(Delivered at the Third Session of the Ninth National People's Congress on March 6, 2000)

　　Zeng Peiyan
Minister in Charge of the State Development Planning Commission

_____________
Note:
1. News dispatches are embargoed until the conclusion of today's meeting.
2. The official version of this speech in Chinese will be released by the Xinhua News Agency.

Fellow Deputies,

　　I have been entrusted by the State Council to report now to this session on the implementation of the 1999 Plan for National Economic and Social Development and on the Draft 2000 Plan for National Economic and Social Development. These are presented 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 1999 Plan for National Economic and Social Development

　　The people of all ethnic groups in China worked hard together with one mind under the correct leadership of the Communist Party of China over the past year. They surmounted all types of obstacles in the way forward to score fresh achievements in reform and opening up and in the modernization drive. The national economy witnessed sustained, rapid and sound development, and all social undertakings progressed in an all-round way. On the whole, the 1999 plan was carried out satisfactorily and the major regulatory targets for national economic and social development were basically attained.

　　The national economy continued to show good momentum of development, and there were improvements in the quality of growth and performance of the economy.In 1999 China's GDP hit 8.2054 trillion yuan, representing an increase of 7.1% over the previous year. The production conditions for agriculture continued to see improvement, and important advances were made in restructuring efforts. The capacity to fight against natural calamities was further strengthened. Efforts to develop water-saving irrigation and dry farming were stepped up. The area of cultivated land making use of improved varieties of crops and advanced, applicable technology has been constantly expanding. About 4.67 million hectares were added to the area of land applying 18 practical agricultural techniques, including the casting of rice seedlings, wheat mulching, high-quality early rice and canola. Grain output remained stable at a relatively high level of 500 million tons. The added value of industry grew by 8.5%. Marked progress was made in industrial restructuring. Development of information and other high-tech industries was accelerated. Production of mobile communications equipment, computers and large-scale integrated circuits increased by 43.5%, 196.4% and 149% respectively. The sales rate for manufactured goods reached 97.16%, a rise of 0.56 percentage points. In 1999 the composite economic performance index for industrial enterprises was 99.3, an increase of 8.4 percentage points. Total profits from state-owned industrial enterprises and from the industrial enterprises with controlling share held by the state reached 96.7 billion yuan, an increase of 77.7%. The added value of tertiary industry grew by 7.5%. Development of the tourism, information and consulting service industries was quickened.

　　The investment pattern continued to improve and there was better quality in construction projects.Total fixed asset investment for 1999 reached 2.9876 trillion yuan, an increase of 5.2% over the previous year. Implementation of a proactive fiscal policy, issuance of additional treasury bonds and expansion of investment played an important role in promoting economic development. A total of 101 billion yuan worth of treasury bonds was issued in 1999, providing an impetus for the expansion of investment by localities, departments and enterprises as well as an increase in bank loans. These funds plus the increase in investment were used to complete a number of key projects and to get big jobs done which had been on the agenda awaiting action for years. We further reinforced 6,100 km of banks and dikes on major rivers and lakes to improve their flood control capacity. In the middle and lower reaches of the Yangtze River, we converted farmland into lakes, built new towns for the nearly 1 million displaced people and increased the flood diversion and detention area by over 1,500 square km. Some 24,000 km of highways were under construction in 1999, including 10,000 km of expressways. Newly built highways opened to traffic totaled 4,740 km, including 1,895 km of expressways. A total of 1,005 km of newly laid railway tracks and 547 km of double-track lines were opened to traffic. Much headway was made in the development of urban infrastructure and environmental protection. The daily capacity of urban water supply was increased by 8.5 million cubic meters, and the daily capacity of urban wastewater processing was up by 5.8 million tons. Upgrading and extension of rural power grids were carried out throughout the country, with 500 counties completing upgrading projects. Grain depots with a total capacity of 25 billion kg were erected. The process of upgrading technology in enterprises and applying high technology to production was sped up. More investment was made in the construction of educational facilities in support of the increase in college and university enrollment. More than 60% of the capital from treasury bonds issue was invested in the central and western regions. To strengthen the management of funds from treasury bonds issue and better ensure the quality of construction projects, the State Council convened the National Conference on Improving the Quality and Management of Infrastructure Construction Projects, formulated regulations and adopted measures to this end. The responsibility system for project quality at all levels was introduced throughout the country. The supervision and auditing of major projects was strengthened.

　　National revenue and expenditures grew rapidly and the financial situation remained stable.We effectively promoted rapid growth of revenue by strengthening tax collection and management, putting more effort into resolving tax arrears and severely cracking down on smuggling. National revenue for 1999 (excluding revenue generated through debt) totaled 1.1377 trillion yuan, an increase of 15.2% over the previous year. Expenditures for the country (excluding debt repayment) totaled 1.3136 trillion yuan, up 21.7%. Expenditures exceeded revenue by 175.9 billion yuan, with a deficit of 179.7 billion yuan for the central budget and a surplus of 3.8 billion yuan in local budgets. We took a better advantage of the role of monetary policy. For one thing, we lowered deposit and loan interest rates and the required deposit-reserve ratio. We also expanded consumer credit. The central bank increased refinancing for small and medium-sized financial institutions. We appropriately increased the monetary supply to stimulate domestic demand and promote economic development. M2, M1 and M0 were up by 14.7%, 17.7% and 20.1% respectively at the end of 1999 compared with the figures for the end of 1998. Outstanding loans of all financial institutions totaled 9.4 trillion yuan at the end of 1999 and increased by 1.08 trillion yuan in the year. We deepened financial reform and tightened financial supervision and management, which played an important role in preventing and reducing financial risks. As of the end of 1999, China’s foreign exchange reserves totaled US$ 154.7 billion yuan, an increase of $9.7 billion.

