Key Reports

Government Work Report (2006)

Updated: 2007-03-02 14:16

We will adhere to the strategy of expanding domestic consumption and focus on increasing consumption demand and strengthening the role of consumption in fueling economic development. First, we will strive to raise urban and rural incomes. We need to adjust the distribution of incomes, standardize the way income is distributed, and increase the income of people in the lower and middle income brackets. To increase rural incomes, we will continue to pursue the policy of giving more, taking less and loosening control. In particular, we need to adopt more measures to give more benefits to farmers. All local governments should make necessary adjustments to the minimum salary system and implement it strictly, and introduce a minimum hourly wage system. We need to gradually solve the problem of low wages for rural migrant workers in cities. We must establish laws and mechanisms for ensuring that wages are paid on time. We will conscientiously implement the revised Individual Income Tax Law and lower the tax burden on low- and middle-income people. This year, the government will appropriately raise basic pension benefits for retired enterprise employees, subsidies for entitled groups and subsistence allowances for urban residents. We will reform the civil servant pay system. We will establish a unified national salary system based on position and rank and a mechanism for regular pay increases and improve the system of allowances for difficult and remote border regions, all based on review and standardization of existing allowances and subsidies. In addition, we will promote reform of the income distribution system in public service institutions. Second, we will keep expected individual spending stable and encourage immediate consumption. We will address people's concerns that increasing consumption will make them unable later to meet basic living needs by accelerating efforts to improve the social security system and solve major problems in education, public health and medical care, and housing. Third, we will work hard to encourage consumption in rural areas. We will increase efforts to develop rural markets and promote the flow of goods, make full use of existing rural retail distribution networks, and support urban wholesale and retail businesses in setting up outlets in the countryside to stimulate rural consumption. Fourth, we will improve the consumption environment and consumption-related policies. We will improve housing and public transportation conditions and take active steps to further develop tourism, cultural activities, fitness centers and other services. We will effectively safeguard consumers' lawful rights and interests. We will make appropriate adjustments to the current consumption tax, standardize and develop consumer credit, promptly eliminate or revise unsuitable regulations and policies that discourage consumption, and promote more high-end consumption.

We will maintain fixed asset investment at an appropriate scale, continue to encourage the growth of some sectors while discouraging the expansion of others, improve the investment structure and prevent breakneck growth in investment. We will continue to properly control the availability of land and credit, practice the strictest possible land management system, and grant loans on the basis of proper qualifications and market access requirements. We will strictly control the number of new projects undertaken. We will strengthen weak links and key areas in economic and social development. We will continue efforts to restrict excessive real estate investment and lower overheated real estate prices in some cities. We need to adjust the types of real estate properties on the market by strictly controlling new high-end real estate projects and concentrating on building general commercial housing and low-cost housing. We will establish a sound system for renting affordable housing and a system for leasing housing. We will establish and standardize order in the real estate and construction markets, basically clear up all overdue payments related to construction projects, and promote the sound development of the real estate and construction industries.

2. Promoting the building of a new socialist countryside

Building a new socialist countryside is a major historic task set at the Fifth Plenary Session of the Sixteenth Central Committee of the Party, which will have an overall impact on building a moderately prosperous society in all respects and modernizing the country. We need to implement a policy of getting industry to support agriculture and cities to support the countryside, strengthen support for agriculture, rural areas and farmers, and continue making reforms in rural systems and innovations in rural institutions to bring about a rapid and significant change in the overall appearance of the countryside.

The first priority in developing a new socialist countryside is to develop modern agriculture and promote steady expansion of grain production and sustained increase in rural incomes. We will stabilize, improve and strengthen policies supporting agriculture. We will further increase direct subsidies to grain producers, subsidies for growing superior grain cultivars, and subsidies for agricultural machinery and tools as well as increase transfer payments to major grain-producing counties and financially strapped counties. We will continue and improve the floor price policy for key grain varieties and keep prices for agricultural supplies from rising too quickly. Central government budget expenditures for agriculture, rural areas and farmers this year will total 339.7 billion yuan, 42.2 billion yuan more than last year. We need to protect arable land, especially basic farmland, stabilize the acreage sown to grain, and expand overall grain production capacity. We will increase the country's capacity for innovation in agricultural science and technology and ability to put scientific and technological advances to practical use, and step up efforts to disseminate agricultural technology and improve agriculture-related technical services. We will accelerate reform of the veterinary medicine management system and development of the animal disease prevention and control system. We will continue to adjust the structure of agriculture by promoting development of the livestock and poultry industry, promoting the industrialization of agriculture, developing secondary and tertiary industries in rural areas, particularly for processing agricultural products, helping county economies grow, bringing about an orderly transfer of the rural workforce to nonagricultural employment in rural and urban areas, and increasing rural incomes through various channels.

In order to build a new socialist countryside, we must accelerate development of rural infrastructure. We need to resolutely work to reorient investment by shifting the government's priority in infrastructure investment to the countryside. This constitutes a major change. This mainly involves strengthening basic development of farmland, with the focus on small water conservancy facilities; improving the system of flood control, drought resistance and disaster reduction; accelerating construction of infrastructure projects such as roads, drinking water supplies, methane facilities, electric grids and communications; improving the living environment in rural areas; and accelerating development of rural public services, such as education, health and culture. The main measures we will adopt to accomplish this goal are: gradually increasing annual investment in agriculture and rural areas from the central and local government budgets and credit funds, integrating agricultural investment from all channels to improve capital performance, guiding farmers to invest capital and labor in public welfare facilities that benefit them directly, encouraging and guiding the investment of non-state funds in rural development, and gradually establish an appropriate, stable and effective investment mechanism. If we work tirelessly, we can bring about a major improvement in rural infrastructure.

In order to build a new socialist countryside, we must comprehensively carry out overall rural reform. This year, we will completely rescind the agricultural tax throughout the country, a tax that China has been collecting for 2,600 years. This is a change of epoch-making significance. The reform of rural taxes and fees has greatly benefited farmers by eliminating 33.6 billion yuan of agricultural tax, over 70 billion yuan in the form of the "three deductions" [for public reserve funds, public welfare funds and management fees, tr.] and the "five charges" [charges for rural education, family planning, militia training, rural road construction and subsidies to entitled groups, tr.], assessments for rural education and other unreasonable fees. Starting this year, the government will appropriate over 103 billion yuan annually to ensure the normal operation of town and township governments and meet the needs of rural compulsory education. This figure is comprised of more than 78 billion yuan in transfer payments from the central government budget and over 25 billion yuan from local government budgets. It must be pointed out that after the agricultural tax is completely rescinded, the task of consolidating the results of the reform of rural taxes and fees and furthering the reform will remain very difficult. The key to success is to comprehensively carry out overall rural reform, including deepening reform of government bodies in towns and townships, rural compulsory education, and county and township fiscal management systems. These reforms require adjustments in rural production relationships and directly involve changes in the rural superstructure, which makes such changes profoundly significant and difficult to achieve. However, we must unwaveringly implement them.

The building of a new socialist countryside is a long-term arduous task. We need to proceed from reality, take measures suited to local conditions, give guidance tailored to the situation and plan carefully. We need to respect the wishes of farmers, oppose formalism and coercion, and avoid the herd mentality. We need to advocate a spirit of self-reliance and hard struggle, be realistic and pragmatic, and work diligently.


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