The following is the full text of the Report on the Implementation of the 2004 Plan for National Economic and Social Development and on the 2005 Draft Plan for National Economic and Social Development, submitted to the Third Session of the Tenth National People's Congress on March 5, 2004:

REPORT ON THE IMPLEMENTATION OF THE 2004 PLAN FOR NATIONAL ECONOMIC AND SOCIAL DEVELOPMENT AND ON THE 2005 DRAFT PLAN FOR NATIONAL ECONOMIC AND SOCIAL DEVELOPMENT

(Third Session of the Tenth National People's Congress, March 5, 2005)

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 Third Session of the Tenth National People's Congress (NPC) on the implementation of the 2004 plan for national economic and social development and on the 2005 draft plan for national economic and social development for your examination and approval and also for comments and suggestions from the members of the National Committee of the Chinese People's Political Consultative Conference.

I. Implementation of the 2004 Plan for National Economic and Social Development

Under the leadership of the Communist Party of China (CPC), the people of all our ethnic groups earnestly carried out the Plan for National Economic and Social Development adopted at the Second Session of the Tenth NPC in 2004. We established and implemented a scientific outlook on development, strengthened and improved macroregulation, and worked hard with one heart and one mind to promote sustained, rapid, balanced and sound development of the national economy and all-round social progress. On one hand, outstanding economic problems were alleviated and negative, destabilizing factors were held in check, and on the other, the national economy continued its excellent trend of rapid growth, good performance and strong vitality. By and large, the 2004 plan was implemented satisfactorily. Due largely to substantial increases in investment and exports, China's GDP reached 13.6515 trillion yuan in 2004, representing a year-on-year rise of 9.5 percent and exceeding the target set at the beginning of that year.

There were 9.8 million urban residents entering the workforce for the first time, 800,000 over the target; and the registered urban unemployment rate was 4.2 percent, 0.5 percentage points below the target. Influenced by the rise of grain prices and soaring oil prices on the international market, the consumer price index rose by 3.9 percent, slightly higher than the target of around 3 percent. Total volume of imports and exports increased by 35.7 percent due to the sustained world economic recovery and China's rapid economic growth.

1. The economy grew rapidly yet steadily, and economic performance improved remarkably. Central authorities resolutely decided upon and promptly adopted a series of measures for strengthening and improving macroregulation, specifically to address the problem of overheating in fixed asset investment in the first quarter. As a result, the excessive growth in investment was curbed, the growth rate of fixed asset investment gradually declined, and consumer demand revived. Total investment in fixed assets for the country totaled 7.0073 trillion yuan, an increase of 25.8 percent over the previous year but a decline in the growth rate of 1.9 percentage points. In the fourth quarter, it increased by 22.6 percent, 20.4 percentage points less than the first quarter. Retail sales of consumer goods totaled 5.395 trillion yuan, an increase of 13.3 percent, or 10.2 percent in real terms after adjusting for price changes, up by one percentage point over the previous year. National revenue reached 2.6356 trillion yuan, up 21.4 percent. Large industrial enterprises generated 1.1342 trillion yuan in profits, an increase of 38.1 percent.

2. Adjustment of the industrial structure was vigorously promoted, and weak sectors were strengthened. Within China's GDP, the added value of primary industry hit 2.0744 trillion yuan, an increase of 6.3 percent; that of secondary industry amounted to 7.2387 trillion yuan, a rise of 11.1 percent; and that of tertiary industry was 4.3384 trillion yuan, up 8.3 percent.

Grain production took a significant turn for the better, and agricultural restructuring continued. Total acreage of grain production experienced a rebound after shrinking five years running, increasing about 2 percent to reach 101.61 million hectares. Grain output totaled 469.5 billion kilograms, up by 38.8 billion kilograms. Development of areas of industrialized production of superior quality farm products was strengthened and the proportion of superior varieties of grains, vegetables and fruits produced has risen. There was a bumper crop of cotton, and animal husbandry and aquaculture developed rapidly.

