Full Text: China's economic and social development plan - I

Fourth Session of the Tenth National People's Congress

March 5, 2006

National Development and Reform Commission

Fellow Deputies,

The National Development and Reform Commission has been entrusted by the State Council to submit this report to the Fourth Session of the Tenth National People's Congress (NPC) on the implementation of the 2005 plan for national economic and social development and on the 2006 draft plan for national economic and social development for your deliberation and approval and also for comments and suggestions from members of the National Committee of the Chinese People's Political Consultative Conference.

I. Implementation of the 2005 Plan for National Economic and Social Development

Under the leadership of the Communist Party of China (CPC), the people of all our ethnic groups adopted and implemented a scientific outlook on development, improved macroeconomic regulation, worked hard together and forged ahead resolutely in 2005. The national economy did well, exhibiting fairly rapid growth and good performance with stable prices. The Plan for National Economic and Social Development adopted at the Third Session of the Tenth NPC was fully implemented.

1. The economy maintained steady and rapid growth. Economic activity became more stable. The GDP for the whole year amounted to 18.2321 trillion yuan, up 9.9%, and grew at a rate of 9.9% the first quarter, 10.1% the second, 9.8% the third and 9.9% the fourth. The added value created by large industrial enterprises increased 16.4% during the year, growing at a rate of 16.2% the first quarter, 16.5% the second, 16.2% the third and 16.4% the fourth.

Economic development was more balanced. The growth rate was fairly high and prices were stable, with the consumer price index rising 1.8% for the whole year. Economic performance improved in step with economic growth. National revenue increased by 523.15 billion yuan or 19.8% for the year, and profits of large industrial enterprises rose by 22.6%. Shortages hampering economic growth were eased. Coal output reached 2.19 billion tons, up 9.9%; electricity generated reached 2.47 trillion kilowatt-hours, up 12.3%; the total of the number of power lines affected by power outages and the number of outages occurring during summer peak hours was 61% less than the previous year and the amount of power loss caused by outages was down by 66%; and transport of key materials was better ensured.

2. Further progress was made in industrial restructuring. Agriculture was strengthened. Last year, 297.5 billion yuan from the central government budget was spent on agriculture, rural areas and farmers, a year-on-year increase of 34.9 billion yuan. The acreage sown to grain rose by 2.67 million hectares over the previous year, and grain output totaled 484 billion kilograms, 14.54 billion kilograms more than the previous year. We continued to improve the quality of agricultural products, industrialize agricultural production, standardize agricultural operations, and concentrate the production of superior agricultural products in the most suitable areas. The acreage sown to high-quality special wheat accounted for 48% of China's total wheat acreage, up 4 percentage points year-on-year. Similarly, acreage of high-quality rice accounted for 64%, up 3 percentage points. The animal husbandry and aquaculture industries continued to grow.

Industrial restructuring was accelerated. Hi-tech industries developed rapidly, and the added value created by large hi-tech enterprises rose by 19.8%. A number of major projects for science and technology development and for industrial application of advances in science and technology were successfully implemented. Further progress was made in developing key technologies and increasing domestic manufacture of key equipment. The work of importing and assimilating large gas turbines, urban rail transit facilities, large hydroelectric generating units and pumped storage power generating units proceeded smoothly. Projects were launched to build million-ton ethylene plants domestically, and the demonstration project for a 750-kilovolt AC transmission line and transformer facility was completed. Corporate merger and reorganization was sped up; a number of outmoded production facilities that waste energy, create serious pollution or do not have conditions to ensure safe production were closed down; and the growth of investment in some overheated industries continued to decline.

Infrastructure development was intensified. Construction on the West-to-East Electricity Transmission Project, the South-to-North Water Diversion Project and other key projects progressed smoothly. The Qinghai-Tibet Railway was completed one year ahead of schedule. The projects to upgrade highways connecting county seats were basically completed. An additional 130,000 kilometers of highways, including 6,457 kilometers of expressways, were built. Newly built railways opened to traffic in 2005 totaled 1,203 kilometers, electrified railways 863 kilometers, and double-track railways 486 kilometers.

The service sector continued to develop steadily. IT application continued to expand in the government and in business. Development of emerging services such as telecommunications, modern logistics, community services, tourism, and conference and exhibition services was accelerated, and traditional service industries including commerce and trade, and food and beverage services enjoyed good growth.

