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Report on the Implementation of the 2001 Plan for National Economic and Social Development and on the Draft2 Plan for National Economic and Social Development(17/03/2002)
Fellow Deputies,

I have been entrusted by the State Council to report now to this session on the implementation of the 2001 Plan for National Economic and Social Development and on the Draft 2002 Plan for National Economic and Social Development. These are presented to you for your examination and approval and for comments and suggestions from members of the National Committee of the Chinese People's Political Consultative Conference.

I. Implementation of the 2001 Plan for National Economic and Social Development

The people of all ethnic groups in China in 2001 followed the decisions on national economic and social development made at the Fourth Session of the Ninth National People's Congress and vigorously advanced reform and opening up and the modernization drive under the leadership of the Communist Party of China. The national economy continued to grow rapidly with good performance and low inflation. GDP hit 9.5933 trillion yuan, an increase of 7.3 percent over the previous year. Fixed-asset investment in the country totaled 3.6898 trillion yuan, up 12.1 percent. Market prices were stable and the consumer price level rose by 0.7 percent. Imports and exports totaled 509.8 billion U.S. dollars, an increase of 7.5 percent. Government revenue grew rapidly. The financial deficit was kept below the budgeted figure. The financial situation remained stable. The net amount of cash put into circulation amounted to 103.6 billion yuan. The balance of international payments was satisfactory and China's foreign reserves totaled 212.2 billion U.S. dollars at the end of 2001. The registered unemployment rate in cities and towns was 3.6 percent. The natural population growth rate was held at 0.695 percent. Last year, the Ninth APEC Economic Leaders Meeting and other major international conferences were held successfully in China, the country became a member of the World Trade Organization, and Beijing won in its bid to host the 2008 Olympic Games. All this indicates that China has further raised its international position and expanded its influence in international affairs. In general, targets set in the 2001 plan for national economic and social development were basically met, and implementation of the Tenth Five-Year Plan got off to a good start. In the face of a marked slowdown in the world economy and international trade, these achievements in economic development and social progress were not come by easily. The success was due to the CPC Central Committee with Comrade Jiang Zemin at the core directing the overall situation, correctly reading the signs of the times, making scientific decisions and providing correct leadership. The credit should also be given to all local authorities and government departments that conscientiously performed their duties and worked diligently in accordance with the requirements of "The Three Represents" and to the entire Chinese people who worked hard in a concerted effort.

1. We continued to implement the proactive fiscal policy and the prudent monetary policy, with treasury bonds playing an important role in promoting economic and social development. A total of 150 billion yuan worth of long-term treasury bonds was issued in 2001 as approved at the Fourth Session of the Ninth National People's Congress, bringing the total bond issue from 1998 through 2001 to 510 billion yuan. The sale of these bonds effectively stimulated an increase in supporting funds from local authorities, government departments and enterprises as well as in bank loans and investment from other sectors of society. Total investment in projects financed through treasury bonds totaled approximately 3 trillion yuan. This played a vital role in boosting economic growth, improving the economic structure, increasing employment, improving the people's living standards and enhancing the quality of bank assets. In particular, this allowed the amassing of the resources necessary to accomplish many tasks important to overall and long-term economic and social development. These tasks mainly include the following: reinforcement of 30,000 km of banks and dikes on major rivers and lakes, development of new towns for over 2 million people displaced from their homes along the banks of the Yangtze River and increasing flood diversion and detention area by about 3,000 square km. In addition, construction of five vertical and seven horizontal national trunk highways and eight other highways in the western region was accelerated. A total of 25,500 km of new highways were opened to traffic, including 8,000 km of expressways. This brings the total length of expressways in China to 19,000 km, making the country second in the world. Construction of 4,000 km of new railway lines, 1,988 km of double-track lines and 1,063 km of electrified railway lines were completed. A total of 37 airports were either newly built or expanded. Construction was completed on state grain depots with a total capacity of over 35 billion kg. Rural power grids were extended or upgraded in 1,895 counties. We launched nearly 2,000 projects to apply high-tech advances in production, manufacture key equipment domestically and upgrade technology in enterprises, as well as about 1,000 projects to build water supplies, roads and waste and sewage treatment facilities in urban areas and more than 9,300 projects to provide teaching, laboratory and student living facilities for schools. All local authorities and government departments proved themselves highly responsible to the country and the people by strengthening the management of funds from the sale of treasury bonds and quality of construction projects. They correctly allocated the investment of these funds by carefully selecting construction projects, strictly following the procedures for capital construction, carrying out good preparatory work, tightening supervision of major projects and making good use of the role of public opinion. This provided a strong guarantee of the proper use of funds from the sale of treasury bonds and the quality of construction projects.

