While acknowledging our successes, we must also clearly realize that there
are still many difficulties and problems in China's economic and social
activities. Many long-standing and deep-seated problems have yet to be
fundamentally solved, and a number of new problems have arisen that require our
attention. First, it has become difficult to further increase grain production
and rural incomes. There is downward pressure on grain prices and upward
pressure on the prices of agricultural supplies, making it difficult for farmers
to increase their earnings and discouraging them from growing grain. Moreover,
the total area of useable farmland continues to decrease, and the overall
agricultural production capacity is weak. This poses a threat to the nation's
food security. Second, fixed asset investment is still expanding too fast.
Investment in some industries is increasing too quickly, and too many new
projects have been launched. Investment is too concentrated in some areas, and
there is significant pressure for a rebound in investment. Third, the adverse
consequences of overheated investment in some industries are becoming apparent.
The problem of excess production capacity is getting worse, causing the prices
of goods to drop and inventories to increase. Corporate profits are down and
losses are increasing, creating greater potential financial risks. Fourth, many
problems affecting the vital interests of the people have yet to be
satisfactorily solved. There is strong public concern over the difficulty and
high cost of getting medical treatment and receiving an education. The people's
interests are adversely affected by violations of regulations and policies in a
number of areas, including land expropriation, housing demolition and resident
relocation, relocation of people from reservoir areas, and corporate
restructuring, as well as by environmental protection. Fifth, there are serious
problems in production safety. Major coalmine and traffic accidents occur
frequently, causing serious loss of life and property.
We are also aware that there are still quite a few defects and shortcomings
in the work of governments at all levels. The process of transforming government
functions is behind schedule, some tasks have not been adequately carried out,
and efficiency is low. The problem of formalism and going through the motions is
still fairly serious. Some government employees engage in fraud, some are
extravagant and wasteful, and some are even corrupt.
We must heighten our sense of mission and our sense of urgency, build on our
achievements, improve our work, boost our morale, work conscientiously, strive
to do all government work better, and do our best to live up to people's
expectations and prove ourselves worthy of the great trust the country has
placed in us.
II. Major Tasks for This Year
The tasks related to reform, development and stability for 2006, the first
year in the Eleventh Five-Year Plan, are huge. To do the work of the government
well and get the Eleventh Five-Year Plan off to a good start, we need to adopt
the following basic line of thinking: Take Deng Xiaoping Theory and the
important thought of Three Represents as our guide, closely follow the
guidelines set out at the Sixteenth CPC National Congress and the third through
fifth plenary sessions of the Sixteenth Central Committee, fully implement a
scientific outlook on development, continue to accelerate reform and opening up
and stimulate independent innovation, continue to promote economic restructuring
and change of the pattern of growth, always put problems affecting the vital
interests of the people high on our agenda, intensify all aspects of the effort
to build a socialist economy, promote development of the country politically and
culturally, and create a harmonious society.
Taking all relevant factors into consideration, we have set the following
major targets for economic and social development in 2006 as follows: GDP should
grow by about 8 percent, and energy consumption per unit of GDP should fall by
about 4 percent. The rise in consumer prices should be kept under 3 percent.
Urban employment should increase by 9 million persons, and the urban registered
unemployment rate should be kept under 4.6 percent. The equilibrium in the
balance of payments should stay basically balanced.
We need to keep the overall situation in mind and firmly adhere to the
following principles to ensure success in the work of the government this year.
First is to maintain consistency in government policy and carry out fine-tuning
as needed. We need to continue to properly exercise macroeconomic regulation,
ensure continuity and stability in macroeconomic policies, maintain the correct
orientation and strength of macroeconomic regulation, handle each case on its
own merits, provide guidance tailored to the situation, and take specific
measures to solve major problems in economic development. Second is to always
keep the big picture in mind and pay close attention to key areas. We need to
correctly balance reform, development and stability, use reform and opening up
to drive all aspects of our work, and strive to solve the major problems
affecting the overall situation in order to promote all aspects of economic and
social development. Third is to take all factors into consideration in making
overall plans and pay close attention to the well-being of the people. We need
to continue to put people first, maintain the "five balances" [balancing urban
and rural development, development among regions, economic and social
development, development of man and nature, and domestic development and opening
wider to the outside world, tr.], pay closer attention to balancing development
between urban and rural areas and among regions, developing social programs, and
promoting fairness and stability in society, and enable all our people to share
in the fruits of reform and development. Fourth is to stay firmly rooted in the
present while looking ahead to the future. We need to do a good job of this
year's work, gear our work to meeting the targets set in the Eleventh Five-Year
Plan, strive to make progress, refrain from taking on more than we can handle,
and achieve concrete results.
We need to focus on the following aspects of our work this year.
1. Maintaining fast yet steady economic development
Looking at the current international environment and domestic conditions, we
can see that there are many conditions conducive to economic development this
year. But there are also a number of problems that could hold back development,
as well as some uncertainties. We need to adopt sound policies to deal with
these problems and uncertainties to prevent large fluctuations in the economy.
We will keep macroeconomic policies stable, mainly by continuing to follow
prudent fiscal and monetary policies. Since the economy is now performing well
and there is a lot of activity in non-state investment, this year we will again
appropriately reduce the deficit and the amount of long-term treasury bonds for
development. We plan to issue 60 billion yuan worth of long-term treasury bonds,
20 billion yuan less than last year, while increasing regular construction
investment from the central government budget by 10 billion yuan. The deficit in
the central government budget is projected to be 295 billion yuan, 5 billion
yuan less than last year. Funds from the sale of long-term treasury bonds and
budgetary investment will be mainly used to maintain adequate funding for key
projects already underway and to fund an appropriate number of major new
projects that impact on overall development in agriculture, forestry, water
conservancy, science, education, culture, health, ecological improvement,
environmental protection and development of the western region. Starting this
year, China will follow standard international practices by adopting the method
of outstanding balance management for its national debt. We need to administer
taxes in accordance with the law, improve tax collection and management, and
standardize management of non-tax revenue. We need to take all factors into
consideration in making overall plans for budgetary expenditures, limit
expenditures to what we can afford, ensure adequate funding for key items and
economize wherever possible. We will strengthen budgetary oversight and control
the rise in administrative expenses. We need to maintain appropriate growth of
money supply and credit, improve the mix in loan portfolios and create new
financial products. We need to increase credit support for agriculture, rural
areas and farmers and for small and medium-sized businesses, employment, and
students having difficulty paying educational expenses. Long- and medium-term
credit should be kept at an appropriate level. We will improve the mechanisms
for setting and transmitting interest rates. We will improve the system of
managed floating foreign currency exchange rates and keep the Renminbi exchange
rate basically stable at an appropriate and balanced level.