Following is the full text of a report on China's national economic and social development plan delivered at the First Session of the 10th National People's Congress on March 6, 2003:

REPORT ON THE IMPLEMENTATION OF THE 2002 PLAN FOR NATIONAL ECONOMIC AND SOCIAL DEVELOPMENT AND ON THE 2003 DRAFT PLAN FOR NATIONAL ECONOMIC AND SOCIAL DEVELOPMENT

Zeng Peiyan

Minister in Charge of the State Development Planning Commission

Fellow Deputies,

As entrusted by the State Council, I now report to this session on the implementation of the 2002 Plan for National Economic and Social Development and on the 2003 Draft Plan for National Economic and Social Development. I present these to you for your examination 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 2002 Plan for National Economic and Social Development

Under the leadership of the Communist Party of China, the people of all our ethnic groups held high the great banner of DengXiaoping Theory and implemented the important thought of Three Represents over the past year. Acting on the decisions adopted at the Fifth Session of the Ninth National People's Congress, we vigorously furthered the reform, opening up and modernization drive, resulting in the sustained, rapid and sound development of the national economy and in all-round social progress. The 2002 plan was implemented satisfactorily, with the main targets for macroeconomic regulation attained successfully.

The policy of stimulating domestic demand continued to have positive effects, and the national economy maintained sustained and rapid growth. This country generated 10.2398 trillion yuan in GDP in 2002, 8% more than in the previous year. We steadfastly implemented a proactive fiscal policy and a prudent monetary policy, made good use of treasury bonds to stimulate investment, and worked hard to induce nongovernment investment. Investment in fixed assets for the whole country came to 4.3202 trillion yuan, a year-on-year increase of 16.1%. Long-term treasury bonds totaling 150 billion yuan were issued in 2002 with approval of the Fifth Session of the Ninth National People's Congress, which led to an additional increase of 2 percentage points in China's economic growth rate. A large number of high-quality assets have been created by projects financed through treasury bonds. This has increased China's capability for long-term development and played a positive role in optimizing the economic structure, improving the investment environment, increasing revenue, promoting technological progress in enterprises, increasing our ability to maintain sustainable development, and raising people's living standards. Localities and departments painstakingly organized the implementation of projects financed through treasury bonds. They ensured the quality of the work and the safety of the funds by tightening auditing, supervision and inspection and by increasing public scrutiny. We continued to expand consumption as an important part of our proactive fiscal policy and prudent monetary policy. Comprehensive measures were taken to increase personal incomes and improve consumer policies and the consumer environment, making greater spending possible among urban and rural residents. Retail sales of consumer goods for the whole country totaled 4.0911 trillion yuan, 8.8% over the figure for 2001. New growth areas emerged as the focus of consumer spending, including housing, communications, tourism, education and automobiles.

Fresh progress was made in industrial restructuring, resulting in improved quality and efficiency of economic growth. Good results were achieved in restructuring agriculture and the rural economy. Adjustment of the geographical distribution of agricultural production was accelerated, with continued shifting of production of grain, cotton and other major agricultural products to the most suitable areas. The livestock and aquatic farming sectors grew steadily. We developed a number of high-yield, high-quality crop varieties and breeds that are resistant to diseases and suited to adverse natural conditions and continually increased the overall capacity of agricultural production. This country produced 457.1 billion kilograms of grain in 2002, 1% more than in 2001. We vigorously promoted the industrial management of agriculture in order to increase rural incomes. Infrastructure development made great headway, with a large number of new projects for water conservancy, transport, communications, energy development and environmental protection completed and put into operation during the year. Our industrial structure continued to improve. Competitive high-tech industries that possess proprietary intellectual property rights are emerging. The industrial output value of our high-tech industries grew by 23% year-on-year. We put into operation a range of major domestically produced equipment, including urban rail transit facilities, environmental protection equipment, and large-capacity aluminum oxide production equipment. We intensified our efforts to reorganize traditional industries and upgrade their technology. There have been stable development in traditional service industries, rapid growth in modern ones, and vigorous development in telecommunications, logistics, consultancy, tourism and community services. The economic performance of enterprises improved significantly. State-owned and large non-state industrial enterprises generated 562 billion yuan in profit in 2002, 20.6% more than in the previous year.

