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Government's Report Card

Atnine o’ clock on March 5, 2007, China’s Fifth Session of the10th National People’s Congress (NPC) was opened at the Great Hall of the People in Beijing, where Premier Wen Jiabao delivered the report on the work of the government to nearly 3,000 NPC deputies on behalf of the State Council of China. The report is composed of the following six parts:


n Reviewing the work in 2006;

n Planning the work in 2007;

n Promoting rapid and sound economic development;

n Enhancing the building of socialist harmonious society;

n Deepening reform and expanding opening-up; and

n Strengthening government reform and construction.

The following are extracts from the report:


2006: A Good Start to 11th Five-Year Plan


In his government work report, Premier Wen Jiabao said that 2006 was a good start to the 11th Five-Year Plan (2006-10). China made significant achievements in social and economic development in 2006.


– Economy increased rapidly.

GDP reached 20.94 trillion yuan, an increase of 10.7 percent over 2005; the consumer price index rose 1.5 percent. The economic growth rate has been equal to or higher than 10 percent for four consecutive years now with no significant inflation.


– Economic efficiency improved steadily.

National revenue hit 3.93 trillion yuan, an increase of 769.4 billion yuan over 2005; profits of above-scale industrial enterprises rose 31 percent, an increase of 444.2 billion yuan.


– Reform and opening-up expanded further.

Key areas and sectors continued to make progress. The value of import and export totaled US$1.76 trillion, an increase of 23.8 percent over 2005; actual use of foreign direct investment was US$69.5 billion.


– Development of social undertakings accelerated.

 Significant results were seen in technological innovation. The education and public health systems have been improved. Culture and sport are blossoming.


– People’s lives greatly improved.

Approximately 11.84 million new jobs were created in urban areas. The disposable income of urban residents reached 11,759 yuan per capita. Net income of rural residents hit 3,587 yuan per capita. After deducting price factors, the actual growth rate reached 10.4 percent and 7.4 percent respectively over the previous year.


Seven Focal Points of Work Done in 2006


The State Council focused on seven major areas in 2006, Wen said.

– Strengthening and improving macro-regulations and controls.

 The Central Government promptly adopted a series of macro-controls in connection with conspicuous problems in economic operations such as the overly rapid growth of investment, excessive monetary credit and trade surplus.


– Enhancing work on the three agriculture-related aspects.

 Expenditure on the three agriculture-related aspects (rural areas, farmers and agriculture) reached 339.7 billion yuan, an increase of 42.2 billion yuan over the previous year.


– Accelerating economic restructuring.

 Efforts have been made in formulating policies and taking measures to accelerate the revitalization of the equipment manufacturing industry and promote the independent manufacture of major technologies and equipment for key areas.


– Actively promoting reform and opening up.

Progress has been made in adjusting the layout of the state economy, reforming the shareholding system of state-owned enterprises, and supervision of state-owned assets.


– Vigorously developing social undertakings.

 Central finance spending on technology, education, health and culture was 77.4 billion, 53.6 billion, 13.8 billion and 12.3 billion yuan, an increase of 29.2 percent, 39.4 percent. 65.4 percent and 23.9 percent over the previous year.


– Striving to improve the employment and social security work.

 The Central Government endeavored to improve and better implement the policies that support employment and re-employment, and allocated 23.4 billion yuan for employment and re-employment funds.


– Continuing to build a democracy and legal system.

 The State Council submitted seven legal bills including the draft law on enterprises’ income tax, anti-monopoly, unexpected events management and compulsory education to the NPC Standing Committee for consideration. It also enacted 29 administrative regulations such as an AIDS Prevention Act and Regulations on the Management of Foreign Banks.


Contradictions and Problems in Economic and Social Development


Premier Wen pointed out that there are still many contradictions and problems in China’s economic and social development, and some shortcomings and deficiencies in government work.


The first problem is the prominent contradictions in the economic structure. The proportion of primary, secondary and tertiary industries in GDP is imbalanced. Development in urban and rural areas is uneven. The relationship between investment and consumption is uncoordinated.