　　Clear progress was made in reforming state-owned enterprises and turning around the operation of loss-making enterprises, and we continued to deepen all other major reforms.The process of separating the functions of the government from those of enterprises was accelerated. Efforts to merge some enterprises, declare some enterprises bankrupt and reorganize some industries were intensified. A large number of new large enterprise groups were formed in the defense-related, nonferrous metals and telecommunications industries. Tangible results were seen in the drive to turn around the operation of state-owned enterprises. Losses of state-owned enterprises and of enterprises with controlling share held by the state decreased by 15.9% over the previous year. The textile, building materials, nonferrous metals and railway industries took their operations out of the red and into the black. Over 4.9 million workers laid off from state-owned enterprises found new jobs, with 93% of those who did not registered with re-employment service centers, 97% of whom received basic cost of living allowances. We basically ensured that all retired people of enterprises received their pensions on time and in full. Reform of the system of medical insurance for urban workers continued.

　　Price relationships were further rationalized. We adjusted prices for railway freight transport, medical services, postal and telecommunications services and raised public housing rents and charges and fees for higher education, urban water supply and environmental protection. All this promoted the development of basic industries and improvement in social undertakings. We decreased electricity fees for high power-consuming enterprises and lowered electricity rates in rural areas. We also rectified import and export charges by appropriately lowering some fees that were too high, thereby reducing the burden on export enterprises.

　　Continued progress was registered in the reform of the grain and cotton distribution system. We implemented a policy of purchasing at protective prices all the surplus grain farmers had to sell, paying good prices for good quality. This protected the interests of the farmers and promoted adjustment of the production pattern. State-owned grain purchase and marketing enterprises continued to sell grain at a profit and carried out closed operation of their grain purchase funds. In addition, they improved their management and operations and effected a turnaround in their previous very poor performance. Reform of the cotton distribution system proceeded smoothly.

　　Imports and exports grew fairly rapidly and there was continued improvement in the utilization of foreign funds.We stuck to a strategy of success through quality and diversification of market outlets, working energetically to expand exports by granting more export credits, raising comprehensive tax refunds for exports and giving more authority to producing enterprises to independently engage in export. As a result, the slump in exports was reversed with a high growth rate in the second half of 1999. For the year the total volume of China’s imports and exports reached $360.7 billion, an increase of 11.3% over the previous year. Exports accounted for $194.9 billion, a rise of 6.1%. Imports amounted to $165.8 billion, up 18.2%. The pattern of exports improved constantly. Exports of mechanical and electrical products increased by 14.7%, representing a net rise of $9.9 billion which accounted for 88% of the net rise in total exports.

　　Some $56.3 billion in foreign funds was used, a decrease of 3.9% over the previous year. Foreign investment totaled $45.4 billion, including $40.4 billion of direct foreign investment and ranking China first among the developing countries. There was a marked increase in the number of fund- and technology-intensive projects encouraged by the state, with an increase in the size of individual projects. More multinational corporations invested and established production facilities in China.

　　Development of science, technology and education was sped up and all social undertakings made comprehensive progress.More progress was made in deepening the reform of the management system for science and technology. As a result of this reform, 80% of the 242 scientific research institutes affiliated to ten state administrations were restructured and incorporated into enterprises. Our support for research topics in basic research, industry-specific technology, major technology and high technology was strengthened. The launch of the National Key Basic Research Development Project and the Technological Innovation Fund for Small and Medium-Sized Science and Technology Enterprises went smoothly. Progress was made in major special industrial projects such as the development of digital high definition TV, application of rare-earth minerals and biotechnology. The success of the test mission of the Shenzhou spacecraft marked a breakthrough in China's research on manned space flight.

　　Fresh achievements were scored in reform and development of all forms of education at all levels. We increased enrollment for regular and adult higher education, combining the strategy of building the country through science, technology and education with the need to boost domestic demand. In 1999, colleges and universities enrolled 1.6 million students, an increase of 47.4% over the previous year. We vigorously supported the improvement of conditions for operating schools offering elementary education in economically depressed areas. Some 80% of the country’s populated areas have now made a nine-year compulsory education basically universal and eliminated illiteracy among young and middle-aged residents. Education designed to raise the overall quality of students was promoted. Efforts to develop new disciplines in colleges and universities were strengthened.

　　Comprehensive progress was made in culture, art, the press, publishing, radio, film, TV, social sciences, family planning, public health, sports and other social undertakings. Socialist cultural and ethical development continued to gather in strength. The natural population growth rate was 0.877%. The project to extend radio and TV coverage to every village went into full swing, enabling about 40 million rural residents to enjoy radio and TV broadcasts in their homes for the first time. The project to improve the health of residents in poor rural areas was launched.

　　Market sales began to pick up and people's living standards continued to improve.Measures such as expanding personal consumer credit, increasing the number of legal holidays and improving the consumption environment helped boost consumption demand so that in the latter half of 1999 market sales began to recover. Retail sales of consumer goods for the country totaled 3.1135 trillion yuan in 1999, an increase of 6.8% over the previous year, or an increase of 10.1% in real terms after allowing for price decreases. On July 1, 1999, the incomes of lower-income urban residents and government employees were raised. In the year the per capita disposable income of urban dwellers was 5,854 yuan, an increase of 9.3% in real terms over the previous year. The per capita floor space for urban residents was 9.6 square meters, an increase of 0.6 square meters. The registered unemployment rate was 3.1% in cities and towns. Measures were taken to lighten the burden on farmers and efforts were made to increase their income. The per capita net income for rural residents was 2,210 yuan, an increase of 3.8% in real terms. Fresh progress was registered in anti-poverty work and about 8 million more poverty-stricken people now have adequate food and clothing.

