(Delivered at the Fourth Session of the Ninth National People's Congress on March 6, 2001)

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,

　　As requested by the State Council, I shall now make a report to this session on the implementation of the 2000 Plan for National Economic and Social Development and on the Draft 2001 Plan for National Economic and Social Development. This is presented to you for your examination and approval and for comments and suggestions from members of the National Committee of the Chinese People's Political Consultative Conference.

　　I. Implementation of the 2000 Plan for National Economic and Social Development

　　The people of all ethnic groups in China worked hard together during the past year under the correct leadership of the Chinese Communist Party, scoring notable achievements in national economic and social development. The economy as a whole took an important turn for the better as it entered a beneficial cycle. The plan was satisfactorily implemented.

　　 The national economy continued to grow rapidly and there was continuous improvement in the quality of growth and in economic performance.In 2000 China's GDP hit 8.9404 trillion yuan, representing an increase of 8% over the previous year, up by 0.9 percentage points. The overall fall in prices was arrested and prices became stable, with consumer prices rising by 0.4%. Total profits of state-owned and large non-state industrial enterprises reached 426.2 billion yuan, an increase of 86.2% over the preceding year, with profits of state-owned enterprises and enterprises with the controlling share held by the state amounting to 239.2 billion yuan, an increase of 140%. The sales rate for manufactured goods was 97.71%, a rise of 0.46 percentage points over the previous year.

　　 Economic restructuring was vigorously promoted and effective supply capacity was increased. Fresh progress was registered in agricultural restructuring.The area of land sown in high-quality special wheat and early rice and soybeans was expanded by a good margin. Grain output totaled 462.5 billion kilograms despite serious drought conditions. We began to concentrate production of major crops in areas with the best conditions. The output of meat, poultry, eggs, milk and aquatic products rose steadily. High-tech industries, a new growth area in our economy, developed rapidly. Total output value of the telecommunications industry exceeded 1 trillion yuan for the first time, making the industry number one among all manufacturing industries. Production of mobile phones increased by 130% and production of semiconductor integrated circuits was up by 51.5%. We now have the world's second largest fixed-line phone network and mobile phone network. More progress was registered in efforts to make enterprises the main organizations for producing technological innovations. Enterprises, universities and research institutions jointly launched 140,000 cooperative projects. The focus of restructuring efforts in the textile industry was gradually shifted from the reduction or elimination of outmoded production capacity to improvement in the quality and grades of products, enabling a number of enterprises to become more competitive. Progress was also made in efforts to eliminate outmoded production capacity and accelerate adjustments in the pattern of production in the coal, metallurgical, petroleum, chemical, machine building, building materials and sugar refining industries.

　　Fixed asset investment steadily rose and significant results were attained in efforts to develop projects funded through treasury bonds.Total fixed asset investment for 2000 reached 3.2619 trillion yuan, an increase of 9.3% over the previous year. Capital construction investment in the electronics industry increased by 48.9% and in scientific research and technological services, by 19.2%. Investment in technological upgrading rose by 13.2%. Investment in the western region increased by 14.4%, 6.1 percentage points higher than the growth in investment in the eastern region and 0.6 percentage points higher than that in the central region.

　　The additional treasury bonds issued by the Central Government played an important role in promoting economic and social development. A total of 360 billion yuan worth of long-term treasury bonds was issued to boost economic development over the past three years. These funds led to a total increase in investment of 750 billion yuan in the form of matching funds from local authorities, government departments and enterprises plus an increase in bank loans. This provided the concentration of resources necessary to accomplish major tasks that had been waiting to be addressed for years. First, we accelerated infrastructure development. We reinforced more than 16,000 kilometers of banks and dikes on major rivers and lakes and increased the area making use of water-saving irrigation by over 4.33 million hectares. Some 174,000 kilometers of newly built highways were opened to traffic, including 10,230 kilometers of expressways. A total of 2,070 kilometers of railway tracks were laid. We basically completed projects to extend or upgrade power grids in the rural areas in 1,000 counties, districts or cities. Nearly 2 million kilometers of high- and low-voltage lines were strung or upgraded. Construction work was either under way or completed for state grain depots with a total capacity of over 35 billion kilograms. The capacities of urban water, heat and gas supplies and urban sewage treatment were improved. Second, we promoted technological upgrading in enterprises and improved the level of production in industry. More than 300 projects that apply high technology to production received support and 880 key technological upgrading projects were listed in the plan for subsidizing interest payments on loans financed through treasury bonds. Third, we stepped up our efforts in ecological development and environmental protection. We carried out the pilot projects to improve the ecological environment through comprehensive treatment in key areas, to protect natural forest resources and natural pasture and to restore terraced fields on steep slopes to woodland or pasture in the central and western regions. Support was given to projects to prevent and control environmental pollution in Beijing. The environmental conditions were improved in areas which were the source of dust storms in Beijing and Tianjin. We completed 44 projects designed to prevent and control water pollution in the valleys of the Huai, Hai and Liao rivers and Tai, Chao and Dianchi lakes. All this helped improve the environment in these key areas. Fourth, we promoted development of social undertakings. Some 694 infrastructure projects were set up for teaching and scientific experiment and research and conditions in institutions of higher learning were improved. All local authorities and government departments continued to improve the regulation of projects financed through treasury bonds and tightened supervision of major projects. Cases of misappropriation of development capital, irregularities in the contracting of projects and serious quality problems in projects were strictly investigated and dealt with. This helped to ensure the quality of projects and the security of investment capital.