2. Industrial restructuring was vigorously promoted, resulting in improved economic growth and better performance of the national economy. The distribution of agriculture continued to improve as production of major crops was gradually concentrated in areas with the best conditions. The area of land sown in high-quality special wheat accounted for 25 percent and in high-quality early rice, 50 percent of the total area. Grain output totaled 452.6 billion kg. Industrial management of agriculture was strongly promoted. Livestock and aquatic products industries grew steadily. Fresh progress was made in industrial restructuring. High-tech industries developed rapidly and the electronic information industry grew by 28 percent. Technological upgrading of enterprises was stepped up, with investment in updating and upgrading increased by 15.3 percent, 3.2 percentage points higher than the overall growth in investment. The proportion of high added value products rose in metallurgical, textile and light industries. The capacity to independently develop and produce major equipment such as urban rail transit facilities, 500 kv direct-current transmission equipment and environmental protection equipment was strengthened. Progress was made in eliminating outmoded production facilities and reducing overproduction, with the coal industry as a whole seeing a turnaround in operations. Tertiary industry showed good development momentum. There was vigorous growth in new services. The number of mobile phone subscribers reached 144.8 million, making China first in the world. The economic performance of enterprises continued to improve. Total profits of state-owned and large non-state industrial enterprises hit 465.7 billion yuan, a rise of 8.1 percent. The composite economic performance index for industrial enterprises in 2001 reached 122.1, an increase of 3.4 percentage points.

3. Reforms related to the reform of state-owned enterprises continued to deepen and the institutional environment for economic and social development improved. The reform to introduce the shareholding system in state-owned enterprises was gradually standardized, and efforts were intensified to reform and reorganize enterprises that were performing poorly. Progress was made in reform of the management system in monopoly industries, with reform plans for telecommunications, power and civil aviation completed and inaugurated. Initial steps were taken to set up a system open to the participation of all sectors to provide credit and financial guarantees, mainly for small and medium enterprises. Establishment of a social security system was accelerated. The basic living allowances of over 90 percent of workers laid off from state-owned enterprises were guaranteed. An overwhelming majority of the retirees of these enterprises received their basic pensions on time and in full, with 97.8 percent of them receiving it from government-directed funds to which their employers are obliged to contribute. The trials to improve the social security system in Liaoning and other provinces proceeded smoothly. Marked progress was made in lifting controls on grain purchase markets and prices in the key grain distribution areas of southeastern coastal regions. A vertical management system for the central grain reserves was set up by and large. The emphasis of work to deregulate cotton purchasing has shifted to efforts to rectify market order and improve quality monitoring. Control over prices for more commodities and services was relaxed and vigorous efforts were made to find new price management methods such as holding public hearings to set prices. The mechanism to set prices for petroleum in line with supply and demand in the domestic and international markets saw continued improvement and more progress was made in the reform of prices for water supply and rents for public housing.
4. There were initial results in rectifying and standardizing market order due to efforts to implement temporary solutions while seeking permanent solutions and focusing on the most crucial problems. We tried hard to rectify and standardize order in the market by addressing root causes. To this end, continued efforts were made both to improve education in this area and to strengthen law enforcement and improve discipline and both to bring about overall improvement and to solve special problems. The work was concentrated on the fight against smuggling, production and marketing of fake and shoddy goods, fraudulent export tax rebates, evasion of foreign exchange repayment, obtaining foreign exchange under false pretenses and other special cases. We worked to improve order in commodity markets, financial markets, construction markets and markets for cultural products. Special checks were carried out on prices for medicines and medical services and in rural areas, for electricity and charges for upgrading of power grids. Special checks were also conducted on public bidding for major projects. These efforts all contributed to improvement in the market environment.

5. Vigorous efforts were made to develop a more open economy, creating more space for economic growth. Total volume of imports increased by 6.8 percent and exports by 8.2 percent despite an unfavorable international trade environment. The pattern of exports continued to improve, with exports of mechanical and electrical products increasing by 12.8% and exports of high and new technology products by 25.4 percent. Imports of advanced technology and key equipment urgently needed domestically and raw and semi-finished materials in short supply continued to grow rapidly. More foreign capital was absorbed and utilization was improved. Foreign direct investment in 2001 amounted to 46.8 billion U.S. dollars, a record high and an increase of 14.9 percent. Foreign investment in integrated circuits, computers, telecommunications products and other high-tech projects increased and the number of large projects financed by multinational corporations grew. Actively taking part in international economic cooperation, more Chinese enterprises made overseas investments. This stimulated exports of technology and equipment and promoted foreign labor cooperation.

6. More steps were taken in the program to extensively develop the western region with improvements in planning and policy. A master plan for development of the western region during the Tenth Five - Year Plan period and a ten-year plan for the development of trained personnel were formulated. Working comments from the State Council in support of policies and measures for development of the western region were publicized. More development funds from the state budget were utilized in the central and western regions than in the previous year. Fixed-asset investment in the western region increased by 19.3 percent, 6 percentage points higher than in the eastern region, and in the central region, by 16.3 percent, 3 percentage points higher. The ten major projects launched in the year 2000 progressed smoothly. Work began on a number of major projects last year. These include the Qinghai-Tibet Railway Line, the project to divert electricity from the west to the east, the Longtan and Gongboxia hydropower stations, the Baise and Nirji key water control projects, the main sections in the central and western regions of the five national trunk highways running from north to south and seven running from west to east, the Lanzhou-Chengdu-Chongqing petroleum pipeline, the Linhuaigang flood control project on the Huai River and the first phase of the project to divert water from the Yellow River at Wanjiazhai. Over the past three years, 1.24 million hectares of farmland were returned to woodland and trees were planted on 1.09 million hectares of barren hills and uncultivated land in the central and western regions. A special project was launched and got underway to industrialize management of high technology in the western region to support the intensive development of the region's advantageous resources. There were positive results in concentrated support efforts to develop an institution of higher education in each of the provinces and autonomous regions and the city directly under the Central Government in the western region, to renovate primary and middle school buildings in poor condition and to set up vocational education centers, hospitals and blood donor centers in poor counties, to develop cultural facilities at the community level and to expand radio and TV coverage in the region.