　　All these great achievements of 1999 created a sound environment for celebrating the 50th anniversary of the founding of New China and welcoming the return of Macao to our motherland. They also strengthened confidence both at home and abroad in the development of China's economy. Experience has shown that the Central Committee of the Communist Party of China with Jiang Zemin at its core is entirely capable of dealing with all types of complicated situations, keep the overall situation under control and lead the people of all ethnic groups in a united struggle to blaze new trails, score more achievements and bring about sustained, rapid and sound development of the national economy.

　　However, we are fully aware that there are still quite a few conflicts and problems in economic and social development. First, effective demand is feeble. The pace of increase in fixed asset investment has slowed. The increase in investment from state institutions and enterprises dropped from 22.7% in the first quarter of 1999 to 3.8% in the fourth quarter. Certain factors held back the growth of consumer spending and restricted the expansion of consumption fields. In 1999, consumer prices and retail prices of consumer goods fell by 1.4% and 3% respectively over the previous year. Second, unemployment pressure has grown. As of the end of 1999, there were 6.5 million workers laid off from state-owned enterprises unemployed. There are other unemployed people who need to find jobs. Fewer people are now employed in township and village enterprises. There is a great deal of surplus labor in rural areas that needs to be absorbed elsewhere. Third, the growth of rural incomes has slowed. Due to changes in the balance of supply and demand, there was a constant drop in the prices of agricultural products and a decline in the performance of township and village enterprises. The per capita net income of rural residents increased by only 48 yuan in 1999. Fourth, anomalies in the economic structure remain outstanding. The problem of excess production capacity for ordinary products is still serious. Some enterprises are unable to adapt to changes in market demand and have weak development and innovation capacity. They are unable to replace older generation of products with new ones fast enough and are hardly competitive. Fifth, the environment continues to deteriorate in some regions and pollution is serious in some cities. We will take effective measures and work hard to solve these problems.

II. Regulatory Targets and Major Tasks for Economic
and Social Development in the Year 2000

　　The year 2000 marks the turn of the century and is the final year for implementing the Ninth Five-Year Plan. Success in economic work for this year will have a major impact on our effort to attain all of the strategic targets for the second stage of our modernization drive and to move on to reach the targets for the third stage.

　　The general requirements for economic work in the year 2000 are as follows. We should follow the guidance of Deng Xiaoping Theory and the Party's basic line and conscientiously implement the guiding principles set at the Fifteenth National Congress of the Party and the third and fourth plenary sessions of the Fifteenth Party Central Committee. We should continue to implement all the policy measures adopted by the central authorities for promoting reform and development, giving priority to the reform and development of state-owned enterprises, economic restructuring, scientific and technological progress and expansion of domestic demand. We should further stabilize the position of agriculture as the foundation of the economy, making diligent efforts to restructure agriculture and the rural economy and using every possible means to increase the farmers'incomes. Taking the reform of state-owned enterprises as the key link, we should energetically promote improved performance and the establishment of a modern enterprise system. We shall continue to follow a proactive fiscal policy, take more advantage of the role of monetary policy and make comprehensive use of macro-control means such as taxation and pricing. Efforts to develop infrastructure should be strengthened. No time should be lost in speeding up technological upgrading and scientific and technological innovation. Great efforts should be made to expand consumption. We should open China wider to the outside world, vigorously work to increase imports and exports and raise the level of foreign fund utilization. We should improve the social security system, pay close attention to poverty alleviation programs, step up efforts to fight poverty and further improve people's standard of living. We should balance reform, development and stability to ensure sustained, rapid and sound development of the national economy and promote all-around social progress so that we can greet the new century with outstanding achievements. In accordance with these requirements, the major targets for national economic and social development in the year 2000 are as follows:

– Economic growth rate of around 7%;
– Increase in total fixed asset investment of around 10%;
– Consumer price level and overall retail price level equal to or slightly higher than those of 1999;
– Total import and export volume up by 3%, and a basic equilibrium of balance of payments;
– Central government deficit of 229.9 billion yuan;
– Total volume of currency issued around 150 billion yuan;
– Registered urban unemployment rate controlled around 3.5%; and
– Natural population growth rate of 0.92%.

　　Development is the key to solving all the problems facing us. The primary target for this year's economic work is to maintain fairly rapid development of the national economy. This is crucial to efforts to solve the outstanding problems in economic activities, maintain social stability and strengthen confidence both inside and outside China in our economic development. Of course, we must seek a realistic growth rate based on market demand and economic performance. A correct orientation and degree will be maintained in macro-control. Efforts to boost domestic demand will be integrated with those to restructure the economy, make scientific and technological advances and open China to the outside world. We will speed up the fundamental transformation of the economic structure and the pattern of economic growth so that we can push the development of the national economy into a new stage.

　　The major tasks for national economic and social development in the year 2000 are as follows.