The second problem is the extensive economic growth pattern, which is reflected most prominently in high energy consumption and heavy pollution. China failed to meet its 2006 target to reduce energy consumption per unit of GDP by about 4 percent and to cut down the total discharge of major pollutants by 2 percent.


Third, efforts to resolve outstanding problems concerning the interests of the masses were insufficient. Many people on a low income still lead a difficult life.


Fourth, the government itself still has some problems. There are still a small number of civil servants who neglect their duties. They are detached from the masses,  abuse their power and they are corrupt.


Hitting 8 Percent of GDP Growth in 2007

According to Wen, taking all factors into account, the main objectives of this year’s national economic and social development are: To achieve an 8-percent growth in GDP based on efforts to optimize the structure, improve efficiency, lower consumption and protect the environment; to create new jobs for no less than 9 million people in urban areas and keep the registered unemployment rate in urban areas below 4.6 percent; to keep the general level of prices stable and the rise of the overall consumer price index within 3 percent; to improve the imbalance of international payments.

Strengthening and Improving Macro-controls and Regulations

 It is necessary to persist in strengthening and improving macro-controls so as to promote fast and stable economic development, Wen said.


China needs to continue to pursue sound fiscal policies, Wen said.


First, the government should appropriately reduce the scale of the financial deficit and long-term treasury bonds for construction. This year the Central Government’s budget deficit will be 245 billion yuan, a decrease of 50 billion yuan from 2006; planned long-term treasury bonds for construction are valued at 50 billion yuan, 10 billion yuan less than last year; investment in routine construction from the central budget is 80.4 billion yuan, 25 billion yuan more than last year’s budget; total investment from the Central Government in construction is 130.4 billion yuan.


Second, the structure of the government budget and government investments needs to be improved. China needs to ensure that direct investment in rural production and living conditions exceeds that of the previous year; investment in social undertakings such as education and public health exceeds that of the previous year, so did the input in the development of western regions.


Third, the excess financial revenue should be used appropriately. It should be used primarily to pay export tax rebates, return farmland to forest and other old problems. The government should increase local tax returns and general transfer payments according to the law, increase investment in education and science, and increase funding for social security, policy-based SOE bankruptcy, and the basic living expenses of residents.

Enhancing the Control and Management of  Real Estate Market

Based on the fact that China has a large population but scarce land and on the current economic development level, it’s necessary for China to build energy-efficient, land-saving and environmentally friendly buildings in light of the current economic conditions and levels of development. The real estate industry should focus on ordinary housing for the masses. The government should specially care for and help solve the housing problems of low-income families, increase policy support, establish and perfect the low-rent house system, as well as improve and standardize the system for economical housing, Premier Wen said.


Wen said China needs to correctly use government regulations and market mechanisms to maintain a reasonable scale of investment in real estate, optimize the commercial supply structure, increase supervision and regulation of housing prices, curb excessive increases in property costs, and maintain a reasonable level of prices. Efforts should be made to thoroughly rectify and regulate the real estate market order, improve supervision of the market, and crack down on illegal development, transactions and intermediary activities in accordance with the law, Wen added.

Striving to Save Energy and Protecting the Environment

Wen stressed that energy-saving and environmental protection work should focus on the following eight areas in 2007:

n Improving and strictly implementing energy and environmental standards;

n Eliminating obsolete production capacity;

n Giving priority to key industries and enterprises;

n Improving energy-saving and environmentally friendly policies;

n Accelerating progress of energy-saving and environmentally friendly technology;

n Intensifying efforts to control pollution and protect the environment;

n Strengthening the supervision of law enforcement management; and

n Taking responsibility system for saving energy and protecting the environment.

Ensuring 12 Million Hectares of Arable Land

We must not make any irreversible mistakes which would be calamitous to future generations, Wen said, and we must ensure the area of arable land is no less than 12 million hectares.

In order to better protect arable land, especially basic farmland, as well as prohibit the unauthorized use of tillable land, it is necessary to regulate which areas are built upon. The construction of villas, golf courses, and new Party, government and state-owned enterprise projects, such as training center sites, should be prohibited in particular.