7. Unremitting efforts were made to invigorate the country through science, technology and education and maintain sustainable development, with comprehensive progress in all social undertakings. Major achievements were made in basic research and more breakthroughs were made in several areas of high-tech research. Chinese scientists completed the Beijing Region of the Human Genome Project ahead of schedule according to high scientific standards. They independently completed a working draft and database for the hybrid rice genome. As a result, China has become an advanced country in terms of genome sequencing ability. We produced Shuguang 3000 super-servers with an overall capacity up to advanced international levels and a PC cluster that is a leader internationally. A total of 134 more government research and development institutions were converted to enterprises. Development of education was accelerated. Progress was made in education designed to raise the overall quality of students. More areas made nine-year compulsory education available to basically everyone and by and large eliminated illiteracy among young and middle-aged people. Investment in education continued to increase. The number of students studying at colleges and universities has more than doubled since the policy of recruiting more students was introduced in 1999. Operating conditions at institutions of higher learning saw continual improvement. Substantial progress was made in converting school support services into independent operations.

Ecological improvement and environmental protection work were intensified. Protection of natural forest resources, work on key shelter forests, control of the sources of sandstorms affecting the area around Beijing and Tianjin, restoration and development of natural grasslands and other major ecological improvement projects progressed smoothly. The project to prevent and control water pollution in the area of the Three Gorges Reservoir was fully launched. Soil erosion on 5.3 million more hectares of land was successfully brought under control. Results of efforts to prevent and control industrial pollution were consolidated, efforts to improve the overall environment of urban areas were steadily intensified, and environmental protection work was vigorously developed in rural and mining areas.

Development of culture, art, the press, publishing, radio, film, TV, social sciences, family planning, health, sports, preservation of cultural and historical relics and other undertakings was accelerated. Radio coverage reached 92.9 percent of the population and TV coverage, 94.1 percent. The number of cable TV subscribers hit 88.03 million, up by 11 percent over the previous year. Greater efforts were made in family planning. Marked progress was made in reform of the basic medical insurance system for urban workers, the medical and health care system and the pharmaceutical production and distribution system. The socialist spiritual civilization, democracy, legal system further improved. Sports undertakings flourished. Chinese athletes did extremely well in major sports competitions both at home and overseas, and the nationwide physical fitness campaign was further expanded.

8. Incomes of urban and rural residents continued to grow and the people's standard of living improved steadily. Consumption demand continued to grow and retail sales of consumer goods totaled 3.7595 trillion yuan, an increase of 10.1 percent over the previous year. Infrastructure development in the tourist industry was stepped up and income generated by the industry totaled 499.5 billion yuan, representing an increase of 10.5 percent. Individual housing and automobile purchases increased significantly. Per capita disposable income of urban residents rose by 8.5 percent and per capita net income of rural residents increased by 4.2 percent. The number of people living below the poverty line in rural areas decreased by 4 million. Coverage of the system of subsistence allowances for urban residents was markedly expanded.

While noting these achievements, we are also very aware that there are still some conflicts and problems in social and economic activities that cannot be overlooked. First of all, although rural incomes have started to recover, the foundation for income growth is far from solid. There are some fundamental factors affecting rural incomes and making it more difficult to increase rural incomes that have to be addressed. Second, much remains to be done by quite a number of state-owned enterprises in terms of internal reform, operating mechanisms, technological progress and modern management. Third, unemployment pressure and the pressure on the social security system have increased. Over 5 million workers laid off from state-owned enterprises remained jobless at the end of last year and the number of registered urban unemployed stayed at 6.81 million. Fourth, the deflationary tendency has yet to be completely eliminated. The economic growth rate slowed every quarter last year. Fifth, the internal mechanism for state-owned enterprises to increase their fixed-asset investment and the policy environment for non-state investment need to be improved. Sixth, investment in science, technology and education and the pattern of trained and qualified personnel cannot meet the needs of economic development. Ecological environmental problems remain outstanding. Capacity for sustainable development has yet to be improved. Seventh, there are many uncertainties affecting export increase. Eighth, market order remains somewhat chaotic. We are taking vigorous measures and working hard to deal with these problems.

II. Regulatory Targets and Major Tasks for Economic and Social Development in 2002
The year 2002 is of vital significance in China's history as well as an important year for promoting the reform, opening up and the modernization drive. Guided by Deng Xiaoping Theory and the general guidelines set at the Fifteenth National Party Congress, we will continue to implement the guidelines laid out in the important speech delivered by Comrade Jiang Zemin on July 1, 2001, follow the guiding principles set at the fifth and sixth plenary sessions of the fifteenth Party Central Committee and bear in mind "The Three Represents," correctly understand the complex and volatile international political and economic situation and guard against and overcome risks and difficulties in our way ahead to maintain economic and social stability. We will boost domestic demand, deepen the reform, open wider to the outside world, accelerate the economic restructuring, rectify and standardize order in the market and improve the quality of economic growth and the performance of the national economy to promote its sustained, rapid and sound development and all-round social progress. We will strengthen efforts to develop the socialist spiritual civilization, democracy and legal system, improve Party building, change the way the government functions, work hard together and build the country through diligence and frugality to greet the convocation of the Sixteenth National Congress of the Party with new achievements in our reform, opening up and modernization drive. The major targets for national economic and social development in 2002 are as follows:  

- Economic growth rate around 7 percent.

