecommunications and civil aviation industries was continued. The export tax rebate mechanism was improved. The reform of state-owned commercial banks was accelerated. The Chinese People's Insurance Company and the China Life Insurance Company completed their reorganization and transformation into stock companies and were successfully listed on overseas stock exchanges.


Smooth progress was made in the trial reform of rural credit cooperatives in eight provinces and municipalities directly under the central government. Trials for restructuring the cultural system were started in selected regions. Major and important cases were investigated and prosecuted in the course of rectifying and standardizing the order of the market economy, resulting in gradual improvement of the market environment.


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


6. More jobs were created, and people's lives continued to improve. A total of 8.59 million more urban residents found jobs, and 4.4 million laid-off workers were reemployed in 2003; both figures exceeded the targets set for the year. The registered unemployment rate was 4.3 percent in cities and towns at the end of 2003.


The urban population had a per capita disposable income of 8,472 yuan, an increase of 9 percent in real terms, and the rural population had a per capita net income of 2,622 yuan, an increase of 4.3 percent in real terms. Living allowances for laid-off workers and old-age pensions for retirees were basically paid on time and in full. Social security coverage further increased, as more people became covered by old-age, medical, unemployment or workman's compensation insurance. Some 22.35 million urban residents received subsistence allowances, 1.7 million more than in 2002.


The government allocated special funds to help people in disaster-afflicted areas restore production and improve their living conditions. Programs to give people work in place of relief subsidies continued to expand. Better roads and supplies of electricity and potable water in poverty-stricken areas improved working and living conditions there. Steady progress was made in pilot programs to move impoverished people out of areas afflicted by extremely poor ecological conditions.


Because of the complicated and volatile international situation, the unexpected SARS outbreak and the numerous natural disasters, these achievements in China's economic and social development were made only with great difficulty. They are attributable to the correct leadership of the CPC Central Committee with Comrade Hu Jintao as General Secretary, which maintained control of the overall situation and remained calm and resolute in making decisions.


Credit also goes to local authorities and government departments, which consciously followed the important thought of Three Represents, unified the broad masses of cadres and people and worked hard in a down-to-earth manner. These achievements are also due to the National People's Congress strengthening its oversight and guidance and the CPPCC taking an active part in the deliberation and administration of state affairs.


While affirming our achievements, we are clearly aware that there are still many difficulties and problems in China's economic and social development that we cannot afford to ignore. Some longstanding, deep-rooted problems have yet to be solved, and there are still structural barriers holding back economic and social development.


Moreover, there are new circumstances and problems affecting the operation of the economy. First, farmers have difficulty increasing their incomes and grain production has dropped considerably. The 2003 increase in per capita net income for the rural population was 0.5 percentage points lower than in 2002. The problem of indiscriminate expropriation of arable land is serious. Grain output for 2003 decreased by 26.4 billion kilograms year-on-year.


Second, the problem of unemployment remains serious. We still have about 14 million laid-off workers and unemployed people in cities and towns. Approximately 10 million new urban residents are expected to enter the labor force this year. In addition, large numbers of surplus rural laborers still need to shift to non-agricultural industries and urban areas.


Third, there is an excessively wide income gap among some members of society, and in both urban and rural areas many low-income people lead a fairly difficult life.


Fourth, the economic structure is still irrational, and too much of our economic growth is based on extensive production. The problems of haphazard investment and low-level, redundant expansion are worsening in some industries and localities, resulting in excess energy consumption, serious waste of resources and environmental pollution. Considerable disparity remains between supply and demand in coal, electricity, oil and transport capacity, and the shortages of resources are increasingly affecting development.


Fifth, economic and social development remains imbalanced. The public health service system is far from sound. The situation that rural education remains weak as a whole requires fundamental changes. Sixth, the order of the market economy remains somewhat chaotic. We urgently need to improve the social credit system. Major industrial accidents occur frequently. We need to take a long-term perspective rooted in the present and solve these problems through reform and development.