　　Consumption demand recovered and rose steadily and people's living standards continued to improve.Retail sales of consumer goods totaled 3.4153 trillion yuan, an increase of 11.4% in real terms over the previous year. New consumption growth areas, such as housing and tourism, gradually emerged. Sales of commercial housing to individuals increased by 50.6% and accounted for 84.8% of total sales of commercial housing. The Chinese New Year, May 1 and October 1 holiday periods became "golden times" for consumption. There were 740 million person-trips taken within the country in 2000 and income from tourism totaled 317.6 billion yuan, an increase of 12.1% over 1999. The per capita disposable income for urban dwellers reached 6,280 yuan and the per capita net income for rural residents, 2,253 yuan, an increase of 6.4% and 2.1% respectively in real terms after allowing for price changes. The per capita floor space for city dwellers was 10 square meters and for rural residents, 25 square meters. The program to increase the availability of basic education in poverty-stricken areas made headway. More efforts were put into the fight against poverty, resulting in a further reduction in the number of people without adequate food and clothing in rural areas and basic attainment of the objectives of the seven-year poverty alleviation program.

　　Revenue grew by a big margin and the financial situation remained stable. National revenue for 2000 amounted to 1.338 trillion yuan, an increase of 16.9% over the previous year. Expenditures totaled 1.5879 trillion yuan, a rise of 20.4%. Expenditures exceeded revenue by 249.9 billion yuan, leaving a deficit of 259.8 billion yuan for the central budget, 20 billion yuan less than the projected figure in the adjusted budget. There was a surplus of 9.9 billion yuan in the local budgets. We continued to follow a prudent monetary policy and guide lending through credit policy. The broad money supply M2 and the narrow money supply M1 were up by 12.3% and 16.0% respectively at the end of 2000 over the same period of 1999. The net amount of currency issued in 2000 was no more than 150 billion yuan. Outstanding loans totaled 9.9 trillion yuan, an increase of 1.3 trillion yuan. The system requiring individuals to use their real names when depositing money in banks was adopted. China's foreign reserves totaled US$ 165.6 billion at the end of 2000, $10.9 billion more than the corresponding period of the previous year.

　　The objectives for the three-year plan to reform large and medium state-owned enterprises and turn around the operation of loss-making enterprises were basically achieved and we continued to deepen all other reforms.Progress was made in establishing a modern corporate structure in key large and medium state-owned enterprises. Debt-to-equity swaps were carried out, more enterprises were listed on the stock exchanges and boards of supervisors were set up for key large state-owned enterprises, promoting transformation in their operating mechanism and improvement in their performance. By the end of 2000 there was a reduction of more than 70% in the 6,599 large and medium state-owned industrial enterprises and enterprises with the controlling share held by the state which were operating at a loss at the end of 1997. We quickened our pace in establishing a social security system. More efforts were made to ensure that the basic cost of living allowances for workers laid off from state-owned enterprises and the basic pensions of retirees from these enterprises were paid on time and in full. More than 90% of retirees received their basic pension payments from non-state sources. Efforts to establish a system of unemployment insurance made steady progress. We began to implement the basic medical insurance system.

　　Reform of the pricing system continued. Electricity rates in rural areas where power grids had been upgraded or the power supply management system had been restructured were gradually made the same as those in urban areas. Domestic prices for refined petroleum products were gradually brought in line with those in the international market. There was success in efforts to rectify pharmaceutical prices and charges for medical services. Some 238 charges related to motor vehicles were eliminated. Prices for telecommunications services were reviewed and special reviews of prices related to tourism, electricity and refined petroleum products, fees collected by public security departments and educational fees in rural primary and secondary schools were conducted.