Encouraging, Supporting and Guiding Private Economic Development

It is necessary to enthusiastically implement the Central Government’s policies and measures aimed at encouraging the private economy to get involved in the reform of state-owned enterprises, financial services and social undertakings. They should also be included in undertakings such as the construction of public utilities and infrastructure. Efforts should be made to improve the policies on finance, taxation and technological innovation, as well as the management of private enterprises. The legitimate rights and interests of privately owned enterprises should be protected in accordance with the law and the guidance and management of non-public enterprises should be improved, so as to encourage these enterprises to operate in compliance with the law.


Promoting Education and its Equality


Premier Wen noted that China will take two major measures to promote the development of education.


First, beginning with the 2007 academic year, China will establish and improve the system of state scholarship and increase aid for students attending general undergraduate colleges and universities, higher vocational institutions and vocational secondary schools. The Central Government will increase its budget for this from 1.8 billion yuan in 2006 to 9.5 billion yuan in 2007. Spending will hit 20 billion yuan next year. Local governments will increase spending correspondingly.


In addition, China will expand a national student loan policy to help students from poor families.


Second, China will provide free education for students studying to be teachers at normal universities directly under the administration of the Ministry of Education, so as to encourage more young people to devote themselves to the education of others.

Waiving Tuition and Other Fees for Compulsory Education in Rural Areas

Premier Wen stressed that China will completely waive tuition and fees for compulsory education in rural areas in 2007, so as to reduce the economic burden on the 150 million rural families which include middle and primary school students. In addition, it will continue to provide free textbooks and subsidies to boarders from poor families.


The national budget for compulsory education in rural areas will reach 223.5 billion yuan this year, an increase of 39.5 billion yuan over 2006. During the 11th Five-Year Plan period, the Central Government will invest a total of 10 billion yuan in reconstructing junior high schools in rural areas. Local governments will also increase spending correspondingly.

Putting Greater Emphasis on Vocational Education

Premier Wen pointed out that giving priority to the development of vocational education and making education truly accessible to the whole of society is a major change and a historic task.


It is necessary to focus on the development of secondary vocational education, and to improve the vocational education and training network in both urban and rural areas, Wen said. China needs to expand the reform of the management system for vocational education, establish an educational system that involves industry, enterprises and schools, and promote cooperation between them.


The quality of higher education needs to be improved and reform of education and teaching needs to be accelerated. Efforts should be made to stabilize the enrollment scale, improve academic and university development, and to train as many talented people as possible. The Chinese Government needs to support and regulate the development of private education, so as to fully encourage the society’s enthusiasm for education.

Focussing the Reform of Medical and Health Care System on Four Areas

Premier Wen said that in order to accelerate the reform and development of the health care work, we must focus on the construction of a basic health care system that covers urban and rural residents, and the work for this year will focus on the following four ar eas:


First is to speed up the establishment of a new type of rural cooperative medical care system by extending the scope of current trials to 80 percent of the counties in China this year. The central finance will allocate a subsidy of 10.1 billion yuan, an increase of 5.8 billion yuan over 2006.


Second is to strengthen urban community health services. The central finance will provide certain allowances to the central and western regions.


Third is to launch the pilot project of community-based system of urban medical and health care services. The government will offer certain financial assistance to people in need.


More efforts will be made to intensify the prevention of major communicable diseases. In 2007, 15 communicable diseases such as hepatitis A and epidemic meningitis that can be effectively prevented through immunity have been listed on the national immunity planning. Apart from free treatment for patients of such communicable diseases as AIDS and snail fever, the free treatment will cover more diseases for this purpose. Therefore, the central finance will offer another 2.8 billion yuan.

Improving Employment and Social Security

Premier Wen stressed that we should do a better job to improve employment and social security, and continue to put employment expansion at a prominent place.

Emphasis should be placed on the work to create jobs for laid-off workers  because of economic transformation or enterprise reorganization, restructuring, closure or bankruptcy. We should help "zero-employment" families and people who have difficulty in finding jobs get employed. We will pay close attention to helping university graduates find jobs and helping demobilized soldiers return to civilian life.