　　1. Continuing to expand investment scale and optimize the investment pattern.

　　The difficult part of efforts to attain the targets for economic growth in the year 2000 will be in ensuring a rapid rise in investment. We have set the target for the increase in national fixed asset investment at about 10%, which is both necessary and possible. We will continue to increase the volume of treasury bonds and government investment so that banks will grant more loans and enterprises will increase investment. We will also guide and encourage collective, self-employed and private businesses and other components of the non-state sector to do the same. We should use as much foreign investment as possible. We should make sure that investment is made in the right areas so that there will be no more redundant construction. Fixed asset investment will be used mainly to expand infrastructure development, especially in water conservancy, railways, highways, main communications lines and other key projects, as well as to support technological upgrading in enterprises, accelerate the application of high technology to production, support the equipment manufacturing industry, promote advances in industrial technology and industrial upgrading and raise the level of national defense-related science and technology. In addition, more funds will be invested in the development of the western region of the country, in ecological development and environmental protection and in developing infrastructure facilities for education, science and technology as well as in building more grain depots in major grain production areas and in speeding up the construction of affordable and practical housing. We will be launching a number of major projects, including the Nanjing-Xi'an and the Chongqing-Huaihua railway lines, gas pipelines connecting Qaidam, Xining and Lanzhou, the Zipingpu key water conservancy project in Chengdu, a new airport in Guangzhou, the second phase of the Mingzhu light rail line in Shanghai and the Nanjing subway project. Preparations for the project to pipe gas from the west to the east, the petroleum pipelines from Lanzhou to Chengdu, the Beijing-Shanghai rapid transit railway, the Longtan Hydropower Station in Guangxi, the Yatai II submarine cable and other projects will be accelerated. Investment financed through the issue of treasury bonds will be mainly concentrated on projects begun one or two years ago so that they can be completed and yield returns as soon as possible. Projects will be well selected and funds properly used. Supervision, auditing and project quality control will be tightened to prevent shoddy workmanship on projects.

　　2. Promoting strategic restructuring of agriculture and the rural economy and improving the overall quality and performance of the rural economy.

　　We will continue to strengthen infrastructure development efforts in agriculture, focusing on water conservancy. Construction of the projects to reinforce dikes on the Yangtze and Yellow rivers and other big rivers will be accelerated. Rivers and lakes will be dredged and desilted and new towns built for the displaced people. Major dilapidated reservoirs will be reinforced. More pivotal water conservancy projects on major rivers will be constructed. Large irrigated areas will be improved, and the application of water-saving irrigation will be vigorously expanded. Efforts to develop water and power supply, roads, communications and other public facilities in rural areas will be strengthened.

　　Farmers should be encouraged to adjust the pattern of cultivation in response to market demand. They should develop green foods and local specialties and work hard to improve the overall quality of agricultural products. The application of key technology for the integrated use of agricultural resources, intensive farming, forecast and control of biological disasters and production of highly processed agricultural products will be vigorously expanded. Projects to improve seeds and the varieties and breeds of livestock, poultry and aquatic products will be successfully carried out. Livestock and poultry production and aquacultural development will be stepped up to increase consumption of meat, eggs and milk and to accelerate the conversion of grain into other products.

　　We will continue to deepen reform of the grain distribution system. We will uphold the policies of purchasing at protective prices all the surplus grain farmers have to sell, of having state-owned grain purchase and marketing enterprises sell grain at a profit and of ensuring closed operation of state grain purchase funds. The types of grain to be purchased at protective prices will be regulated as appropriate. We will focus on reform of state-owned grain purchase and marketing enterprises to increase their competitiveness on the market.

　　Township and village enterprises will be restructured and vigorous efforts will be made to develop small cities and towns. Township and village enterprises should be advised to integrate production with industrialized operation of agriculture to promote the processing of agricultural products and the conversion of them into other products to increase their added value. Small cities and towns should have a rational distribution and should be scientifically planned and their development should be accelerated. Township and village enterprises should be encouraged to concentrate in small cities and towns.

　　Anti-poverty policies and measures will be further implemented and the efficiency in the use of anti-poverty funds will be raised. We will mobilize the whole society to join in the anti-poverty program. Efforts should be aimed at helping approximately 10 million more poor rural residents solve their food and clothing problems in order to attain the objectives of the state anti-poverty plan which calls for helping 80 million destitute rural residents over the seven years from 1994 to the year 2000.

　　3. Intensifying industrial restructuring efforts to improve the quality and performance of industrial growth.

　　Technological progress and the process of industrial upgrading will be accelerated. The metallurgical industry should increase production of steel products urgently needed domestically, such as cold-rolled plates, autobody sheets, galvanized sheets and petroleum pipelines. The nonferrous metals industry should produce more highly processed products and new materials and ensure an ample supply of copper barilla and aluminum oxide. The petroleum and natural gas industry should accelerate the development and prospecting of oil and gas resources in the central and western regions and build more natural gas pipelines. More adjustments will be made in the pattern of production in the chemical, petrochemical and pharmaceutical industries and in industries which support agriculture. The light industry should focus on the production of wood pulps, high-grade paper and paperboards and use new applicable high technology to produce highly processed farm products. The textile industry should develop specialized functional fibers and improve printing, dyeing and other finishing processes by applying advanced technology. Efforts will be made to produce urban rail tracks and rolling-stock and environmental protection equipment domestically as soon as possible. The production capacity and level of technology of new power equipment and new ships and equipment for use in agriculture and in petrochemical, metallurgical, textile and paper industries will be raised. We will speed up the process of industrial restructuring and enterprise reorganization in old industrial bases. A number of small plants and mines that are technologically backward, produce inferior products, waste resources and cause serious pollution should absolutely be closed down. Backward equipment, technology and processes should be abandoned. Total production in the coal and metallurgical industries will be kept under control. Every possible means will be used to improve the quality of industrial products, raise productivity and enhance enterprise performance.

　　4. Striving to create a good external environment and promoting reform and development of state-owned enterprises.

　　More reserve funds will be set aside, mainly for canceling bad bank debts resulting from the bankruptcy or close-down of large and medium-sized state-owned enterprises and worn-out mines. We will lose no time in successfully carrying out debt-to-equity swaps in some large and medium-sized state-owned enterprises, truly integrating these swaps with efforts to change the way enterprises operate, make structural adjustments and improve management. We will make sure such swaps are carried out in accordance with rules only in enterprises that meet all the conditions so as to prevent the evasion of repayment of debts in a disguised form and protect state assets from losses. Financing channels for enterprises will also be widened.