Steady progress was made in developing China's west, and development of the central and western regions was expedited. Infrastructure development continued to accelerate. Construction started on a range of key projects such as piping natural gas from the west to the east and harnessing the Tarim River in a comprehensive way. Construction on the Qinghai-Tibet Railway and the project to divert electricity from the west to the east proceeded satisfactorily. Work was accelerated to ensure that every township has access to electricity, that every county seat is served by asphalt roads, and that every village receives radio and TV programs. Projects for ecological conservation such as those for returning farmland to forest, protection of natural forest resources, prevention and control of desertification, and restoration and development of natural grassland kept on schedule. In 2002, we returned 2.52 million hectares of farmland to forest and afforested an additional 2.88 million hectares of barren hills and uncultivated land. We sped up the development of small and medium-sized water conservancy projects, potable water sources for people and livestock, and roads in rural areas, improving the conditions for production and living there.

Economic restructuring was steadily deepened, adding fresh vigor and vitality to China's development. We continued and further standardized the reform of large and medium-sized state-owned enterprises to convert them into standard companies. The promulgation of the Law on Promoting Small and Medium-Sized Enterprises helped improve the environment for developing such enterprises. Development of individually and privately run businesses and other non-public sectors of the economy was accelerated. Substantive progress was made in restructuring the management system of such industries as telecommunications, civil aviation and electric power. Price reform continued to deepen with the introduction and strengthening of a system of public hearings for price-related government decisions. We began to collect fees for treatment of urban sewage and garbage, and instituted a system of advance notification of prices and administrative fees related to farmers. Significant achievements were made in upgrading electricity grids and restructuring the electricity supply system in rural areas to adjust the electricity rates there to conform with those in urban areas. Urban and rural residents in 70% of the counties are now paying the same rate for household electricity, reducing the financial burden on rural residents by 42 billion yuan a year. The fee-to-tax reform in rural areas was instituted in 20 provinces (autonomous regions and municipalities directly under the central government) on a trial basis. The reform to make the purchasing and marketing of grain and cotton more market-oriented was accelerated. Conclusive results were achieved in reforming the system of administrative examination and approval. We intensified our efforts to straighten out and standardize the order of the market economy, and we carried out a campaign to comedown hard on the production and marketing of counterfeit and shoddy food products, medicines and medical apparatus and instruments as well as other illegal acts. Efforts were stepped up to target wrongdoings in cultural activities, tourism, the building industry and rural market fairs. All this improved the market environment. Our World Trade Organization (WTO) membership began well, and we further developed our open economy. To fulfill our commitments to the WTO earnestly, we formulated, revised or revoked relevant laws and regulations, lowered the general tariff level, subjected non-tariff measures to phased elimination, and opened more areas to foreign investment. In addition, we began to establish anti-dumping, countervailing and safeguard mechanisms. The volume of our imports and exports for 2002 reached 620.8 billion US dollars, an increase of 21.8% over the previous year. Our trade mix continued to improve, with a significant increase in the export of mechanical and electrical and high-tech products and an increase in the import of key equipment, advanced technologies and resource goods that are badly needed in China. Foreign direct investment in China over the year amounted to $52.7 billion, 12.5% greater than in 2001. The foreign investment structure became more rational and the investment was used to finance larger capital-and technology-intensive projects. Fresh progress was made in implementing the "going global" strategy. Regional as well as multilateral and bilateral economic cooperation continued to deepen. Revenue continued to grow, and banking and financial operations remained stable. Revenue for the entire country amounted to 1.8914 trillion yuan, a year-on-year increase of 15.4%. Expenditures reached 2.2012 trillion yuan, up 16.4%, exceeding revenue by 309.8 billion yuan. The financial sector intensified its support for economic growth and restructuring while watching out for and defusing financial risks. The broad money supply (M2) and the narrow money supply (M1) both increased by 16.8%, and 158.9 billion yuan was put into circulation during the year. At the end of 2002, the outstanding loans for all financial institutions were 15.4% greater than at the end of 2001; the ratio of their non-performing loans dropped by 4.5 percentage points; and China's foreign exchange reserves reached $286.4 billion.