　　Fresh progress was made in reform of the grain and cotton distribution system. State-owned grain enterprises stopped making huge losses. We basically set up a vertical management system for the central grain reserves. More grain and cotton storage facilities were built. The government sold large quantities of its cotton and sugar in stock on the open market, thus regulating supply and demand in the market and adjusting market prices effectively.

　　The large-scale development program for the western region was unfolded and the implementation of strategic concepts was begun.An integrated plan for developing the western region was worked out and policies and measures for implementation were put in place. Vigorous efforts are under way to build communications, energy and water conservancy facilities in the western region. Construction work on new projects, such as the Xi'an-Nanjing and Chongqing-Huaihua railway lines, the light rail line in Chongqing and the gas pipelines from Sebei and Xining in Qinghai Province to Lanzhou, progressed smoothly. Preliminary work on the major projects to divert gas and electricity from the west to the east was accelerated. Work has begun on the Hongjiadu, Yinzidu and Wujiangdu hydropower stations in Guizhou Province and on the 600,000 kw power station and high-tension transmission lines in Xuanwei in Yunnan Province. Work on other large and medium projects under way was accelerated. The pilot projects to restore cultivated land to woodland or pasture in selected areas made steady progress, resulting in about 752,667 hectares of cultivated land and approximately 524,667 hectares of barren hills and uncultivated land covered with trees and other vegetation. Work on projects designed to protect natural forest resources progressed smoothly. Efforts to control sand and conserve water and soil in a comprehensive way advanced steadily. Stronger support was given to the western region in terms of science, technology and education.

　　Imports and exports increased rapidly and there was improvement in the utilization of foreign funds. The adverse effects of the Asian financial crisis on foreign trade were overcome, imports and exports grew rapidly and there was more improvement in the pattern of trade. The volume of imports and exports totaled $474.3 billion, an increase of 31.5% over the previous year. Exports grew by 27.8% and imports, by 35.8%. Exports of electromechanical products were worth $105.3 billion, representing an increase of 36.9% and accounting for 42.3% of the total value of exports. Exports of high and new technology products grew by 50% and took up 14.9% of total export volume. The volume of imports of mechanical equipment, raw and semi-finished materials and intermediate products for use in industry that were in short supply in China growing rapidly.

　　There were more favorable conditions for the utilization of foreign funds. The number of foreign-funded projects approved in 2000 increased by 32.1% over the preceding year and the amount of foreign funding specified in contracts grew by 51.3%. A total of $59 billion of foreign funds was used, including $40.7 billion of direct foreign investment. Some large enterprise groups were listed on foreign stock markets. We vigorously promoted implementation of the "go global" strategy for opening up the country and helped and encouraged qualified enterprises to invest overseas. Progress was made in efforts to develop resources and production and processing projects overseas, and there was an increase in the number of high and new technology research and development projects involved. Multilateral and bilateral economic and trade relations made great headway. Negotiations for China's accession to the World Trade Organization (WTO) entered the final stage.

　　Fresh progress was made in implementing the strategy of developing the country through science, technology and education and all social undertakings developed.Breakthroughs were made in some areas of science and technology. With the successful launch of the Fengyun II meteorological satellite, China was the third in the world to develop, manufacture and launch heliosynchronous orbit and geostationary orbit meteorological satellites. Major success was achieved in efforts to develop super-hybrid rice. The major technical indices and overall performance of the large-scale parallel computer system Shenwei I were up to international advanced level. High-speed broadband networks were set up. Electromagnetic biochips were invented in China. The successful independent development of the first humanoid robot in China shows that the country has attained international advanced level in robot technology. Significant progress was made in reform of the system for managing research institutes. Non-state science and technology enterprises developed rapidly. A state system for encouraging innovation was gradually established.

　　All forms of education at all levels developed and we continued to develop education designed to raise the overall quality of students. The goal of making nine-year compulsory education basically available throughout the country and basically eradicating illiteracy among young and middle-aged persons is now becoming a reality. Nine-year compulsory education is now available in 85% of the country's populated areas. The proportion of illiterate young and middle-aged persons among the population dropped to less than 5%. Significant progress was made in reform of the management system of higher education. Colleges and universities enrolled 2.21 million students in 2000, an increase of 610,000 over the previous year. Adult higher education developed rapidly. Goals for the first phase of the 211 Project for higher education were reached on schedule.