3. The overall strategy for regional development was carried forward. The development of the western region proceeded smoothly, and ten key projects were launched there with total investment of 136 billion yuan. The Suining-Chongqing-Huaihua Railway was opened to traffic; construction on the western sections of the five vertical and seven horizontal national trunk highways began; the projects to build, renovate or expand ten airports in the western region, including those in Chongqing, Xining and Manzhouli, were completed; and construction of the Baise and Zipingpu dams was completed and water storage in their reservoirs was begun. Implementation of the strategy for revitalizing Northeast China and other old industrial bases made steady progress. We supported the expansion of competitive industries, such as the petrochemical, steel, major equipment, shipbuilding, automobile and auto parts industries, focusing on increasing domestic manufacture of major equipment and enhancing enterprises' capacity for independent innovation. Initial progress was made in the trial transformation of the economies of cities reliant on natural resources, and the work of renovating shantytowns was started. We worked out and implemented policy measures to energize the central region, resulting in further strengthening of the position of agriculture as the foundation of the economy, expansion of competitive industries, and strengthening of the role of large groups of cities in driving the development of surrounding areas. The eastern region continued to lead in the country's development, and its economic restructuring and the transformation of its pattern of economic growth had good results.

4. Further breakthroughs were made in economic restructuring. Trials of overall rural reform were carried out, the livestock tax was rescinded, and exemption of the agriculture tax was extended to 28 province-level localities. Reform of state-owned enterprises was deepened, and oversight of state assets was tightened. Further advances were made in reforming the management systems of the railway, civil aviation and tobacco industries, and reform of the postal service system was initiated. Policy measures were formulated and instituted to encourage, support and guide the development of the non-public sector of the economy. Reform of the mechanism for setting the RMB exchange rate was successfully implemented. Steady progress was made in reforming the shareholder structure of listed companies. Great strides were made in introducing the shareholding system in state-owned commercial banks. Comprehensive trials to deepen the reform of rural credit cooperatives were launched. The export rebate mechanism was improved. Trial VAT reform in the old industrial base of Northeast China proceeded smoothly. Reform of the investment system continued, and the system for approving and recording projects funded by enterprises were instituted nationwide. The plan for reforming the producer price of natural gas was put in place, a mechanism was established for coupling the price of coal to those of electricity and heating, and the water price reform continued steadily.

5. China opened further to the outside world. Import and export volume reached US$ 1.4221 trillion in 2005, a year-on-year increase of 23.2%. Exports accounted for $762 billion, up 28.4%, and imports amounted to $660.1 billion, up 17.6%. Export volume of electromechanical products rose 32% and new and high technology products by 31.8%. The service sector was opened further to foreign competition. Progress was made in discouraging the export of highly polluting products, resource products and products that consume excessive quantities of energy. We continued to make more and better use of foreign capital, with the amount of foreign direct investment actually used over the year totaling $60.3 billion. The country's year-end foreign exchange reserves reached $818.9 billion. Progress was made in encouraging enterprises to go global, and total overseas direct investment of Chinese enterprises (non-financial portion) over the year reached $6.9 billion.

6. Achievements were made in resource conservation and environmental protection. More efforts were made to save energy, water, materials and land, to comprehensively utilize resources, and to develop a circular economy. The first group of pilot projects for a circular economy was launched in key industries and sectors, industrial zones, and some areas. A policy of charging differential prices was adopted in some high power-consuming industries, state standards for water quotas were set for some high water-consuming industries, and energy efficiency standards were required for some products. Water consumption per 10,000 yuan of GDP dropped by 8.7%. Progress was made in extensively applying energy-efficient techniques in construction, producing new wall materials, saving lumber and using wood substitutes. People throughout the country became more aware of the depletion of natural resources and the need to conserve them.

We sped up work to prevent and control pollution in such key areas as the watersheds of the Huai, Hai and Liao rivers and Tai, Chao and Dianchi lakes, the Three Gorges Reservoir area, and along the routes of the South-to-North Water Diversion Project. Control of pollution caused by urban sewage, industrial wastewater, hazardous wastes, and sulfur dioxide emissions from thermal power plants was strengthened. A greater proportion of urban sewage was treated, and more industrial solid waste was comprehensively utilized. Air quality improved in some cities where the air had been seriously polluted. We returned 1.111 million hectares of cultivated land to forests, afforested 2.667 million hectares of barren or closed-off hills and uncultivated land, and returned 6.667 million hectares of grazing land to grassland. Progress was made in major ecological conservation projects, such as those to protect natural forest resources and bring the sources of dust storms affecting Beijing and Tianjin under control. We improved 8.38 million hectares of grassland affected by desertification, degeneration or alkalization, brought soil erosion under control in 4.2 million hectares of land, and restored the ecology in 72,000 hectares of mining areas. Protection of wildlife species and habitats was strengthened.

7. Science and technology, education, culture, health and other social programs developed in an all-round way. The Outline of the National Long- and Medium-Term Program for Scientific and Technological Development (2006-2020) was promulgated and implemented. The national innovation system, basic research, and the science and technology infrastructure were further improved. We successfully launched the Shenzhou VI manned spacecraft. Development of the Goodson-2 general purpose high-performance microprocessor chip and the genetically engineered inactivated AI vaccine for poultry was completed. Pest-resistant cotton was grown on 3 million hectares of land. We signed 265,000 technology-related contracts worth 151 billion yuan during the year, up by 13.2% over the previous year.