- Increase in total fixed-asset investment around 10 percent.

- Rise in the consumer price level of 1-2 percent.

- Strive for an increase in total import and export volume.

- Central budget deficit under 309.8 billion yuan.

- Increase in M2, the broad money supply, and M1, the narrow money supply, of about 13 percent with total cash put into circulation not exceeding 150 billion yuan.

- Registered urban unemployment rate around 4.5 percent.

- Natural population growth rate under 0.8 percent.

To attain these targets, we must focus on accomplishing the following tasks:

1. Agricultural and rural infrastructure development will be accelerated and everything possible will be done to create conditions for increasing rural incomes. This year we must strive for a 4 percent increase in rural per capita net income in real terms. We will continue to increase investment in agricultural infrastructure, focusing on development of water-saving irrigation projects, drinking water for people and animals, roads, hydropower, marsh gas, pasture fencing and other small and medium public utilities in rural areas. More investment will be made in projects to prevent floods and fight droughts and to reinforce decaying reservoirs. Experiments in transforming administrative fees into taxes in rural areas will be expanded to cover about one-third of the provinces. Moves to reduce or exempt agricultural fees and taxes in disaster areas will continue. Development of bases for special farm products will be combined with vigorous efforts to develop special high-quality and pollution-free products, rationalize regional distribution of agriculture and protect farmland. Measures in compliance with WTO rules will be adopted to rectify and improve the state system for supporting and protecting agriculture, direct more investment to agricultural science and technology and rapidly develop ways to help agricultural producers. Superior seed varieties and improved breeds of poultry and livestock will be developed, coupled with strong efforts to import and cultivate them and to spread their application. Efforts to establish a system of quality standards and certification, a testing and measuring system and market information system for farm products will be strengthened. Work to set up pest- or disease-free areas and a system for preventing epidemic diseases in poultry and livestock will be accelerated to promote development of the poultry and livestock industry. The processing industry for farm products will be developed to increase the added value of these products. Support will be given to leading enterprises to bring the industrial management of agriculture to a higher level. A serious effort will be made to develop small model towns for comprehensive economic development. We will continue to aid indigent people through development-oriented assistance and increase funding for poverty reduction programs through various channels. The Central Government will grant 10.6 billion yuan for poverty reduction funds this year. We will provide more jobs to people as an alternative to relief to improve infrastructure in poverty-stricken areas and ethnic minority areas so that these areas will become more self-reliant in their development. Trial programs will be conducted to move people out of areas with adverse living conditions and a fragile environment and help them start a new life elsewhere.

2. Proper utilization and management of long-term treasury bonds for development will be continued to promote sustained and rapid economic growth. Yesterday Premier Zhu Rongji pointed out inhis Report on the Work of the Government that this year we will continue to implement a proactive fiscal policy and a prudent monetary policy and issue 150 billion yuan worth of long-term treasury bonds for development. This is necessary to maintain sustained and steady growth of the national economy and to curb deflation. Right now banks have sufficient funds, interest rates are low, market prices are stable and production capacity for major products is fairly large. Conditions are therefore still good for issuing long-term treasury bonds for development. The important thing is to correctly guide investment orientation, pay close attention to economic performance and social benefits and properly utilize and manage fund from the sale of treasury bonds. First of all, these funds will be used this year to ensure that such ongoing projects financed by treasury bonds as reinforcement of the dikes on the middle and lower reaches of the Yangtze River, upgrading of power grids in rural areas, and development of urban infrastructure and grain depots directly under the Central Government are completed and put into operation as soon as possible. Second, more investment will still be directed to the central and western regions, making sure sufficient funding is allocated for western development projects under construction and launching a number of necessary projects. These include projects to divert natural gas from the west to the east, develop the Sebei Gas Field and the Golmud Airport, divert electricity from the west to the east from the northern route and build national trunk highways and important sections of inter-provincial highways in the western region. Third, technological upgrading in existing enterprises will be accelerated. Construction of key projects listed in the plan will be started where appropriate. Investment in education, health, cultural undertakings, public security organs, procuratorial organs, people's courts and judicial organs will be increased. We must lose no time in carrying out preliminary work on the project to divert water from the south to the north and start construction of the project as soon as possible. At the same time, we must work hard to encourage and guide non-state sectors of the economy to invest in infrastructure and public welfare undertakings by improving services, expanding channels and opening up more areas. We will make sure the time is right before starting projects, maintain continuous and steady investment growth, ensure an appropriate scale of construction in the next two years and lay a solid foundation for long-term development. Proper budget arrangements will be made for supporting funds and the provincial governor responsibility system will be continued to guarantee adequate funding for key projects. Close attention will be paid to project supervision, management of funds will be strict and the quality of projects will be ensured.