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

The year 2004 is an important year for achieving the targets set in the Tenth Five-Year Plan and a crucial time for maintaining good momentum in economic growth. To ensure economic and social development this year, we must follow the guidance of Deng Xiaoping Theory and the important thought of Three Represents and fully implement the guiding principles of the Sixteenth National Congress of the CPC and the Third Plenary Session of its Sixteenth Central Committee. We must continue to put the people first and articulate and bring to fruition a conception of all-round, balanced and sustainable development.

In line with the need to balance urban and rural development, balance development among regions, balance economic and social development, balance development of man and nature, and balance domestic development and opening wider to the outside world, we must shift the focus of our economic work onto restructuring the economy, changing the mode of economic growth, and improving its quality and efficiency. We must nurture, guide and make good use of everyone's initiative in accelerating development so as to bring about sustained, rapid, balanced and sound developme nt of the national economy and all- round social progress.


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


l         Economic growth rate around 7 percent.

l         Nine million new jobs for urban residents and registered urban unemployment rate confined to 4.7 percent.

l         Rise in the consumer price index of about 3 percent.

l         Increase in total import and export volume of 8 percent.


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


1. Adopting comprehensive measures to increase rural incomes and maintaining and increasing grain production capacity. Following the principle of "giving more, taking less and loosening control," we will strive to increase rural incomes, aiming for an increase in the per capita net income of 5 percent in 2004.


We will continue to carry out strategic restructuring of agriculture and the rural economy. We will implement a plan to arrange where crops are grown so as to use cropland to the best geographical advantage. We need to strengthen scientific research in agriculture and apply research results more widely.


We will promote the development of intensive processing of farm and livestock products and other non- agricultural industries in rural areas, and improve the distribution of farm products. We will develop farmers' cooperatives for specialized production and speed up industrialization of agricultural operations. We will strengthen the emergency animal epidemic prevention system, improve the systems of quality standards of farm products and for inspecting, testing and certifying them, and implement the Action Plan for Pollution-Free Food. We will promote the adjustment and transformation of township and village enterprises, selectively develop small towns, and strengthen intra-county economies.


Vocational training will be offered to rural laborers, and better information will be provided to guide the movement of surplus rural labor in an orderly way. The problem of withholding or delaying payment of the wages of migrant rural workers in cities must be solved, and a mechanism to ensure the timely payment of such wages will be established and improved. Pay for farmers will be included in the budgets for government-financed rural construction projects to ensure they are properly paid.


We will deepen the reform of rural taxes and administrative charges, reduce the rates for agricultural taxes and eliminate taxes on all special agricultural products except tobacco to effectively lighten the burden on farmers. We will give more people work in place of relief subsidies as part of the effort to improve the mechanism for alleviating rural poverty through development. Emergency disaster relief work must be done well, and proper arrangements will be made for the work and daily lives of needy rural households.


We will strengthen our grain production capability and improve the country's food security. The acreage sown to grain must be expanded. We will work hard to increase the yield per unit area and ensure that grain output totals 455 billion kilograms this year. We will practice the most stringent possible system for protecting farmland. We will reform the way land is expropriated and requisitioned and the mechanism of compensating for its expropriation and requisition. The transformation of farmland to non-agricultural purposes will be planned and managed strictly.


We will launch a project to industrialize production of high-quality grains, and establish a group of state production centers concentrated in major grain producing areas to produce high- quality and special grain crops. Investment will be increased to develop improved crop strains, promote wider application of advanced agricultural techniques, prevent and control plant diseases and pests, improve irrigated areas, develop dry farming and water-saving irrigation, turn hillsides into terraced fields and build silt trappers. Improvement of low- and medium-yield farmland will be accelerated. Major grain consumption areas will also be obligated to protect their primary farmland to maintain necessary grain production capacity and ensure adequate local grain reserves.


2. Adjusting the orientation of investment using treasury bonds to make full use of their role in promoting restructuring and balancing development. We will ensure the continuity and stability of our macroeconomic policies, adhere to the principle of stimulating domestic demand, and continue to implement a proactive fiscal policy and a prudent monetary policy.