We should enhance the construction of social security system. This year, the Central Government will allocate 201.9 billion yuan to social security, an increase of 24.7 billion yuan. We will improve the system of basic old-age insurance for enterprise workers. We will step up development of the basic medical, unemployment, workers’ compensation and maternity insurance systems for urban residents, with the compensation and medical insurance for the migrant workers as the focus.

We will improve the rural and urban social aids system.  Efforts will be made to establish the minimum living security system for urban residents, the system for rural and urban medical aids and for childless and infirm rural residents. 2007 will see the establishment of the minimum living security system in rural areas.


Solving Problems Concerning Extravagance and Waste in Some Administrative Departments


We will work vigorously to improve the government’s work style. One important task we are now facing is to deal with the serious problem of extravagance and waste in some government bodies. Quite a few local governments, departments and organizations compete with one another for lavishness and spend money with gay abandon, which arouses strong public resentment.


We must put a resolute stop to these unhealthy practices. We will strictly control the construction and expansion of government office buildings, absolutely stop the construction of more luxury government building projects, truly standardize official entertaining, plug up loopholes in management rules, and work to reduce government overhead and build a conservation-oriented government.

Developing the Prosperity and Stability of Hong Kong and Macao

Premier Wen said that the Central Government will work together with people of Hong Kong and Macao to maintain lasting prosperity and stability of Hong Kong and Macao.


Wen said, China will unswervingly stick to the policy of  "one country, two systems," "Hong Kong people administer Hong Kong," "Macao people administer Macao" and high-degree autonomy. The Central Government will act in accordance with the Basic Law of Special Administrative Region and give full support to the chief executives of Hong Kong and Macao in their law-based governance and in their efforts to develop the economy, improve people’s livelihood and promote harmony. The Chinese mainland will strengthen its exchange and cooperation with Hong Kong and Macao in the fields of economy, trade, science and technology, education, culture, health and sports.

Strongly Opposing to Any Form of Secessionist Activities in Taiwan

Premier Wen stressed that the government will remain committed to the basic principle of peaceful reunification and "one country, two systems" and vigorously expand exchanges and cooperation between the two sides.


We will continue to develop the cross-Strait relationship and push forward all polices aimed to promote peaceful reunification of China.


We will unite Taiwan compatriots to fight firmly against any secessionist activities including Independence by Legal Theory of Taiwan.


We adhere to the basic principles of "peaceful reunification" and "one country, two systems" and the eight-point proposal for developing cross-Strait relations and promoting China’s peaceful reunification under the present circumstances.


We will unswervingly uphold the one-China principle and never give up our efforts to achieve peaceful reunification.


We will try to conduct dialogues between the two sides on the basis of one-China principle and promote resumption of direct links for postal, air and shipping services and trade on a comprehensive, direct and two-way basis, so as to win peace, development and well-being for people across the Strait.


We will strive to resume dialogue and exchanges with parties in the island that are willing to conduct cooperation with the Chinese mainland under the one-China principle to promote a peaceful and stable development of cross-Strait relationship.

Making Unremitting Efforts to Promote the Construction of a Harmonious World

Premier Wen expressed that China stands ready to make unremitting efforts to promote the construction of a harmonious world of lasting peace and common prosperity together with peoples in other countries.


Wen indicated that China’s proposal to build a harmonious world conforms to the world’s development trend and also the common interests and aspiration of people around the world. It is a reflection of the strong commitment of the Chinese Government and the Chinese people to contribute to world peace and progress. In the efforts to build a harmonious world, we need to achieve equal and democratic politics, mutually beneficial economic cooperation and growing cultural cooperation. Friendly cooperation with other countries is to jointly cope with global security challenges both in conventional and unconventional forms, so as to achieve lasting peace and common prosperity of the world.


Wen said that we must make great efforts to conduct exchanges and cooperation with the rest of the world in terms of economy, trade, science and technology, culture, education and sports, so as to strengthen the friendship between China and people around the world and to present China’s image as a peaceful, democratic, civilized and progressive country.


China will try to safeguard the legitimate rights of Chinese citizens and Chinese legal persons in other countries, and at the same respect, protect the legitimate rights of foreigners in China.



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