3. Employment and incomes will be increased to develop and increase the consumption capacity of residents. Solving the problem of unemployment will be moved toward the top of the agenda and a variety of measures will be adopted to ensure that about 8 million more urban residents find jobs this year compared to last year. To this end, we will, first of all, expand the available employment channels, provide better market access, lower requirements for access and rely more on the role of the non-public sector and small and medium enterprises to create more jobs. Second, we will create more job opportunities. Vigorous steps will be taken to develop labor-intensive industries with comparative advantages. Development of tertiary industry will be accelerated and more community services will be developed in urban areas. Third, more flexible and diverse forms of employment such as part-time, temporary and "flextime" job opportunities will be encouraged. Fourth, we will improve employment services, promote and standardize intermediary labor organizations and the labor market, improve the employment service system, provide better vocational training and help workers become better qualified for employment or reemployment. Restrictions on rural residents working and doing business in urban areas will be relaxed. When making job assignments, we will give the necessary consideration to disadvantaged groups with difficulty in finding employment.

Diligent efforts will be made to increase the incomes of both urban and rural residents, especially those with low incomes. We will continue to guarantee that workers laid off from state-owned enterprises receive subsistence allowances and that retirees receive their pensions on time and in full. Effective measures will be taken to ensure that all eligible poverty-stricken urban residents are covered by the system of subsistence allowances. Reform of the basic old-age insurance system, the unemployment insurance system and the basic medical insurance system for urban workers will be strongly promoted. The income distribution system in state-owned enterprises should be optimized. The income distribution system will be reformed on a trial basis in selected large enterprises under the jurisdiction of the central authorities and in Chinese companies listed on foreign stock exchanges. The basic wages of employees in government departments and institutions and the pensions for their retirees will be increased as appropriate.

Consumption policies and the environment for consumption will be improved. A personal credit system will be set up and developed to expand the scale of consumer credit. New forms of consumption such as leasing will be tried. We will continue to encourage residents to spend more on housing, automobiles, telecommunications, tourism, education, cultural activities, sports and medical and health services. New areas will be fostered and developed as the focus of consumer spending.

4. Moves to improve and upgrade the industrial structure will be accelerated in order to improve the overall quality of industry. Strong efforts will be made to integrate information technology into the national economy and society. E-government will be introduced. Development of shared databases will be accelerated. No time should be lost in formulating a policy framework for e-commerce. Development of e-commerce certification systems and systems for enterprise and individual credit information will be accelerated. No time should be lost in developing information
security systems.

We will continue to accelerate application of high-tech advances to production. This will require the organization and implementation of major special projects to apply to production such high-tech achievements as new types of electronic parts and devices, integrated circuits, software, optoelectronic devices, new materials, satellite technology and modern practices of traditional Chinese medicine. A comprehensive set of standards will be formulated for digital TV as soon as possible. High-tech projects will be launched in key areas to develop the next generation of high-speed broadband information networks, third-generation digital mobile communication systems, light aircraft, a biotechnology industry, satellite systems for direct transmission of radio and TV programs and modern agriculture. Also to be launched are key scientific research projects.

No effort will be spared to develop the domestic capacity to manufacture key equipment. The capacity to design and manufacture all parts of key equipment will be strengthened by carrying out major projects and importing key technologies, while striving to make independent technological innovations. The main focus of these efforts will be development of gas turbines, ultra-high voltage direct-current power transmission equipment, 600-megawatt supercritical power generators, entire large-scale petrochemical facilities, large-capacity ships and related equipment, large-scale construction equipment and key parts and components for numerically controlled machine tools.

We will work hard to reorganize and upgrade traditional industries. Guided by market demand, key industries and enterprises will be upgraded with high and new technologies and advanced applicable technologies to make manufacturing more concentrated and enhance product development capacity. Completion of major projects that would help upgrade relevant industries will be accelerated, including projects to develop liquefied natural gas, produce ethylene on a large scale and develop phosphate and potash fertilizers and highly effective, low-toxicity insecticides. Preparatory work and actual construction of the projects to develop ethanol fuel and coal liquids will be accelerated. Large-scale, new dry-process cement production lines will be built to raise the proportion of new building materials used in China. Strong efforts will be made to develop high added value products such as differentiated and functional fibers, focusing on improvement of the printing, dyeing and other finishing processes of textiles. Special demonstration projects will be set up for the intensive processing of agricultural and sideline products, with the food industry taking the lead. Development of tree groves to produce raw materials for paper mills will be accelerated, and integration of papermaking with afforestation efforts will be promoted. We will continue to reduce through economic and legal means surplus production capacity and production facilities that turn out inferior products, waste resources, cause too much environmental pollution and do not have proper safety equipment.

5. Economic restructuring will be deepened to give added impetus to economic and social development. The reform to institute a shareholding system in state-owned enterprises will be standardized. Corporate governance will be improved. Internationally competitive conglomerates and enterprise groups will be developed. Small and medium state enterprises will be let go of and enlivened in various ways. Enterprise management will be improved and enterprises will be encouraged to make more use of information technology. Restructuring of monopoly industries will continue. There will be more effective guidance and careful organization so as to ensure normal production and business operations and stability of the workforce and prevent the loss of state assets. While developing state sectors of the economy, we will vigorously support and encourage the sound development of non-public sectors.