　　Market supply and demand will be regulated as needed through the combined application of planning tools, fiscal and monetary policies and economic levers. We must continue to improve the commodity market, cultivate and develop markets for essentials of production such as capital, technology and labor. We will intensify market supervision and regulation, clearing away administrative barriers that break up and isolate markets to create a market environment conducive to fair competition. We will resolutely crack down on the production and marketing of fake and shoddy goods. The social security system will be improved, and social insurance, mainly endowment, unemployment and medical insurance, will be made compulsory in urban areas. The program for giving cost of living allowances to workers laid off from state-owned enterprises will be further improved and re-employment efforts stepped up. We will ensure that basic old-age pensions for retirees of state-owned enterprises are paid on time and in full. In areas where conditions permit，trials will be vigorously launched in a careful manner to incorporate basic cost of living allowances into unemployment insurance. Social security funds will be raised through various channels and a variety of methods. No time should be lost in studying how to maintain and increase the value of social insurance funds. We will make great efforts to create job opportunities and support the development of small and medium-sized enterprises and the non-state sector of the economy.

　　5. Strengthening implementation of a proactive fiscal policy and making greater use of monetary policy.

　　Looking at China's present economic situation and the problems facing the country, we must continue to follow a proactive fiscal policy if we want to attain our macro-economic objectives this year. We will issue 100 billion yuan worth of long-term treasury bonds to boost investment demand. This year's total national budgetary revenue will be 1.2338 trillion yuan and expenditures will total 1.4637 trillion yuan (including interest payments on debt). This leaves a deficit of 229.9 billion yuan, which is entirely for the central government as local budgets will maintain fiscal balance. We currently have a fairly ample supply of goods and materials, which provides the necessary material guarantee for issuing more treasury bonds to help offset the current feeble demand. From a long-term point of view, so long as we make good use of these funds, not only will there not be any big risk, but we will lay a solid foundation for future development. We must work hard to increase revenue and reduce expenditures, intensify tax collection and management and collect taxes strictly in accordance with the law to ensure an increase in tax revenue. We will adjust the pattern of expenditures, strictly controlling and holding down expenditures for ordinary projects in favor of expenditures for key projects. The function of budgetary funds in directing investment should be given full play.

　　We must make integrated use of all types of monetary policy tools to truly increase the supporting influence that finance has on economic development. We will properly expand the monetary base as needed for economic development. This year M2 is expected to increase by 14% to 15% and M1, by 15% to 17%. Total lending by all financial institutions is expected to increase by 1 trillion yuan. Financial institutions should devote a great deal of effort to improving their financial services and provide greater support in all areas for economic development and reform while maintaining prudent operation. We will speed up efforts to establish and improve a credit guarantee system for small and medium-sized enterprises. The size of refinancing for small and medium-sized financial institutions should be appropriately increased where conditions permit. Along with the issue of treasury bonds, lending will be increased to support infrastructure development and technological upgrading. Working capital loans will be granted as needed to trustworthy and profitable enterprises whose products are marketable. We will work to solve the problem of farmers having difficulty taking out loans. We will continue to promote financial reform and rectification, tightening financial monitoring and regulation in accordance with the law and improving all areas of work to guard against and defuse financial risks.

　　6. Carrying out a strategy of large-scale development of the western region to promote coordinated development of regional economies.

　　The large-scale development strategy to speed up development of the central and western regions is a major policy decision made by the Party Central Committee, showing great foresight and taking the interests of the whole into consideration in accordance with Deng Xiaoping's strategic thinking on the development of both the coastal areas and the interior. This year we will lose no time in working out integrated programs and studying the relevant policies and take substantial steps to strengthen such key fields as infrastructure development and environmental protection.

　　Accelerated infrastructure development constitutes the foundation for large-scale development of the western region. Development of water conservancy, communications, transportation, telecommunications, tourism, radio and TV facilities will be accelerated to promote the transformation of the region's resource advantages into economic advantages. We will pay close attention to ensuring rational exploitation and efficient use of water resources, giving priority to water-saving projects. The building of national and provincial major highways will be stepped up, and great efforts will be made to link roads in poor areas to major highways. More railway lines will be built linking up the various parts of the western region and connecting the region with other regions. On the basis of major airports on key air routes, reasonable plans will also be worked out to build some airports on secondary air routes. Vigorous efforts will be made to develop transport of natural gas through pipelines. Construction of a number of major projects will continue this year and others will be started. The pace of preparatory work for new projects will be accelerated, particularly for the projects to lay gas pipelines between the Tarim Basin in the Xinjiang Autonomous Region and Shanghai and between the Sichuan-Chongqing area and Wuhan so that they can be started as soon as possible.

　　Ecological development and environmental protection are an important part of efforts to develop the western region on a large scale. We will take comprehensive measures to return cultivated land to woodland or pasture and close hillsides to facilitate afforestation, providing local residents with grain as compensation and encouraging individuals to manage specific areas on contract. We will take advantage of our relatively ample supply of grain to try to fundamentally reverse the deterioration of the environment in the western region, focusing on terraced fields on steep slopes in the ecologically vulnerable areas in the upper reaches of the Yangtze and Yellow rivers. We will work steadily to return cultivated land to woodland or pasture, plant trees and grass on barren hills and uncultivated land and restore vegetation cover in a planned and systematic way, beginning with trial projects. This year the trial projects to return cultivated land to woodland or pasture will cover about 333,333 hectares and the area of restored woodlands will exceed 666,667 hectares. In carrying out these projects, we will conduct thorough investigation and study, work out sound overall plans and take into consideration local conditions, following the objective laws and respecting the will of the farmers, so that measures and guidance can be tailored to individual local conditions.