Development of energy facilities and the transportation infrastructure was intensified. Work progressed smoothly on a number of major energy construction projects, such as the second pipeline for transmitting natural gas from Shaanxi to Beijing, the first phase of the Guangdong liquefied natural gas project, state petroleum reserve bases, upgrading of coalmines for production safety, large coalmines and rural power grids. Production capacity of coalmines increased by 120 million tons. Installed power-generating capacity increased by 50.55 million kilowatts. An additional 1,433 kilometers of railway tracks were laid. There were 46,000 kilometers of newly built highways opened to traffic, including 4,476 kilometers of expressways. The handling capacity of ports increased by 120 million tons. Work to upgrade or build new airports in Guangzhou, Chongqing and Qingdao was completed, and a number of feeder airports were built and put into operation.

Upgrading of traditional industries was stepped up, and hi-tech industries grew rapidly. Differentiated fibers accounted for 28 percent of the fibers used for textiles, a year-on-year increase of 3 percentage points. New dry-process cement accounted for 32.5 percent of total cement output, up by 7.5 percentage points. Sheet and strip steel accounted for 33.7 percent of steel production, up by 1.6 percentage points. Total added value of large hi-tech enterprises rose by 23.1 percent, 6.4 percentage points more than the average for all large industrial enterprises. Hi-tech industries that can greatly stimulate economic development such as biology, integrated circuits and software, are now emerging.

3. Further progress was made in development of the western region, and the revitalization of Northeast China and other old industrial bases got off to a good start. Notable results were achieved in infrastructure development in the western region. A total of 80 billion yuan was invested to fund 10 new major projects in 2004. The entire West-to-East Natural Gas Pipeline Project was put into commercial operation as scheduled. Additional power-generating capacity of 8 million kilowatts went on line in the West-to-East Electricity Transmission Project, raising the total installed power-generating capacity to over 20 million kilowatts. An additional 396 kilometers of track was laid on the Qinghai-Tibet Railway. Expanded or newly built airports in Xingyi, Lhasa, Hotan and Yan'an were put into operation. The natural environment was improved. We returned 667,000 hectares of farmland to forest, afforested an additional 3.255 million hectares of barren hills and uncultivated land, and improved 5.6 million hectares of seriously degraded grassland. Restructuring and technology upgrading in Northeast China and other old industrial bases was accelerated. Hi-tech projects for enhancing the ability of enterprises to make technological innovations were carried out smoothly. Work to solve the problem of sinkholes in coalmining areas went into full swing. In the eastern and central regions, we continued to develop distinctive economies under macroregulation and accelerated structural adjustments.

4. Economic restructuring was further deepened, and China opened wider to the outside world. All controls on the grain market were lifted. The pace of introduction of the shareholding system in large state-owned enterprises was quickened. A basic framework for oversight and management systems for state-owned assets was established. The experimental reform to transform the Bank of China and the China Construction Bank into stock companies progressed smoothly. The pilot reform of rural credit cooperatives was expanded. Important progress was made in the reform to deregulate interest rates and make them subject to market forces. Implementation of the reform of the investment system was begun. Taxes on all agricultural specialties except tobacco were rescinded, and the agricultural tax was reduced or exempted. Pilot projects to transform the VAT were begun in the old industrial base of Northeast China. The reform of export tax rebate mechanism was fully implemented. We continued to deepen the reform of the administrative approval system, eliminating or streamlining 495 more items requiring administrative approval. We continued to carry out pilot projects for a new cooperative medical care system in rural areas and to reform the urban medical service system. There form of the cultural system progressed smoothly.

China's foreign trade leapt to a new level. The total volume of the country's imports and exports reached 1.1548 trillion US dollars for the year. Exports accounted for 593.4 billion US dollars, up 35.4 percent year-on-year, and imports amounted to 561.4 billion US dollars, up 36 percent, yielding a trade surplus of 32 billion US dollars. The export mix continued to improve, with rapid increases in the export of electromechanical products and new and high technological products. China's foreign reserves totaled 609.9 billion US dollars at the end of 2004. We made more and better use of foreign capital, with the amount of foreign direct investment actually used over the past year totaling 60.6 billion US dollars, an increase of 13.3 percent. Investment in the service sector continued to increase, and the number of R&D centers and regional headquarters established by multinational companies in China increased significantly. Further progress was made in implementing the "go global" strategy. Implementation of the Closer Economic Partnership Arrangement between the mainland and Hong Kong and between the mainland and Macao went smoothly.