Compulsory education is now available in 95% of the country's populated areas. Progress was made in the program to make nine-year compulsory education basically universal and to basically eliminate illiteracy among young and middle-aged adults in the western region. We built, renovated or expanded over 2,400 boarding schools in rural areas and provided distance learning equipment for 160,000 rural primary and secondary schools and teaching centers. With funds of over 7 billion yuan from both central and local governments, 17 million poor students were given free textbooks and exempted from tuition and miscellaneous fees, and students living on campus were granted living allowances in 592 key counties designated for poverty-alleviation work, and more than 17 million poor students were provided free textbooks in the central and western regions. The construction of school buildings and practice laboratories for secondary vocational schools and county-level vocational education centers was accelerated. Steady progress was made in the 211 Project and the May 1998 Program for higher education.

The system of public culture-related services was improved. Efforts to develop major cultural projects and to protect natural and cultural heritage sites were intensified. Almost every county has a cultural center and library. Progress was made in the project to extend radio and TV coverage to all rural villages, which now reaches 27 million more people. The Outline of the National Program to Develop Red Tourism was initiated. Extensive fitness programs were launched for the general public and smooth progress was made in building Olympic venues.

Establishment of the disease prevention and control system was basically completed. Development of the medical treatment system proceeded smoothly. We continued to build the rural health service system and improved the rural health infrastructure, centering on health clinics in towns and townships in the central and western regions. Trials of a new type of rural cooperative medical care system were extended to 671 counties with a total of 177 million rural residents. Development of urban community health services was accelerated. Preliminary achievements were made in preventing and controlling the spread of highly pathogenic avian influenza. We began work on a service system for rural family planning. The natural population growth rate was 5.89бы.

8. People's lives continued to improve. Urban per capita disposable income rose by 9.6% and rural per capita net income by 6.2% in real terms. Retail sales of consumer goods rose by 12.9%. Urban employment increased by 9.7 million, and the registered urban unemployment rate was 4.2%. The coverage of the social security system continued to expand, efforts were intensified to provide the "two guarantees" [guarantee of basic living allowances for workers laid off from state-owned enterprises and guarantee that retirees' pensions are paid on time and in full, tr.], and the basic livelihood of poor people in urban and rural areas was ensured. The work of incorporating basic living allowances for workers laid off from state-owned enterprises into the unemployment insurance system has been basically completed in nearly all parts of the country. Trials for improving the urban social security system in the northeast progressed smoothly.

Though progress was made in economic and social development, we still face many difficulties and challenges. Some longstanding and deep-seated problems are hindering sound development of the economy, such as limited capacity for independent innovation, imbalanced economic structure, extensive pattern of economic growth, increasing restraints imposed by resources and the environment, notable disparity between urban and rural economies, imbalanced economic and social development, systems and mechanisms that need further improvement, and an inadequate legal system. The current serious problems are as follows. 1) It has become very difficult to increase grain production and rural incomes. Resolving the problem of weak agricultural infrastructure requires fundamental changes, and there is little land available for increasing grain production by expanding acreage. Overall agricultural income remains low, there is considerable downward pressure on grain prices, increases in energy and raw material prices have raised the costs of agricultural production, and there are numerous factors preventing rural migrant workers in cities from earning more money. 2) Investment in fixed assets continued to rise too fast. Total fixed asset investment nationwide in 2005 increased by 25.7%, slower than the previous year, but still very fast. There are too many fixed asset investment projects under construction, and too many new ones are being started. Investment in some industries is expanding too fast, the pattern of distribution of investment among different industries is irrational, and there is pressure for overheated investment to rebound. 3) Adverse effects of surplus production capacity in some industries have begun to emerge. Prices for the products of these industries dropped and inventories grew, corporate profits shrank and losses mounted, and potential financial risk has increased. 4) Many problems vital to the immediate interests of the people have not yet been properly solved. Pressure on employment and reemployment has increased, the social security system needs to be improved, the income gap among some members of society is expanding, and little progress has been made in dealing with problems such as arbitrary educational charges, inadequate medical facilities and excessively high medical costs. People still complain bitterly about certain problems related to environmental protection, enterprise restructuring, land expropriation, housing demolition and resident relocation, and displacement of people to build reservoirs. Preventing and controlling the spread of highly pathogenic avian influenza and other major animal and plant epidemics continues to be an arduous task. 5) The production safety situation remains grim. Major coalmine and traffic accidents occur frequently, causing serious loss to people's lives and property. We must pay close attention to the above-mentioned problems, take vigorous measures and work conscientiously to solve them.