　　In developing the western region, we should not cling to the old systems and traditional growth patterns. We will apply new approaches, methods and mechanisms in line with the development of a socialist market economy and transformation of the pattern of economic growth. We will also be open-minded and realistic and make bold innovation and energetic exploration. Each locality should capitalize on its resources and advantages to develop economic sectors and industries which will have good market potential and local characteristics and give the locality a competitive edge. Close attention will be paid to developing localized, water-saving and ecologically friendly agriculture and tourism. The western region should get in step with the rapid progress made in science and technology in the world and truly rely on scientific and technological advances in promoting resource exploitation, industrial upgrading and environmental cleanup. Taking full advantage of existing science and technology, we will make great efforts to develop science and technology applicable to the industrial development of the western region. The region should train and attract more skilled personnel by creating a good social environment and introducing policies that encourage them to give full play to their talents. The state will invest more heavily in the central and western regions and increase transfer payments from the national budget to the local budgets. The central and western regions will be granted preferential treatment in terms of treasury bond financing, debt-to-equity swap programs, reserve funds for clearing up non-performing loans and bad debts, and loans from foreign governments or financial institutions. To accelerate the development of the western region under the new circumstances, we will mainly depend on market forces to attract capital from a variety of sources to meet the enormous demand for capital. The relevant policies will be improved and efforts will be made to improve the investment environment. Bolder measures will be taken to attract foreign capital and capital investment from the eastern region of the country. Developing the western region is a long-term arduous task requiring the hard work of several generations. People from all sectors of society should enthusiastically and energetically support this endeavor. Entrepreneurs, scientists, technical personnel and college graduates should be encouraged to work for the region. Government officials and the general public in the region should rely on their own efforts and work untiringly to build a new stable and united western region with economic prosperity.

　　Large-scale development of the western region will provide markets, energy and raw and semi-finished materials for the development of the eastern region and contribute to economic restructuring of the eastern region. The eastern region should seize the current historic opportunity to conscientiously make institutional and technological innovation, work hard to develop their export-oriented economy, accelerate industrial upgrading, strengthen cooperation with the central and western regions and increase their competitiveness in the international market. Areas where conditions permit in the eastern region should take the lead in modernizing.

　　7. Continuing to raise the level of opening up and making better use of both domestic and international markets and resources.

　　We will seize the favorable opportunities presented by the upturn of the international economic environment and the accelerated pace of China's accession to the World Trade Organization to revise and improve relevant laws and regulations to accord with international standards, expand imports and exports and utilize more foreign funds. Policies to encourage exports, such as refunding export tax, will be continued. We will further increase the export of mechanical and electrical products, accelerate the upgrading of textiles, garments and other traditional export commodities, vigorously export high-tech products and put more farm products on the international market. Enterprises with comparative advantages will be encouraged to invest in setting up factories abroad that process their own materials, open up foreign markets and pay close attention to improving management. We will take further steps to optimize the pattern of imports, making proper arrangements for the import of key equipment, technology and raw and semi-finished materials urgently needed in China. We will vigorously promote the reform of state-owned foreign trade enterprises and accelerate the implementation of a registration system to empower producing enterprises to directly engage in import and export. The number of export commodities on which voluntary quotas are imposed will be reduced. Quota management and bidding methods will be improved. Regulation of processing trade enterprises will be based on classification of the enterprises. An all-out drive will be launched to combat cases of failure to turn over foreign currency owed to the government and illegal arbitrage of foreign exchange, tax fraud and smuggling.

　　We will further improve the investment environment and experiment with more ways and areas of investment for utilizing foreign capital. Restrictions on foreign investment in terms of investment fields, geographic regions, technology transfers, required local content, foreign exchange equilibrium and maximum proportion of foreign capital will be relaxed. We will open to the outside world banking, insurance, telecommunications, tourism and other service trades on a step-by-step basis. Regulations concerning the management of BOT projects with foreign investment and infrastructure transfer projects should be formulated and implemented as soon as possible. Efforts will be stepped up to attract investment from multinational corporations. Vigorous efforts will be made to attract foreign investment in a variety of forms for the reorganization and technological upgrading of state-owned enterprises. We will attract foreign investment to fields encouraged by the government, such as high technology and environmental protection, as well as to the central and western regions. We need to improve the management of foreign-funded enterprises, provide better service to them and protect the legitimate rights and interests of foreign investors. We will further strengthen overall management of our foreign debt. The information system for foreign debt should be improved, and early warning and monitoring should be strengthened. A monitoring system for local foreign debt will be set up gradually.

　　We must prepare well for China's entry into the World Trade Organization.

　　8. Adhering to a strategy of sustainable development and successfully protecting and improving the environment.

　　We will continue to work hard to prevent and control pollution in the key areas as follows: the Huai, Hai and Liao rivers, Tai, Chao and Dianchi lakes, the sulfur dioxide control regions, the acid rain control regions, the city of Beijing, the Bohai Sea, the Three Gorges reservoir region and the upper reaches of the Yangtze River. Efforts will be stepped up to carry out key pollution control projects. Seriously polluted cities should solve their pollution problems within the prescribed time. Investment will be further increased for the projects to protect natural forest resources along the upper and middle reaches of the Yangtze and Yellow rivers, to build the ten protective forest systems, and to comprehensively clean up the environment on the loess plateau, in the surrounding areas of the capital city Beijing and in other key regions. Control of soil erosion will be tightened. Land, forests, grasslands, water, minerals, marine resources and other state resources must be conserved and rationally and effectively utilized in accordance with the law. Planning and administration for land to be used for construction will be strengthened.

　　Efforts to prevent and control industrial pollution will be integrated with industrial restructuring. Arrangements will be made to set up a number of key energy-saving and environmentally friendly model projects. Cleaner production will be vigorously promoted. By the end of the year 2000, the proportion of enterprises meeting standards for discharge of industrial wastewater will reach 75.4%, the proportion meeting standards for discharge of industrial flue gases and dust will reach 75.9% and the rate of comprehensive utilization of industrial solid wastes will reach 46.2%. Construction of facilities for treating urban sewage and refuse will be accelerated. The development of urban transportation means using clean energy should be encouraged. A market for environmental protection services will be fostered and standardized.