5. Undertakings in science and technology, education, culture and health developed rapidly, and further progress was made in ecological conservation and environmental protection. More major advances were made in basic research and research in strategic hi-tech fields. We improved the national innovation system and the science and technology infrastructure and became better able to make industrial innovations. We organized the industrial application of such high technologies as the next generation of the Internet, third-generation mobile communications, biotechnology, modern agriculture, and new materials. A number of national hi-tech industrial bases in the fields of biology and software were established. Steady progress was made in the research and development of major equipment and key industrial technologies. Important progress was made in independently developing feeder aircrafts and collaborating with international partners to manufacture them. Education experienced rapid development. More people benefited from the plan to make nine-year compulsory education basically universal and basically eliminate illiteracy among young and middle-aged adults. Senior middle school education was expanded, and enrollment for secondary vocational and technical education continued to increase. The number of students receiving all kinds of higher education exceeded 20 million.

We improved the public health system and strengthened our population and family planning work. We basically completed work on 9 provincial-, 241 prefectural- and 1,410 county-level disease prevention and control centers. Construction was begun on 290 emergency medical centers and 2,074 communicable disease clinics, some of which were completed and put into use. Hospital facilities were improved in 3,787 towns and townships in key AIDS and snail fever prevention and control counties and in counties with cooperative medical care pilot programs in the central and western regions. The natural population growth rate was 5.87 per thousand.

Further progress was made in developing urban and rural cultural facilities. We continued to improve county libraries and cultural centers, as well as radio, television and film facilities in rural areas. We put more effort into building major national cultural projects and protecting our natural and cultural heritage. We launched extensive fitness programs for the general public, and Chinese athletes did well in competitive sports. We made steady progress in building Olympic venues.

Efforts to protect the environment and improve the eco-system were intensified. We sped up the implementation of projects to prevent and control water pollution in such key areas as the valleys of the Huaihe, Haihe and Liaohe rivers and Taihu, Chaohu and Dianchi lakes and the Bohai Sea, thereby improving water quality in some of those areas. Greater efforts were made to prevent geological disasters in the Three Gorges Reservoir area and to control pollution caused by urban household wastewater, industrial wastewater, hazardous wastes, and sulfur dioxide emissions from thermal power plants in the areas affecting the reservoir. Efforts were accelerated to control pollution along the east route of the South-to-North Water Diversion Project. More urban sewage was treated, and more industrial solid wastes were comprehensively utilized. Notable achievements were made in protecting natural forest resources, in improving the key shelter forests in Northwest, Northeast and North China and the middle and lower reaches of the Yangtze River, and in protecting nature reserves and wild animal and plant species.

6. Further progress was made in employment and social security work, and people's lives continued to improve. A total of 5.1 million laid-off urban workers found new jobs. We raised subsistence allowances for urban residents in some areas and basic old-age pensions for workers retiring from enterprises. The numbers of urban residents who were covered by basic old-age, basic medical, unemployment and worker's compensation insurance were 163 million, 124 million, 106 million and 68.23 million, respectively. Urban per capita disposable income was 9,422 yuan, an increase of 7.7 percent in real terms. Rural per capita net income was 2,936 yuan, up 6.8 percent in real terms. The numbers of poverty-stricken and low-income rural residents were reduced by 2.9 million and 6.4 million respectively at the end of 2004 compared to the numbers at the end of 2003.

While fully affirming our achievements, we realize that we have only partially achieved our goals in strengthening and improving macroregulation and that although outstanding conflicts and problems in our economic activities have been alleviated, they have yet to be fundamentally resolved and there are still numerous obstacles to maintaining steady and rapid economic development. First, the agricultural infrastructure remains weak, which severely restricts our ability to increase the acreage sown to grain and the yield per unit area, and climatic conditions are unpredictable. All this makes it very difficult to continue to increase grain production and rural income. Second, there are too many fixed asset investment projects under construction, and too many new ones are being started. The driving force behind investment growth is strong, and investment demand could return to excessive levels. Third, there are tight constraints on resources and the environment, and coal, electricity, petroleum and transportation are still in short supply. There is significant inflationary pressure. Environmental pollution remains serious in some areas. Fourth, rural education, health, culture and other social undertakings fall far short of what is needed for development and improved living standards in rural areas. Fifth, the employment situation is gloomy. The income gap between some members of society is too wide, and some low-income people lead difficult lives. Sixth, deep-seated conflicts in economic and social development have yet to be fundamentally eliminated. The economic system is unsound, the economic structure is irrational and the pattern of economic growth is too crude. We all need to adopt proactive measures to solve these problems.