　　Development of culture, art, the press, publishing, radio and TV, film, social sciences, family planning, health, sports, preservation of cultural and historical relics and other undertakings was accelerated. Radio coverage reached 92.1% of the population and TV coverage, 93.4%. The target for controlling natural population growth was reached. Major advances were made in reform of the drug and health management system. Socialist spiritual civilization and democracy and the legal system further improved. At the XXVII Olympic Games, Chinese athletes scored their best achievements since China began participating in the Games, greatly stirring the patriotic feelings of the people all over the country and stimulating them to unite and work hard.

　　The achievements scored in national economic and social development in 2000 were not come by easily. They were the result of the concerted efforts of the people throughout the country conscientiously following through on correct policy decisions made by the central authorities. These achievements marked the fulfillment of the Ninth Five-Year Plan and the attainment of the strategic objectives for the second stage of the modernization drive, thus laying a solid foundation for efforts to attain the strategic goals for the third stage. However, we are fully aware that there are still conflicts and problems in current economic and social activities that should not be overlooked. A mechanism for effecting the normal increase in effective demand has not been completely established. The base for economic recovery remains unstable. There is not enough investment activity in society. Although there has been some improvement in investment from the collective and private sectors and individual investors, this improvement has played only a limited role in the overall growth of investment in society. There are still some factors restricting growth of consumption. Efforts to expand consumption in rural markets need to be increased. The pattern of exports is irrational and quite a few commodities are poor competitors. Agriculture is vulnerable to the effects of natural disasters. The consistently low prices of agricultural products have slowed down the growth in the incomes of farmers and there has even been a drop in the incomes of farmers in some major grain producing areas. The industrial structure is still not very rational. Overproduction in ordinary processing industries is still a glaring problem and the proportion of emerging industries making significant use of technological advances is low. Regional economic development remains unbalanced. It will be no easy job to help the rural residents who are still impoverished to shake off poverty. There has still not been a fundamental change in the way state-owned enterprises operate. They are not in a position to make innovations and a number of them are having difficulty continuing to operate. Pressure to employment efforts is mounting in urban areas as more than 6 million workers laid off from state-owned enterprises have not yet found jobs. Total payments exceed new revenue for old-age insurance funds in some regions, making it difficult to pay retirees on old-age pensions. Income distribution has become increasingly irrational. Production and marketing of fake and shoddy goods, tax evasion and tax fraud, smuggling and obtaining foreign exchange under false pretenses have become rampant problems in some regions, leading to a general lack of credibility in society. Indiscipline in financial and economic affairs is still a problem despite repeated attempts to curb the problem. Abusing one's power for personal gains, corruption, extravagance and waste remain a serious problem among a small number of government functionaries. There are still many hidden hazards jeopardizing operating safety and catastrophic accidents are still causing serious damage to people's lives and property. The public order is not good in some regions. Concerned departments are paying close attention to all these problems and will take further measures to solve them.

　　II. Regulatory Targets and Major Tasks for Economic andSocial Development in 2001

　　The year 2001 is the first year of the new century as well as the first year for implementing the Tenth Five-Year Plan and moving on to reach the strategic targets for the third stage of our modernization drive. It is also crucial to maintain good momentum in economic growth and press on at this opportune moment. Success in economic work for this year is of vital significance to our effort to maintain steady, rapid and sound development of the national economy and to get off to a good start for implementing the Tenth Five-Year Plan.

　　The overall requirements for economic work in 2001 are: Following the guidance of Deng Xiaoping Theory and bearing in mind the Three Represents (the CPC represents the requirement to develop advanced productive forces, an orientation towards advanced culture and the fundamental interests of the overwhelming majority of the people in China), we must follow the guiding principles set at the Fifteenth National Congress of the Party and the Fifth Plenary Session of the Fifteenth Party Central Committee, seize opportunities and accelerate development. We must continue to boost domestic demand, follow a proactive fiscal policy and a prudent monetary policy and make comprehensive use of macro-regulatory means to consolidate and promote economic growth. Relying on institutional innovation and scientific and technological innovation as well as IT-led industrialization, we must work vigorously to promote strategic restructuring of the economy. We must strengthen the position of agriculture as the foundation of the economy, intensifying efforts to support and protect agriculture and increase the incomes of farmers. We must accelerate the transformation of the way state-owned enterprises operate and improve their management in order to consolidate and expand the results already achieved in efforts to reform state-owned enterprises and turn around their operation. We must prepare well for entry into the WTO, doing more to open to the outside world and energetically working to develop a more open economy. We must widen employment channels, step up efforts to establish and improve a social security system and continue to improve people's standard of living. We must balance reform, development and stability to promote sustained, rapid and sound development of the national economy and overall social progress, trying our best to get off to a good start on the fulfillment of the Tenth Five-Year Plan. In accordance with these requirements, the major targets for national economic and social development in 2001 are as follows:

- Economic growth rate of 7%;
- Increase in total fixed asset investment of around 10%;
- Rise in consumer price level of 1-2%;
- Rise in total import and export volume of around 8%;
- Central Government deficit under 259.8 billion yuan;
- Total volume of currency issued of no more than 150 billion yuan;
- Maximum registered urban unemployment rate of 4%; and
- Natural population growth rate under 1%.

　　Following are the major tasks for national economic and social development in 2001:

　　1. Continuing to boost domestic demand and maintaining rapid development of the national economy. 

　　Continued expansion of domestic demand is a long-term strategic policy underlying China's economic development and an important means for solving the problems plaguing economic activities. This policy is necessary in order to maintain the good momentum of economic growth. We will continue to follow a proactive fiscal policy and a prudent monetary policy for some time to come while working to expand effective demand.

　　We will adopt vigorous measures to promote rapid expansion of total fixed asset investment. The focus of fixed asset investment will be on completing projects under construction that are financed through treasury bonds; speeding up development of agriculture, forestry, water conservancy, transportation, telecommunications and urban infrastructure, environmental protection, construction and upgrading of power grids in urban and rural areas and construction of state grain reserve facilities; supporting technological upgrading in enterprises and commercialization of high technology; improving infrastructure for science, technology and education; and implementing the strategy of large-scale development of the western region and acceleration of the development of the central and western regions. We will begin work on a number of major projects, including the Linhuaigang flood control project on the Huai River, the Nirji water conservancy project on the Nen River, the Bose water conservancy project on the You River, the Qinghai-Tibet railway line, the west-to-east gas pipeline, the oil pipeline from Lanzhou, Chengdu to Chongqing, the Longtan Hydropower Station in Guangxi, the new Baiyun Airport in Guangzhou, the alcohol fuel project in Jilin Province, the Hainan Natural Gas Chemical Fertilizer Plant, the water source protection project to divert water from the Luan River to Tianjin, the Shanxi Wangqu Power Plant, the Tongbai Pumped Storage Station in Zhejiang Province, and the three 500-kv direct current power transmission projects connecting Guizhou Province to Guangdong Province, the Three Gorges area to Guangdong Province and the Three Gorges area to eastern China, which are part of the effort to set up a national power network. We will build a number of new national trunk highways and major regional routes, including the Fujian and Jiangxi sections of the Beijing-Fuzhou Highway, the Xinxiang-Zhengzhou section in Henan Province of the Beijing-Zhuhai Highway and a trunk highway running from Beijing to Chengde in Hebei Province. We will step up preliminary work on the Xiaowan Hydropower Station in Yunnan Province, the project to comprehensively improve the Tarim and the Hei rivers, the Shanghai International Shipping Center and railway lines from the northwest and southwest to other countries. We will also step up preliminary work on the projects to divert water from the south to the north and carry out other preparations so that work on them can start soon. We will step up preliminary work on the projects to divert water from eastern to western Liaoning Province and to divert water from the Yellow River to the Jiaodong Peninsula in Shandong Province. We will complete and put into operation a number of major projects including, for example, the Baosteel Phase III in Shanghai, the second Yangtze River bridge in Nanjing, Jiangsu Province, the Mianhuatan Hydropower Station in Fujian Province, the Jiangya water conservancy project in Hunan Province, the Guangdong-Hainan railway line with a ferry across the Qiongzhou Straits and the Neijiang-Kunming railway line between Sichuan and Yunnan provinces. We will continue to strengthen supervision and inspection of projects to ensure the quality of projects and proper control of funds. We will review and abolish unreasonable regulations that restrain investment from society, create the conditions necessary for fair competition and encourage and guide non-state businesses to increase investment.