　　9. Stepping up efforts to develop the nation through science, technology and education and comprehensively develop all social undertakings.

　　The Decision on Strengthening Technological Innovation, Developing High Technology and Applying Scientific and Technological Advances to Production issued by the Party Central Committee and the State Council will be diligently implemented. We will redouble our efforts to establish a national innovation system and accelerate the implementation of a knowledge innovation project. We will promote technological innovation and apply scientific and technological advances to production. Restructuring of the management of research institutes throughout the country will be basically completed this year. Efforts will be concentrated on a number of key basic research projects. We should support large state-owned enterprises' efforts to set up technology development centers. We should encourage the development of various forms of not-state science and technology enterprises and small and medium-sized science-and-technology related enterprises. Efforts to build national engineering research centers and bases for translating research results into productive forces will be strengthened. We will organize and carry out major projects for applying high technology to production. Efforts will be focused on digital high definition TV, broadband high speed information networks, industrial process automation and commercial aircraft and satellites to develop new industries. Great efforts will be made to bring the national economy into the information age and accelerate the development of the information industry.

　　Reform and development of education will be accelerated. Education to improve the overall quality of students will be extensively promoted. We will make a nine-year compulsory education basically universal throughout the country and basically eliminate illiteracy among young and middle-aged people. Particular attention should be paid to this work in China's western region where the education base is weak. We will help young students improve their moral, intellectual and fitness level as well as their appreciation of aesthetics. All types of vocational education and training will be vigorously developed. Continued efforts should be made to steadily increase the enrollment of graduate students and undergraduates in regular and special courses. Colleges and universities should develop more disciplines. Plans call for the enrollment of 120,000 graduate students and 1.8 million undergraduates in regular and special courses in all colleges and universities in the country in the year 2000. We will further promote reform of general services in institutions of higher learning to make them into independent operations. More support will be given to infrastructure development in these institutions. Reform of the management system for institutions of higher learning under departments of the central government will be carefully implemented so that 97 of these institutions are sponsored jointly by central and local authorities and mainly managed by local authorities. Non-government organizations and individuals are encouraged to run schools in a variety of forms.

　　Efforts to promote socialist cultural and ethical progress will be intensified. The scientific spirit will be promoted and pseudoscience opposed. We will further develop infrastructure for social undertakings. More investment will be made in the development of cultural and popular science facilities. Restructuring of the management system for culture will be deepened. The project to extend radio and TV coverage to every village in the countryside will be continued to ensure that the targets set for population coverage are attained. Reform of the public health system will be vigorously promoted. A total of 85% of all counties should reach the standards for primary hygiene and health care. A variety of cultural and sports activities will be offered for the participation of the general public. We should successfully carry out family planning, strictly control population growth, continue to improve the quality of the population and pay close attention to the problem of the aging of the population.

　　We will work vigorously to develop tertiary industry. Effective policies and measures will be adopted to support and speed up the development of information, tourism, cultural, education and community services as well as intermediary services such as legal, auditing, accounting and consulting services.

III. Increasing Effective Demand to Promote Sustained, Rapid
and Sound Development of the National Economy

　　Boosting domestic demand is an important measure for resolving the conflicts and problems in our current economic activities; it is also a long-term strategic policy for national economic development. The key to expanding domestic demand is to increase effective demand. The production capacity of enterprises making unmarketable products must not be expanded, and under no circumstances will poor quality redundant development be allowed. Increasing effective demand will not only promote economic growth at present but also help improve the industrial structure, increase the potential of future economic development, improve the overall quality and performance of the national economy and add to our overall national strength and international competitiveness. In working to boost effective demand, the objective will be to increase investment and consumption to constantly improve the material and cultural life of both urban and rural residents. The supply structure will be adapted to changes in demand in the domestic and international markets. Scientific and technological advances and technological innovation should be the driving force behind efforts to promote the optimization and upgrading of the industrial structure. We will follow a strategy of sustained development, ensuring that economic development is in line with the country’s supply of resources and the environment to maintain a beneficial development cycle. We will create the necessary conditions in terms of systems, mechanisms and policies to increase effective demand and promote sustained, rapid and sound development of the national economy.

　　Urban and rural markets will be vigorously developed to expand consumer demand. Stimulating the market and increasing consumption is the key to boosting effective demand.We will adopt a variety of measures to encourage increased consumption. We will do our best to ensure that the total volume of retail sales of consumer goods reaches 3.335 trillion yuan this year, an increase of 7.1% over last year. First of all, the policy on income distribution will be adjusted to give people more purchasing power. All policies introduced in 1999 to adjust income distribution will be continued to gradually increase the income of low- and middle-income urban residents. Serious efforts will be devoted to the problem of unpaid wages and salaries for teachers and public servants in some areas. The per capita disposable income for urban dwellers should increase by 4% in real terms over last year. Rural residents should be encouraged to invest more of their labor into infrastructure projects and projects to improve the environment to increase their income through a variety of channels. Reform of taxes and administrative charges will be carried out on a trial basis in selected rural areas. Charges levied in rural areas for education, medical care, family planning, marriage registration and housing construction will be reviewed and adjusted or canceled accordingly. Inspection of grain prices, tobacco prices and charges related to agricultural production and development will be strengthened to truly lighten the burden on farmers. Practices that defraud or harm farmers must be aggressively combated. The per capita net income for rural residents should increase by 4% in real terms over last year. Second, the consumption policy will be improved and more areas of consumption will be developed. No time will be lost in reviewing the policies and regulations promulgated in the past to limit consumption. Procedures for granting student loans and durable consumer goods loans will be improved. Consumer spending will be encouraged in areas such as telecommunications, tourism, cultural activities, entertainment and sports and exercise. Third, the consumption system will be reformed and improved and new consumption growth areas such as housing will be vigorously developed. The reform of the urban housing system will be deepened and commercialization of housing distribution will be accelerated. The scale of lending to buy housing will be expanded and the public funding system for housing will be improved. Rents for public housing will be raised. The secondary housing market will be further deregulated and improved. Vigorous efforts will be made to straighten out property demolition charges and charges for urban infrastructure construction. Property management will be strengthened and standardized. Fourth, the consumption environment will be improved through strong efforts to develop urban and rural markets. Commodity distribution channels will be developed to rectify market order. The role of public opinion and the media will be brought into play to make reform measures more transparent and help people change their attitudes toward consumption, improve their income and spending expectations and increase immediate consumption.