Pricing mechanisms in the petroleum and natural gas, telecommunications, electricity and civil aviation industries will be improved. Electricity rates will be made the same for all urban and rural residents using the same power grid. The pricing mechanism for water supply and the policy for sewage treatment fees will be improved and a system will be set up to collect fees for urban garbage treatment to promote the industrial management of sewage and garbage treatment.

Closer attention will be paid to the role of a modern distribution industry in increasing production and consumption. Reform of the distribution system needs to be accelerated. Strong efforts will be made to develop the materials distribution industry and the professional and socially responsive service system including commercial chains and physical distribution organizations. The reform of the grain distribution system will be further deepened and the reform of state-owned grain trading enterprises will be accelerated. All policy and measures concerning reform of the cotton distribution system will be conscientiously implemented.

Reform of the investment and financing system will be accelerated to set up mechanisms to stimulate and restrain investment by enterprises as soon as possible. Except for major projects and those for which special rules apply, enterprises will be allowed full independence in decision-making for their investment in all projects, assuming full responsibility for risks. The way state-owned financial enterprises operate will be improved and a strict responsibility system for the approval of project loans will be established. Strong efforts will be made to explore ways of expanding financing channels for enterprises. Decision-making for state investment in projects will be made more scientific and democratic for better management and utilization of government investment funds.

6. A good job must be done in foreign trade and investment work so that resources and markets at home and abroad are both used effectively. China will carefully analyze the advantages and disadvantages of its WTO membership, take full advantage of the rights it enjoys and fulfills its commitments to the organization while taking the necessary measures to protect its interests. Everything possible will be done to increase the country's volume of exports. No time should be lost in reforming and improving the system of export tax rebates. There will be tax exemptions, discounts or rebates for all exports carried out by producers on their own or through commission agents. Export credit will be expanded and export credit insurance mechanisms will be improved. Policy-related financial institutions will increase their support for exports. Customs clearance procedures will be simplified to improve efficiency. We will continue to diversify export markets. While consolidating and expanding traditional markets, we will open emerging markets such as Russia, East Europe and Latin America. Great efforts will be made to diversify the types of organizations engaging in foreign trade, restructure foreign trade more thoroughly and further ease restrictions on who can engage in foreign trade. The strategy of going global will be vigorously promoted by encouraging suitable Chinese enterprises to invest, develop and contract to build projects abroad. This will spur exports of equipment, materials and labor and stimulate import of goods and resources that are in short supply in China. Careful arrangements will be made to import key equipment and technologies and important raw and processed materials that are badly needed in the country.

We will continue to improve the investment environment. We must work hard to acquire advanced technologies and managerial expertise as well as outstanding personnel from other countries. We will ensure a steady increase in foreign capital input while improving the performance of foreign capital utilized. Foreign investment will be guided toward modernization of agriculture, high-tech industries, development of infrastructure and the western region and reorganization and upgrading of state-owned enterprises. Service trade and other areas will be opened to the outside world step by step. We will continue to use foreign preferential loans effectively. The method of managing foreign debts needs to be improved to reduce debt risks.    

7. We will continue to implement the strategy of developing the western region and promote coordinated regional economic development. We will accelerate improvement of infrastructure and ecological conditions in the western region, with efforts first of all directed at developing science, technology and education, stepping up development of industries that exploit local conditions and transforming resource advantages into economic advantages. Improving the infrastructure and working and living conditions in western rural areas will be high on the agenda. To be more specific, we will try our best to accomplish the following: First of all, work to ensure that every county is served by asphalt roads will be basically completed by the end of the year. This will require the construction of 25,000 km of asphalt roads to serve the three prefectures that do not have asphalt roads to their provincial capitals, and the 281 counties (production and construction brigades or farms) that do not have asphalt roads to the seats of their prefectural governments. Second, every township will have electricity. We will focus on the 783 townships that do not have access to any power grid or to any other power sources. Various means will be tried to this end, including development of small-scale hydropower, solar energy or wind power facilities there, depending on local conditions. Efforts to upgrade a second group of rural power grids will be accelerated to basically complete the upgrading of the rural power grids in the counties in the central and western regions in about one year. Third, radio and television coverage will be extended down to every village. We will continue to develop the village radio and television project and the Tibet-Xinjiang Project. Radio and television reception facilities will be built in administrative villages recently connected to power grids. Fourth, we will implement the household contract system for returning cultivated land to woodland. An individual contract system will be introduced whereby house holds are assigned tasks, receive subsidies and own the trees and other vegetation they plant. Through full implementation of the program to return cultivated land to woodland, the total area replanted this year will reach 2.27 million hectares and an additional 2.66 million hectares of barren hills and wasteland will be planted with trees.

The ten-year plan for the development of trained personnel in the western region and the policies and measures that support the development of the region will be implemented. We will step up the exchange of cadres between the eastern region and Central Government departments on one hand and the western region on the other and improve the training work.