　　The key to increasing effective demand is the stimulation of markets and expansion of consumption. We will reform the system of state-funded consumption and revise policies designed to stimulate consumption. We will continue to review regulations concerning electricity, housing, telecommunications and motor vehicles, abolishing provisions that restrain consumption. We will establish and develop a personal credit system and encourage expansion of consumer credit. We will improve the system of public accumulation funds for housing, speed up efforts to relax control over the secondary market for housing and develop the market for renting and leasing housing. We will develop tourism, training courses, community services, culture and entertainment facilities, sports and exercise facilities, sanitation and health services to increase consumption of services and expand areas of consumption. Great efforts will be made to improve the consumption environment. We will continue to improve infrastructure in urban and rural areas, including water supply, power supply, roads and telecommunications, in order to create a favorable environment for expanding consumption.

　　2. Consolidating and strengthening the position of agriculture as the foundation of the economy and doing everything possible to increase farmers' incomes.

　　Development of agricultural and rural infrastructure will be strengthened. We will step up the construction of dikes and key water conservancy projects and the dredging of waterways on the Yangtze, the Yellow and other major rivers and lakes and reinforce decaying reservoirs. In the Yangtze River valley we will lose no time in leveling protective embankments to discharge floodwater, restoring farmland reclaimed from lakes back to the original state, continuing to resettle displaced persons in newly built towns and developing areas for floodwater storage. We will upgrade large irrigation projects and build supporting facilities to make more efficient use of water and ease the shortage of drinking water for people and animals in the relevant rural areas. We will make greater efforts to develop superior seed varieties, cultivate superior breeds of livestock and poultry and protect animal and plant resources. We will also redouble our efforts to develop large production bases for commercial grain and other high-quality products and expand wholesale markets for farm products in producing areas. We will basically complete the renovation of power grids in rural areas throughout the country so that urban and rural residents receiving power from the same source pay the same rate, which will facilitate production and daily life in rural areas.

　　We will promote the restructuring of agriculture and the rural economy. We should protect basic farmland and related production facilities. Major grain-producing areas should continue to take advantage of local conditions for grain production and keep production capacity. We will establish a market information system for farm products to guide producers to restructure the pattern of production in response to changes in market demand and expand production of superior and special varieties. More agricultural products suitable for export will be developed. We will expedite establishment of food safety and quality standard systems. We will speed up development of animal husbandry and aquaculture and expand the processing industry for grain, livestock products and other agricultural products. Support will be given to leading qualified enterprises in their efforts to set up bases for producing, processing and exporting such products. We will encourage these enterprises to cooperate with producers so that both can benefit from the industrial management of agriculture. We will vigorously work for the steady development of small cities and towns and promote restructuring and technical updating in township and village enterprises.

　　Farmers' incomes will be increased through various channels. We need to divert more of the surplus rural labor to township and village enterprises and other businesses. We will guide migration of rural workers to urban areas to ensure that flow is orderly and absorb more of such workers into infrastructure development projects. The financial system in rural areas will be developed, the financial services there will be improved and more financial support will be given to the development of agriculture and the rural economy. We will also step up the transformation of administrative fees into taxes in rural areas to reduce the burdens on farmers.

　　Great efforts will be made to ensure adequate food and clothing for people who are still in poverty and prevent people from returning to poverty. More anti-poverty efforts will be directed to areas where ethnic minority groups live in the central and western regions, the old revolutionary base areas, border areas and areas stricken by extreme poverty. We will continue to provide indigent people with development-oriented assistance, raise anti-poverty funds through various channels and improve the basic conditions for production and daily life in poverty-stricken areas. We will carry out experiments in a planned way to move impoverished people from areas where natural conditions are too poor to be fit for human habitation and help them start a new life elsewhere.

　　3. Continuing to follow a proactive fiscal policy and a prudent monetary policy.

　　Since there is still no mechanism in place for ensuring sustained growth in total investment, we must continue to follow a proactive fiscal policy and maintain the strength of that policy at the level necessary to ensure that the strength of investment is adequate to fuel economic growth and thereby consolidate and develop the current trend in economic recovery. The supply of goods on the market is currently ample and sufficient capital is available in society, making it quite realistic to issue an appropriate amount of treasury bonds. Taking all factors into consideration, we suggest that the Central Government issue no more than 150 billion yuan of long-term development bonds by way of commercial banks this year. Revenue for the year in the central and local budgets totals 1.476 trillion yuan, and expenditures amount to 1.7358 trillion yuan, leaving a deficit of less than 259.8 billion yuan for the central budget, since the local budgets are required to be balanced. The proactive fiscal policy is designed to stimulate growth in investment and consumption in other sectors of society through the expansion of government investment. In addition to funding major projects to develop the western region, funds from the new issue of treasury bonds will be concentrated on projects under way that are supported by treasury bonds so that they can be completed and put into operation as soon as possible. We will also increase revenue and reduce expenditures and ensure that taxes are collected in accordance with the law.