　　Reform of the investment and financing system will be vigorously promoted to create conditions for expanding effective demand.First, the reform of the investment and financing system will be accelerated to provide incentives for and restraints on enterprise investment. The general aim of the reform is to allow enterprises to independently make decisions and accept risks when making investment in projects encouraged or permitted by the state, with the exception of especially important projects or those covered by special state regulations. Examination and approval procedures will be simplified so that the government will only examine investments by enterprises to decide whether or not they are in conformity with the state’s development plan, macroeconomic policies, laws and regulations. The government will not directly intervene in the investment and financing activities of enterprises. The government should work more efficiently and speed up the examination and approval of projects. Second, more channels will be opened up for enterprises to raise more investment capital. The capital market and various means of financing will be developed at a quicker pace so that enterprises can strongly increase their investments in response to shifts in market supply and demand and in accordance with their own development requirements. Formulation of rules governing industrial investment funds will be accelerated so that they can go into effect. Vigorous efforts will be made to establish a risk investment mechanism. Third, we will create a good policy climate for encouraging and guiding all sectors of society to invest more. We will abolish restrictions on investment by all sectors of society and on the development of the non-state sector of the economy, opening more areas to them. Concrete actions will also be taken to provide consulting services and personnel training for the expansion of investment from the various sectors of society and the development of the non-state sector of the economy.

　　More use will be made of prices as a lever to promote economic growth and restructuring.Continued efforts will be made to straighten out price relationships and further improve the pricing system. Prices will be appropriately raised for water supplied from water conservancy projects, urban water supply and public transport services. Efforts to impose charges for the treatment of wastewater and refuse will be increased. The price setting mechanism for electricity will be reformed and electricity rates will be adjusted. Electricity rates will be lowered in rural areas where the building and upgrading of power grids and restructuring of the power supply management system have been completed so that rates there will be the same as those in urban areas. Charges for telephone calls in rural areas will also be reduced. The pricing procedures and standards for railway freight transport will be simplified and management of prices for passenger transport will be improved. Discounting of tickets by airlines will be standardized and reasonable price levels will be set for airline tickets. The tuition rates will be appropriately adjusted after the cost of education is standardized. Rigorous efforts will be made to rectify pricing order. The management of charges for intermediary services provided by accountants, auditors, tax agents and lawyers will be improved. Charging of fees connected with the purchase and operation of motor vehicles will be reviewed and straightened out. Prices for drugs and charges for medical services will be rectified. These measures should help promote the development of infrastructure and public-use facilities and expand consumer consumption.

　　Management and legislation will be truly strengthened to improve order in the socialist market economy.Strengthening management is an important means of improving the quality of economic growth and economic performance, as well as a powerful way to guarantee the expected success of policies aimed at expanding effective demand. A responsibility system will be instituted and improved for every position at every important link. The style of work will be modified to improve services and raise efficiency. Hard struggle and plain living should be advocated and extravagance and waste should be combated. Constant efforts will be made to fight corruption and ensure that the government is clean, diligent, pragmatic and efficient. Management will be made more scientific in all industries and enterprises. Close attention will be paid to ensuring production safety by eliminating all hidden hazards. There is one more important task for us this year, namely, the preparation of the Tenth Five-Year Plan for National Economic and Social Development and the Long-term Program for National Economic and Social Development.

　　Efforts to improve legislation on macro-control and economic management will be stepped up. Detailed rules on the implementation of the Public Bidding Law will be formulated as soon as possible and the practice of public bidding will be widely adopted. All laws and regulations will be strictly enforced. Government institutions and functionaries must work hard to improve their ability to administer by law and raise their level of administration. They should perform their duties within their legal authority following legal procedures, with no unclear lines of jurisdiction or shirking of responsibility allowed. We will see to it that all laws and administrative decrees are implemented to the letter and that all violations of laws are prosecuted. Government officials should study hard to gain a good grasp of the law to enhance their ability to administer economic and social matters in accordance with the law. We will conscientiously carry out the Decision of the Standing Committee of the National People's Congress on Strengthening the Supervision of Economic Work. Government institutions and functionaries should voluntarily accept the supervision of the people's congresses, committees of the Chinese People's Political Consultative Conference and all sectors of society.

　　Fellow Deputies,

　　Our economic work this year is of great importance as it has a direct bearing on how well we can implement the Ninth Five-Year Plan and on how well China will do as it enters the new century. We will tightly rally around the Party Central Committee with Comrade Jiang Zemin at its core, hold high the great banner of Deng Xiaoping Theory and implement thoroughly the spirit of the Fifteenth National Congress of the Party and the third and fourth plenary sessions of the Party's Fifteenth Central Committee. We should have a clear understanding of the current situation and our tasks and seize opportunities to blaze new trails and score more achievements. We should also be full of confidence as we work hard together to attain the targets set in the plan for national economic and social development and lay a solid foundation for realizing the strategic goal for the third stage of our modernization drive.