 The central region should vigorously develop new economic growth points and economic belts by fully exploiting its advantageous geographical position as a bridge between the east and the west that stretches from the north to the south and its overall resource advantages and by taking advantage of the country's program for industrial restructuring and development of the western region. Efforts to speed up development of the central region will be supported with government investment in capital construction and technological upgrading projects. The eastern region should continue its economic restructuring efforts, develop an internationally oriented economy, enhance its international competitiveness and strengthen economic and technological cooperation with the central and western regions to strengthen its role in stimulating their development.

8. The structure of budgetary expenditures should be optimized to take more advantage of the role of finance in supporting economic growth. Tax collection and administration need to be improved and no effort should be spared to collect budgetary revenues. The principle of "food first, development second" will be followed in making appropriate adjustments to optimize the structure of budgetary expenditures. We will strengthen expenditure management, develop the country through diligence and frugality, practice economy in everything we do and resolutely combat waste and extravagance. The sharing of income tax revenue between central and local budgets according to a fixed proportion will be carefully organized. Total budget revenue should reach 1.8015 trillion yuan and total expenditures should amount to 2.1113 trillion yuan, leaving a central budget deficit of no more than 309.8 billion yuan.

More play will be given to the role of the prudent monetary policy so that finance will render more support for economic development. Wholly state-funded commercial banks should vigorously promote reform of the way they operate and strengthen their internal management. The structure of credit should be optimized, vigorous efforts will be made to improve financial services and the supporting loans for projects funded by treasury bonds must be guaranteed. The loan guarantee system for small enterprises will be improved. Microcredit loans will be introduced vigorously and steadily in rural areas. We will continue to standardize and develop the securities market, promote the steady development of a security market system and appropriately increase enterprise bond issuance. The role of monetary policy instruments such as interest rate, open market operations and rediscount rate will be strengthened to allow more flexibility in regulating the money supply and meet reasonable capital demands in economic development. We will continue to keep the exchange rates for the renminbi stable. Conscientious efforts will be made to tighten financial supervision, the quality of financial assets will be improved and the proportion of non-performing assets will be reduced to improve competitiveness and strengthen risk reduction capability.

9. We will accelerate development of the country through science, technology and education and implementation of the sustainable development strategy while energetically developing all social undertakings. Great efforts will be put into promoting scientific and technological progress and innovations. More investment will be made in the development of science and technology. We will strengthen basic, applied and strategically important high-tech research, improve our ability to make technological innovations and successfully develop the state scientific and technological innovation system. Close attention must be paid to carrying out major projects to develop key technologies such as large-scale integrated circuits, software, functional genomes and biochips and applying them to production. The process of applying scientific and technological advances to production will be accelerated and development of a system of technical standards will be promoted. We will develop our own intellectual property rights for key technologies and strengthen the protection and management of intellectual property. A mechanism for risk investment will be set up and developed, so will a system for stimulating technological innovations. We will develop philosophy and other social sciences. The science and technology management system will be restructured to form a system combining departments, localities, enterprises and institutions of higher learning. Working and living conditions will be improved to attract highly qualified professionals from abroad and encourage overseas Chinese students to return home and develop their careers in China.

In developing education, we will take into consideration future changes. We will continue to strengthen basic education, make compulsory education universally available and improve the overall quality of students. A new system for the management of compulsory education in rural areas with "the county at the center" will be basically set up and funds for compulsory education will be guaranteed. Education will be restructured to vigorously develop senior secondary education and accelerate development of the various types of personnel to meet the demands of economic and social development. Plans have been made to enroll 2.75 million undergraduate students and 196,000 graduate students in regular institutions of higher learning in 2002. The second phase of the compulsory education project for poverty-stricken areas will be carefully implemented and the second phase of the "211" Project for higher education will be launched. Infrastructure development to cope with the increased number of students in regular senior secondary schools and renovation of primary and secondary school buildings in poor shape will be accelerated. A policy of aiding students from poor families will be implemented and will be revised as needed. Projects to introduce information technology in institutions of higher learning in the western region will be carefully carried out to promote the integration of information technology in education.

Efforts to improve the ecological environment and environmental protection measures will be strengthened. Measures to prevent and control water pollution and geological disasters in the Three Gorges Reservoir area of the Yangtze River, in the region along the eastern route of the project to divert water from the south to the north and in the Bohai Sea will be strengthened. Efforts to prevent and control pollution in the Huai, Hai and Liao rivers and Tai, Chao and Dianchi lakes will continue. Plans to prevent and control water pollution in the Yellow River and the Songhua River and preparatory work for the projects will be completed as soon as possible. Vigorous measures will be taken to control pollution caused by sulfur dioxide and acid rain and pollution in mining areas and restore the ecological environment in affected areas. Development of a comprehensive monitoring system for the ecology, the environment, resources and disasters will be strengthened. Efforts will be concentrated on cleaning up the source of pollution and promoting cleaner production. Close attention will be paid to recycling of waste materials to reduce consumption of resources. The Law on the Prevention and Control of Desertification will be implemented carefully. We will continue major projects to comprehensively improve the ecological environment with emphasis on growing trees and grass and on water and soil conservation. We will increase investment in projects to reduce and control the source of sand in the areas surrounding Beijing and Tianjin. Projects to protect natural forest resources will continue. Programs for prevention and control of desertification will be worked out as soon as possible. Restoration and development of natural pastures will be accelerated. Efforts to develop shelter forests in key areas and natural reserves will be strengthened.