At the same time, we will make timely and appropriate adjustments to the emphasis and intensity of these policies in response to changes in the economy. Premier Wen Jiabao pointed out in his Report on the Work of the Government yesterday that we would issue 110 billion yuan worth of long-term construction treasury bonds this year. We must manage and use them well in line with the resolutions of this session. This year the focus of these funds will be shifted from the previous emphasis on expanding domestic demand and stimulating economic growth to promoting restructuring and balancing economic and social development.


They will be mainly used for the following: first, to increase support for developing agriculture and rural areas by building more small and medium-sized infrastructure projects such as water-efficient irrigation facilities, potable water supplies, roads, methane production facilities, hydroelectric plants and pasture enclosure projects, so as to promote balanced urban and rural development; second, to place greater emphasis on developing social undertakings by investing more in infrastructure projects for public health and medical care, elementary education, primary-level governments, people's courts and public security, procuratorial and judicial organs, so as to promote balanced economic and social development; third, to support development of the western region and adjustment and transformation of northeast China and other old industrial bases, so as to promote balanced regional development; fourth, to continue to improve ecological conservation and environmental protection, so as to promote balanced development between man and nature; and fifth, to build more key infrastructure projects, so as to create the conditions necessary for long-term, stable economic and social development.


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


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


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


We must work hard to alleviate bottlenecks in economic development. We will accelerate development of large coal mines and the coal transport system, so as to increase the coal supply without compromising production safety. We will continue developing power generating facilities and power grids in accordance with the principle of giving priority to building power generating capacity and ensuring its rational distribution.


In 2004, construction will be started on power plants with a combined capacity of 40 million KW, new power generating capacity of 37 million KW will come on line, and desulphurization equipment will be built simultaneously as required. We will improve management of power grids and the demand for power to ensure a safe power supply. We will properly organize the production and import of crude and processed oil and speed up the building of a national strategic oil reserve. We will better regulate economic operations in accordance with the laws of the market to balance supply and demand in coal, electricity, oil, transport capacity and important raw and processed materials. We will develop more trunk lines and transportation hubs.


The basic way to alleviate the disparity between supply and demand in coal, electricity, oil, transport capacity and important raw and processed materials is to increase the supply as much as possible and at the same time to effectively change the pattern of economic growth, restructure the economy, and restrict haphazard development of industries and enterprises that waste energy and resources and cause serious pollution and to encourage all industries to save energy and eliminate waste.


4. Implementing a proactive employment policy and continuing to expand consumer spending and improve people's lives. We will further implement existing measures such as fiscal and credit support and tax and fee cuts and exemptions and do everything possible to create more jobs. We will give full play to the role of labor-intensive industries, small and medium-sized enterprises and non-public sectors of the economy in expanding employment.


We will vigorously develop the tertiary industry and expand avenues for employment in traditional service industries such as business, food and beverage service and transportation. We will create more jobs in the areas of public health, urban environmental protection, medical care, as well as community and domestic services. We will expand employment in tourism, education, training, culture, sports and information services. We will promote diverse types of employment and encourage people to be flexible in taking a job or become self-employed. We will improve the employment service system, strengthen the reemployment assistance system and provide better job training, job introduction and employment guidance services to laid-off workers and the unemployed. We will work harder at job placement for college graduates and ex-servicemen.


We will improve the consumer environment, expand consumer spending and gradually increase the proportion of consumption in our GDP. While doing everything possible to increase rural incomes, we will improve commodity distribution facilities and commercial outlets in rural areas and develop infrastructure facilities there such as those for water, power and roads, thus creating conditions for rural residents to expand their consumption.


We will continue to implement the "three-stage guarantee" and ensure that the living allowances for workers laid off from state-owned enterprises and the pensions of retirees are paid on time and in full. We will improve the social assistance system, provide subsistence allowances to the urban poor and help needy urban families solve their practical problems. We will increase the supply of low- and moderate-price commercial housing, stimulate the secondary housing market and expand consumer spending on housing. We will vigorously develop urban public transport services.