　　We will continue to implement a prudent monetary policy. We will employ all financial and credit levers available in order to boost domestic demand, restructure the economy and expand consumption. We will work to meet rational requests for funding from all quarters while watching out for financial risks and improving the quality of assets. We will make timely adjustments in the money supply to meet the requirements of economic development. The broad money supply M2 is expected to increase by 13-14% this year and the narrow money supply M1, by 15-16%. The net increase of cash in circulation is to be held at no more than 150 billion yuan and total lending by all financial institutions is expected to increase by 1.3 trillion yuan. We will enhance supervision and control of all financial institutions in an effort to lower their proportion of non-performing loans and raise their profits and capital adequacy. We will continue to rectify, reform and restructure small and medium financial institutions so that they will play a proper role in the economy. We will strengthen inspection, supervision and control of the securities market, improve procedures for approving stock issues and ensure the quality of listed companies. Efforts will be intensified to enhance supervision and control of the insurance market and promote sustained, sound and orderly development of the insurance industry.

　　4. Carrying out industrial restructuring to bring about steady improvement in economic performance.

　　Development of high-tech industries needs to be accelerated. We will prepare for and carry out a number of high-tech projects to develop a new generation of high-speed broadband information networks, high-definition digital TV, satellite systems for direct radio and TV broadcasting, biotechnology and clean coal technology. We will be starting a number of important special projects in software development, third-generation mobile telecommunications, comprehensive use of water resources and modern industrial management of traditional Chinese medicines. We will encourage investment in new enterprises and foster a market environment favorable for the development of high-tech industries.

　　We will strengthen the information industry to boost national economic and social development. We need to extensively apply IT in enterprises in all industries, with special emphasis on electronic administration and commerce. We will build information network infrastructure. In the software and integrated circuit industries, we will support development of new components, computer network products and digital audio-visual products. We will improve our ability to produce IT equipment and integrate related systems.

　　Great efforts will be made to revitalize the equipment manufacturing industry. Technological upgrading in the key enterprises in this industry will be speeded up through major projects. We will develop highly marketable products, concentrating on environmental protection facilities, urban rail transit facilities, petrochemical processing equipment, large-scale supercritical generating units, direct-current transmission and transformer substations and gas turbines.

　　We will speed up the reorganization and updating of traditional industries. Great efforts will be made to produce petrochemicals, iron and steel and nonferrous metal products that are now in short supply, reducing energy consumption and production cost. We must develop new building materials and accelerate restructuring of the auto industry. We need to develop and apply technologies that require less consumption of water and petroleum. Application of the technologies for clean coal burning and transformation will be expanded. We will try out the use of alcohol fuel in selected areas and develop new energy resources and renewable sources of energy to improve the energy structure. More backward equipment, technologies and production processes need to be abandoned. Enterprises that waste resources, cause serious pollution or operate under unsafe conditions need to be closed down in accordance with the law.

　　We will be working vigorously to restructure and develop the tertiary industry. Traditional services need to be updated. We will develop modern services such as tourism, information, accounting, consulting and legal services. We will try to increase the proportion of the added value of the service industries in the domestic gross product and make sure that they will provide more employment opportunities.

　　5. Consolidating and expanding the results of the efforts to reform state-owned enterprises and turn around their operation and vigorously working to carry out all reforms.

　　Reform of state-owned enterprises will be deepened. A well-regulated nationwide market system that allows fair competition will be established. We will strengthen the market for the essential factors of production such as capital, labor and technology to create conditions for the reform and development of state-owned enterprises. We will develop a number of large enterprise groups that have distinctive products or services and are well managed and highly competitive. We will introduce the shareholding system in more large and medium state-owned enterprises. While a small number of state-monopoly enterprises will be reorganized as state-owned companies, other large and medium enterprises can be transformed into shareholding corporations through listing on the stock market, joint investment with foreign partners or reciprocal holdings with other companies. The state must retain the controlling share in key enterprises that have a significant bearing on the national economy and national security. We will quicken our pace in establishing a modern corporate structure, standardize corporate governance and explore effective ways to manage state assets. We will establish and improve a scientific policy-making system and strengthen the management of all enterprises. We will deepen the reform of the personnel, labor and distribution systems in enterprises. Different measures will be taken to lift control over small and medium enterprises and invigorate them. We will improve the social security system through pilot social security schemes set up in cities and towns. We will gradually replace the basic living allowances for workers laid off from state-owned enterprises with unemployment insurance. We will increase social security funding by restructuring budgetary expenditures and selling off government shares in enterprises. We will uphold the fundamental economic system whereby public ownership remains predominant and different forms of ownership develop side by side. The sound development of private enterprises, especially small and medium science and technology enterprises, will be supported, encouraged and guided.

