We learned many valuable lessons in our experiences over the last five years. The main ones are as follows.
First, we must continue to liberate our thinking. Liberating our thinking and following a realistic and pragmatic approach is the Party's ideological line. We must proceed from reality in everything we do, eliminate superstition, break the shackles of outdated ideas, respect the people's pioneering spirit, boldly explore new ways, take concrete action, be creative, and keep up with the times to ensure that the cause of socialist modernization retains its great vitality.
Second, we must steadfastly apply the Scientific Outlook on Development. This is a major strategic concept for developing socialism with Chinese characteristics and an important guiding principle for China's economic and social development. We must continue to take development as the top priority, concentrate on changing the way the economy develops, and adjust the economic structure to improve the quality and efficiency of economic growth. We must always put people first, attach great importance to overall planning, and promote comprehensive, balanced and sustainable development. Only by thoroughly applying the Scientific Outlook on Development can we achieve sound and rapid economic and social development and promote social harmony.
Third, we must adhere to the reform and opening up policy. Reform and opening up is a major and crucial choice that is shaping the destiny of contemporary China. We need to unswervingly promote reform in economic and political institutions, develop socialist democracy, improve the socialist market economy, liberate and develop the productive forces, promote social fairness and justice, and achieve all-round personal development. Opening up is also a kind of reform, and a nation cannot become strong if it is not open and inclusive. We must continue to pursue reform and opening up throughout the course of socialist modernization and never deviate from this policy.
Fourth, we must continue to exercise effective macroeconomic regulation. Both macroeconomic regulation and market forces are components of the socialist market economy. We need to make better use of the basic role of market forces in allocating resources, revitalize enterprises and improve their competitive edge. At the same time, we need to improve macroeconomic regulation, continue to carry out macroeconomic regulation mainly through economic and legal means, and get the complete range of government policies to fully play their role. We must continue to deal with each situation on its own merits, encourage growth in some sectors and discourage it in others as the situation requires, and refrain from taking a uniform approach to different situations or putting on the brakes without good reason. We must continue to draw lessons from our experiences, make policy adjustments as needed and be result-oriented. We must integrate the use of market forces with macroeconomic regulation in order to ensure that the economy remains vigorous, performs well, and develops in a sustainable, healthy and balanced way.
Fifth, we must continue to run the government for the people. All the power of the government comes from the people, and running the government for them is a lofty mission of governments at all levels. We must never forget that serving the people wholeheartedly is our purpose, and make sure that the aim and outcome of the work of the government is to fulfill, safeguard and develop the fundamental interests of the overwhelming majority of people. We need to attach greater importance to ensuring the wellbeing of the people and improving their lives, in particular showing concern for urban and rural residents with low incomes and helping them make ends meet in their daily lives, in order to ensure that all of the people share in the fruits of reform and development. We must always keep in mind that everything belongs to the people, do everything for their benefit, rely on them in everything we do and attribute all our successes to their efforts. Only by doing so can we enjoy the broadest and most reliable support from the people and draw from them the strength for ensuring success in all our endeavors.
Sixth, we must continue to run the government in accordance with the law. Abiding by the Constitution and laws is a fundamental principle for all the work of the government. We need to exercise our power and perform our functions and responsibilities within the jurisdiction stipulated by law and in accordance with legal procedures, improve government legislative work, standardize administrative law enforcement, improve administrative oversight, develop law-based government and enhance our ability to carry out administrative functions in accordance with the law. We must ensure that government administration fully complies with the law, that power comes with responsibility, that there is proper oversight on the exercise of power, that reparation is paid for infringement of rights, that any violation of the law is prosecuted, and that power is exercised in a transparent manner. This is the only way to ensure that the power entrusted to us by the people is always exercised in their interests.
We are also clearly aware that there are still many problems affecting China's economic and social development and the work of the government, and that changes in the domestic and international environment present many new challenges and risks.