We will steadily increase consumer spending on private cars and communications. We will encourage people to spend more on travel, sports, fitness and culture. We will accelerate the development of the credit system and develop consumer credit. We must combine efforts to expand consumption with those to strengthen regulation of income distribution. We will raise the minimum wage appropriately to increase the incomes of urban residents, especially low- and middle-income people. We need to strengthen supervision over income distribution in monopoly industries and intensify collection and management of individual income tax to regulate excessively high incomes.


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


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


6. Balancing the development of regional economies so that the eastern, central and western regions can complement each other and develop together. We will improve and implement all the policies and measures for developing the western region. We will do a good job on major projects having a bearing on the long-term development of the western region and small and medium-sized projects vital to the immediate interests of the people there.


We will provide more funding for upgrading roads connecting county seats and building roads to villages, and continue to solve the problem of a potable water supply for people and livestock. Construction will be started on the Jiudianxia Water Control Hub and other key projects. We will speed up the building of airports on feeder air routes in the western region. We will build on our achievements in returning cultivated land to forests, and effectively help those farmers and herdsmen whose land has been returned to forests solve their problems of food, firewood and low incomes. We will develop distinctive economic undertakings and industries that have a competitive edge. The number of skilled personnel working in the western region will be increased, and laws and regulations concerning the region will be improved.


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


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


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


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


8. Continuing to implement the strategy of sustainable development and balancing social and economic development with population growth, resource exploitation and ecological protection. We will continue our good work on key ecological projects, including projects to protect natural forests, key shelterbelt projects and projects to control the source of sandstorms affecting Beijing and Tianjin. We will improve our overall ability to manage and protect nature reserves, functional ecological zones, scenic spots and historical sites.


Measures will be intensified to control pollution in the drainage basins of the Huaihe, Haihe and Liaohe rivers, Taihu, Chaohu and Dianchi lakes, and the Three Gorges Reservoir and in areas along the routes of the South-to-North Water Diversion Project, and to control discharge of sewage from large industrial projects and pollution caused by acid rain and sulfur dioxide. We will continue to prevent and control pollution in key industries and cities and increase the proportion of urban sewage and garbage treated. We will promote clean production and develop environment-friendly industries.


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


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


9. Continuing to promote development of science, technology and education and developing all social undertakings. Development of the state innovation system and the scientific and technological infrastructure will be accelerated. We will strengthen basic and hi-tech research, promote the application of scientific and technological advances in production, and improve the ability of enterprises to make technological innovation.


We will begin work on large national science laboratories and installations such as the Shanghai Synchrotron Radiation Facility. We will make good progress in constructing the National Nanoscience Center. National engineering research centers will be set up in the fields of biology, informatics, new materials and pharmaceuticals, and a number of national key laboratories will be upgraded. We will support key enterprises to build their state-level technology centers. We will energetically promote the development of philosophy and social sciences.


We will implement the strategy of relying on talented personnel to strengthen the country. We will energetically train, recruit and properly use all kinds of talented personnel. The top priority for our work in education will continue to be rural education. We will lose no time in improving the mechanism for ensuring adequate funding for rural education to make it more regular and institutionalized. We will intensify our efforts to make nine-year compulsory education basically universal and to basically eliminate illiteracy among young and middle-aged people in the western region.


We will continue the project to renovate dangerous primary and secondary school buildings in rural areas and the national program to make compulsory education universally available in poverty-stricken areas. We need to successfully carry out our pilot projects for modern distance education in rural primary and secondary schools. We will improve the system of government and non-government subsidies for students from indigent families.


We will work harder to develop high-quality universities and key disciplines and improve the quality of higher education. We will increase the number of key senior secondary schools and vigorously develop vocational education and continuing education. Training of high-level technicians will be stepped up. Plans call for enrolling of 4 million undergraduate students and 330,000 graduate students in regular institutions of higher learning in 2004.


We will actively develop culture, health, sports, radio, film, TV, the press, publishing and other undertakings. Primary-level public cultural facilities will be improved. We will better protect our natural and cultural heritages. We will expedite development of our disease prevention and control system, public health emergency response system, major epidemic disease information network and system for supervising enforcement of health-related laws and regulations. We will strengthen the medical and public health infrastructure and the environmental sanitation infrastructure in rural areas.