The pace of advances and innovation in science and technology was quickened, and the guiding role of education in China's development was enhanced. Important progress was made in basic and high-tech research, and our capability for independent innovation continually increased. The Shenzhou III and IV spacecrafts were launched successfully and returned safely, and major scientific and technological projects on super-large integrated circuits and software, and functional genomes progressed smoothly. Significant progress was made in establishing a national scientific and technological innovation system and in reforming research institutes. We redoubled our efforts to develop scientific and technological infrastructure such as key national laboratories and scientific projects. Translation of research results into productive forces was accelerated. Protection and management of intellectual property rights improved. Constant improvement was made in elementary education. A new system whereby county governments are held responsible for administering rural compulsory education began to take shape. Fresh progress was registered in making compulsory education universal in poverty-stricken areas. Significant results were achieved in developing infrastructure necessary for greater student enrollment in institutions of higher learning and regular senior secondary schools, and in renovating dilapidated primary and secondary school buildings. Development of regular senior secondary schools and secondary vocational and technical education was accelerated. Higher education continued to grow, with 3.21 million new undergraduate students and 203,000 new graduate students enrolled in regular institutions of higher learning.

All social undertakings developed in a comprehensive way, and the people's lives continued to improve. Sound progress was made in culture, health, sports, radio, film, TV, the press and publishing. Efforts were constantly intensified to promote spiritual civilization. Progress was smooth in the development of a number of key cultural facilities, rural health facilities, traditional Chinese medicine hospitals and specialized hospitals. National fitness activities flourished, and Chinese athletes did well in major sports competitions both at home and abroad. Notable results were achieved in developing urban infrastructure having a direct bearing on people's lives. The poverty-stricken rural population decreased again. The per capita disposable income of urban residents increased by 13.4% in real terms, and the per capita net income of rural residents rose by 4.8%. We continued to strengthen the program to guarantee that the living allowances for workers laid off from state-owned enterprises and the basic pensions for retirees are paid on time and in full. The program to grant subsistence allowances to the urban poor was notably strengthened. Experiments to improve the urban social security system made great headway. The registered urban unemployment rate was 4% at the end of 2002. Progress was made in environmental protection and in the rational development and use of resources, increasing our ability for sustainable development. Greater efforts were made to improve the environment in key areas by closing a number of seriously polluting enterprises or suspending their operations. Conclusive results were achieved in the prevention and control of water pollution in the valleys of the Huaihe, Haihe and Liaohe rivers and Taihu, Chaohu and Dianchi lakes. Some cities and industrial and mining areas reduced their discharge of sulfur dioxide to bring the worsening acid rain under control. More environmental protection facilities such as sewage and garbage treatment plants were built in urban areas, and 40.3% of urban sewage was brought under centralized treatment. The pace of improving the ecological environment and protecting resources was accelerated. Construction on the south-to-north water diversion project started. The natural population growth rate was 6.45.

Fellow Deputies,

The achievements of the past year were made on the basis of what we had achieved since the policy of reform and opening up was introduced in the late 1970s, especially since 1998. During the past five years, the Chinese economy has experienced sustained and rapid growth. All social undertakings have developed rapidly. Our overall national strength has reached a new height. The socialist market economy has been basically established. A pattern of multidirectional opening to the outside world has taken shape. China's international influence has grown notably, and our national cohesion has greatly increased. Our country has enjoyed social stability, solidarity, good government and a united people. These five years constituted one of the best periods of development in China's history, during which a solid foundation has been laid for our long-term development in the years to come. In the extraordinary course of development over the past five years, our national economy enjoyed sustained, rapid and sound development despite a host of unfavorable factors in the international economic environment and numerous difficulties in the domestic economy. We clearly realize that all this is attributable to the scientific decisions and correct leadership of the central authorities and to the timely guidance and intensified oversight of the National People's Congress and its Standing Committee. Credit also goes to localities and departments for their concerted efforts and earnest work, and to the people of all our ethnic groups who have worked hard with one heart and one mind. We are also aware that there are still many conflicts and problems in our economic and social activities and that some of these are very serious. First, the problem of weak effective demand is coupled with an irrational supply structure. Because the main factors affecting rural incomes have yet to be eliminated, rural income growth has been slow. Some urban residents have very low incomes and are confronted with many difficulties in their lives. All this hinders the expansion of the consumer market. The investment potential of the collective and private sectors and of individually run businesses has yet to be fully tapped. Second, employment and reemployment prospects remain grim. A large number of urban residents need to find a job or get reemployed, and there is a huge surplus of rural labor that needs to be diverted to work in urban areas. This makes it very difficult to create enough new job opportunities to keep up with the demand for employment. Third, the reform of state-owned enterprises is a monument al task, with deep-seated problems still not totally solved. We still have a lot to do to make development through fair competition possible for businesses under different forms of ownership. Fourth, the order of the market economy remains fairly chaotic. We still have a long way to go to establish a social credibility system. Major industrial accidents occur frequently. The State Council is paying close attention to these problems and working hard to adopt measures to solve them.