Greater efforts will be made to develop spiritual civilization and promote all-round development of undertakings in culture, health, sports, radio, film, TV, the press and publishing. The Program for Establishing Civic Morality will be carefully instituted along with vigorous efforts to develop activities for the participation of the masses to build spiritual civilization. We will continue to keep the birth rate low and improve the quality of newborns. More public cultural facilities will be built for ordinary people. Construction of the Grand National Theater and renovation of the China Art Gallery will be accelerated and preparatory work for construction of the National Museum and the National Digital Library will be carried out with care. We will make greater efforts to protect cultural relics and support the building of major museums at provincial level. The special programs for developing rural health care infrastructure and for building traditional Chinese medicine hospitals and specialized hospitals w ill be implemented in a serious effort to improve conditions in medical services and health care. The system for monitoring the people's physical well-being will be improved. Taking advantage of Beijing's successful bid to hold the Olympic Games, we will promote nationwide fitness activities.
III. Continuing to Improve Macroeconomic Management to Meet the Needs of Developing the Socialist Market Economy and Responding to the New Situation Following China's Accession to the WTO

The basic role of the market in the allocation of resources should be fully exploited. The law governing economic development should be followed. International practice will be taken into consideration. The way government functions will be changed and the macro-regulation will be improved to create a sound environment for economic development.

Speeding up efforts to develop the legal system. Legislative plans of the National People's Congress will be conscientiously implemented in drafting laws. The Insurance Law will be amended as soon as possible. An Anti-Monopoly Law will be drafted. A Law on the Prevention and Control of Radioactive Pollution will be submitted to the National People's Congress for examination and approval. We will formulate or revise related administrative statutes, rules and regulations as soon as possible and review local government statutes, rules and regulations and other regulation-related documents, taking into consideration the requirements for developing the socialist market economy, the rules of the World Trade Organization and our commitments to that organization. We will continue to draw up administrative statutes and regulations to rectify and standardize market order. All authorities should follow the law in carrying out their administrative duties and perform their functions strictly within the jurisdiction and according to the procedures specified in laws and regulations.
Improving the means for exerting macroeconomic regulation. The government should place the need to improve economic regulation, market supervision and administration, social management and public services on its agenda. It will exercise indirect regulation of the economy mainly through policy guidance and the release of information, gradually eliminating direct interference in microeconomic activities. Market supply and demand will be regulated by means acceptable under WTO rules. Administration of import quotas and tariff rate quotas (TRQ) for major goods will be effectively exercised. Anti-dumping, countervailing and safeguard measures will be improved. Adopting international standards where appropriate, we will do a good job in inspection, quarantine and disease monitoring and control work in the areas of health, security, sanitation and environmental protection.

Drastically reducing the number of matters subject to administrative examination and approval. Macroeconomic regulatory departments need to step up the change in the way they function. Administrative examination and approval powers that are not in conformity with the effort to separate the functions of government from the management of enterprises and divest institutions of their administrative functions, as well as powers that hamper market development and fair competition, will be resolutely abolished. It is essential that certain matters remain subject to administrative examination and approval. In such cases, the relevant powers will still be revised, red tape will be eliminated and the work style, efficiency and transparency will all be improved to curb corruption by addressing root causes.  

Balancing total supply and demand in response to market changes. Measures to monitor supply and demand of major goods will be strengthened. Greater use of economic means is required in order to more effectively regulate total demand and supply to maintain a proper balance. The balance between revenue and expenditures will be maintained through budgets and taxation. We need to ensure proper liquidity for the credit funds of banks through interest rates. We need to maintain a balance between the supply and demand of major goods through pricing and goods and material reserves.

Rectifying and standardizing order in the market. Efforts to manage and rectify the markets for medicines, foodstuffs, petroleum products, dangerous chemicals and other major goods will be strengthened. Restrictions and barriers to trans-regional marketing and investment will be eliminated and banned. We will continue to curb illegal and criminal activities such as the manufacture and marketing of fake or shoddy goods, focusing on goods harmful to people's lives or health. We will prosecute according to law crimes such as tax evasion, tax fraud, pyramid schemes and smuggling, as well as unlawful practices such as falsification of bills, certificates and accounts. An aggressive effort will be made to combat financial fraud, illegal raising of funds, rigging of the securities market and insider trading and malicious evasion of debt repayment. Special campaigns to rectify prices and charges will be continued. We must put an end to price competition irregularities, focusing efforts on combating price fraud. Order in public bidding for key projects will be rectified and standardized. A system for ensuring good credit among members of society will be developed. Safety measures will be strengthened in key industries as soon as possible to prevent serious accidents.

Fellow Deputies,

Successfully carrying out the economic work for this year will be an arduous task, but it is of great importance. Accepting the supervision and guidance of the National People's Congress and conscientiously soliciting comments and suggestions from the National Committee of the Chinese People's Political Consultative Conference is an important way to ensure success in all economic work. Let us rally more closely around the Party Central Committee with Comrade Jiang Zemin at the core, hold high the great banner of Deng Xiaoping Theory and earnestly implement the important principle of "The Three Represents,'' make pioneering progress and work hard in a down-to-earth manner with full confidence to accomplish all our tasks for economic and social development!
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