Application of digital and computer network technologies in radio, film and TV will be accelerated. We will promote the sound development of the sports industry. We will make good progress in constructing Olympic venues and related facilities. III. Promoting Economic Restructuring Vigorously but Prudently


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


Improving the fundamental economic system whereby public ownership is dominant and diverse forms of ownership develop together. We will adjust the distribution pattern and structure of the state sector of the economy more quickly and improve the mechanism for redirecting investment of state capital so that it can move more rationally. The system for managing and supervising state assets will be improved.


A budgetary system for state capital management and a performance evaluation mechanism for enterprises will be established. The transformation of state-owned enterprises into standard stock companies will be vigorously promoted. We will strongly encourage state, collective and non- public enterprises to invest in each other in order to promote a mixed ownership economy. We will foster the formation of large internationally competitive companies and enterprise groups and further reduce government control over small and medium-sized state-owned enterprises so as to reinvigorate them.


Measures to support reforms in the power, telecommunications and civil aviation industries will be improved. We will organize reform of the postal system well. We will promptly work out plans for reforming the railway system. Commercialization of water and gas supplies and other urban public utilities will be accelerated. Diverse forms of collective economy will be developed. Development of non-public sectors of the economy will be encouraged, supported and guided. We will fully implement all policies that give non- public enterprises the same treatment as other types of enterprises in market access, investment, financing, taxation, land use and foreign trade. We will speed up the process of commercializing services and improve services and oversight for non-public enterprises.


Promoting the reform of the fiscal, taxation and financial systems. Fiscal systems at and below the provincial level will be improved and standardized, and the financial resources at the disposal of governments at county and township levels will be increased. We will gradually shift from a "production VAT" to a " consumption VAT;" we will do this first in some industries in northeast China in 2004 on a trial basis. All measures for reforming the export tax rebate system will be fully implemented.


We will introduce a shareholding system in the Bank of China and the China Construction Bank and continue carrying out pilot projects for reforming rural credit cooperatives. Interest rates will be steadily deregulated. Capital markets will be vigorously developed, and the proportion of direct financing by enterprises will be raised. Management of enterprise bonds will be improved, and the amount and types of the bonds they issue will be increased. Regulatory systems for the banking, securities and insurance industries and mechanisms for coordinating them will be improved.


Making arrangements for the reform of the investment system. We will promptly formulate and improve measures to support reform of the investment system. Enterprises will be able to make investment decisions independently in line with the principle that "the investor makes the investment decisions, reaps the profits and bears the risks." Scientific and democratic decision-making mechanisms for government-funded projects will be improved, and examination and approval procedures will be simplified and standardized. The contractor system for construction will be vigorously promoted.


We will establish an accountability system for investment. While expanding enterprises' decision-making powers over investment, we will strengthen the system of macro- controls over investment. We will rely mainly on economic and legal measures supplemented by administrative measures when necessary to curb haphazard investment and low-level redundant construction in some industries and maintain a rational scale of investment. A system for supervising and managing investment will be established and improved.


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


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


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


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


Deepening reforms of the systems of science, technology, education, culture and health. We will reform the management system of science and technology, improve the modern enterprise system in institutes engaged in technological development and promote the reform of institutes engaged in public welfare research. We will consolidate and improve the system of rural compulsory education that is managed by governments at multiple levels, with county governments playing the principal role, as well as the system of higher education that is managed by the central and provincial governments, with the latter playing the main role.


We will establish and improve the system of vocational education that is managed by governments at multiple levels, with local governments playing the principal role and with both overall government planning and non-government participation. We will continue the pilot reform of the cultural system. We will deepen the reforms of the medical insurance system, the medical and health systems, and the medicine distribution system. We will successfully introduce a new type of system for rural cooperative medical care and health services on a trial basis in selected regions. Fellow Deputies,


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


(Xinhua News Agency March 19, 2004)

Congress in Session
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