– There are still some prominent issues and deep-rooted problems affecting economic performance. China has experienced overheated growth in fixed asset investment, excessive supplies of money and credit, and imbalance in its international payments in recent years. Longstanding structural problems and the extensive pattern of growth remain serious problems. There is a lack of balance between investment and consumption, with the investment rate still running too high. Development of primary, secondary and tertiary industries is not in balance, with too much investment in primary industry, particularly heavy industry, but too little investment in the service industry. China's capacity for independent innovation is still weak and the price paid for economic growth in terms of resource consumption and environmental pressure is too great. Agriculture, the foundation of the economy, remains weak. The difficulty of maintaining steady agricultural development and keeping the incomes of farmers increasing has grown, and the growing development gap between urban and rural areas and between regions has not been checked. In particular, the institutional factors hindering economic development remain serious, making institutional reform a daunting task.
– More work needs to be done to resolve problems affecting the vital interests of the people. The current price hikes and increasing inflationary pressures are the biggest concern of the people. Last year's consumer price index (CPI) rose by 4.8 percent year-on-year, mainly due to large increases in the cost of food and housing. There are a variety of factors behind the price increases. Though the domestic prices of farm products have remained low for many years and some of the recent price increases were therefore overdue and somewhat reasonable, price increases nevertheless have a great impact on people's lives, especially on the lives of the low-income sector of the population. The prices of primary commodities on the international market have risen considerably in recent years, which directly puts upward pressure on domestic prices. Because factors driving prices up are still at work, upward pressure on prices will remain great this year. In addition, prices of the means of production have continued to rise and real estate prices have risen steeply, making the task of holding down inflation difficult. There are still quite a few problems in employment, the social safety net, education, medical and health care, income distribution, housing, product quality and safety, workplace safety and public security, and we need to work harder to resolve them.
– Both uncertainties in the international economic environment and potential risks have increased. As economic globalization proceeds, the Chinese economy becomes increasingly tied to the world economy. The current imbalance in the global economy is only getting worse and global economic growth is slowing, making international competition even fiercer. The impact of the US sub-prime mortgage crisis is expanding, the value of the dollar is continuing to fall, and there is greater risk in international financial markets. Grain prices are rising and prices for petroleum and other primary products remain high in the international market. Trade protectionism has gotten worse, and trade frictions have increased. The effect of certain political factors in the international arena on world economic trends cannot be overlooked. All this could adversely affect China's economic development. China is now in a critical period in its reform and development, and we must be fully prepared for changes in the international environment and become better able to defuse risks.
– The government's self-improvement efforts and administration need to be strengthened. We are keenly aware that the work and accomplishments of the government still fall somewhat short of what circumstances require and the people expect. The functions of government have not been completely transformed, and public administration and public services are still weak. Some government departments have overlapping responsibilities, their powers and responsibilities are not well matched, some try to shirk their responsibilities, and their performance is poor. Some government employees have an inadequate sense of responsibility toward the public and are not competent enough. Oversight mechanisms and checks on government authority are not strong enough. The problems of formalism and bureaucratic behavior are fairly common, and fraud, extravagance and waste, and corruption are quite serious.
We must remain clear-headed at all times, be more mindful of potential danger, be highly responsible to the country and the people, maintain a high sense of mission and urgency, work even more industriously, and successfully carry out all of the government's work.
The achievements of the past five years have not come easily. They were built on a foundation laid through many years of reform and opening up, and are attributable to the correct leadership of the Party Central Committee with Comrade Hu Jintao as General Secretary, which has effectively managed the overall situation. Credit also goes to the hard work and concerted effort of the people of all the ethnic groups in China, and to the support and assistance of overseas Chinese nationals and foreign friends. Displaying indomitable determination, courage and will, the Chinese people have overcome untold difficulties and challenges and accomplished major tasks. On behalf of the State Council, I would like to sincerely thank the people of all the ethnic groups, the democratic parties, the people's organizations and people from all sectors of society. I would like to express my sincere thanks to our compatriots in Hong Kong and Macao special administrative regions and in Taiwan, as well as overseas Chinese nationals. I would like to thank governments of other countries, international organizations and foreign friends of China around the world for their understanding of and support for China's modernization.