　　The transformation of government functions will be accelerated. Good progress will be made in reducing administrative examination and approval of enterprises and in breaking industry monopolies. We will be working hard to reform the investment and financing system. We will continue to review the matters that are subject to administrative examination and approval procedures and cut them down whenever necessary. Some of them can be put under record keeping. Even for those matters that have to remain under administrative examination and approval procedures, the procedures must be simplified. Administrative departments will be required to provide services within a certain timeframe and improve the quality of their work so as to create a more relaxed policy environment for the growth of all types of economic entities.

　　The price reform will continue. We will improve the price setting mechanism by breaking industry monopolies and removing regional blockades. We will standardize pricing in industries such as electricity, gas and water supply, telecommunications, transportation, medical treatment and education. We will promote price reform in oil, natural gas, water, electricity, drugs and medical services. We will make government decisions on prices more scientific and transparent. We will also promote the reform of fees and taxes on transportation and motor vehicles.

　　Reform of the distribution system for grain and cotton will be deepened. We will continue to improve all measures to reform the grain distribution system and the provincial governor responsibility system for grain-related work. The scale of grain reserves held by the Central Government should be increased as appropriate and the macro-regulatory capability of the state should be strengthened. Wherever possible, key distribution areas should step up efforts to bring the purchase and sale of grain into line with market demand. Key production areas should continue to implement the three policies of purchasing surplus grain from farmers without limit at protective prices, allowing state-owned enterprises to sell grain at a profit and ensuring that grain purchase funds are not diverted to other purposes, while continuing to reform state-owned grain enterprises. We will continue to buy at protective prices as much surplus grain from farmers as they make available. State-own enterprises dealing in grain should strengthen reform efforts in order to truly become economic entities responsible for management decisions and economic performance. We will carefully check inventory grain storage. We will open up more channels for the distribution of cotton and strengthen market management and quality control.

　　6. Striving to increase employment and solve problems affecting the well-being of the people.

　　Efforts will be made to ensure that people are employed through various means and channels. We will vigorously develop different forms of ownership and labor-intensive industries with great market potential to create more employment opportunities. We will provide various types of vocational training to improve the skills of unemployed workers and make it easier for them to find employment again. We will help people change their concept of a job and encourage them to look for different types of jobs through preferential policies.

　　We must put people's welfare first, following a principle of "food first, development second." We must guarantee that workers laid off from state-owned enterprises receive their basic living allowances and that retired people are paid pensions on time and in full, ensuring that no more such payments will fall in arrears. We will raise the basic salaries of employees in state organs by an appropriate amount. We will establish a unified subsidy system for people working in remote regions and places with difficult working circumstances. We must do all we can to improve the living standards of low-income groups and improve the welfare system in an effort to ensure that no urban residents live below the poverty line. We must ensure the timely distribution of relief funds to disaster-stricken areas and to people in financial straits to restore production and normal life. We will deepen reform of the income distribution system, adopt on a trial basis a system for giving annual salaries and stock options to key managerial and technical personnel of listed state-owned companies, and strengthen supervision and management of income distribution in monopoly industries. We will improve all facets of public security.

　　7. Preparing for China's entry into the WTO and opening up even more to the outside world.

　　We will conduct a thorough study of WTO rules and make a concentrated effort to review, revise and improve relevant economic laws and regulations to establish and develop a system of laws for dealing with external affairs in line with China's specific conditions that also conforms to WTO rules. Efforts to revise government functions and ways of regulating the economy will be accelerated. We will be doing all we can to restructure and reorganize industries in fields such as agriculture, automobiles, petrochemicals, electromechanical equipment manufacturing, telecommunications, finance and insurance to improve their competitive edge. Great efforts will be made to train high quality professionals who are well versed in international law and WTO rules.

　　We will use science, technology and education to increase trade and follow a strategy of diversifying markets to increase imports and exports. Policies and measures will be implemented and retained to encourage an increase in the export of goods and services. The pattern of exports will be shifted to increase the proportion of electromechanical equipment in the country's exports, particularly high and new technology products, and raise their added value. Proper arrangements will be made for the import of key equipment, technology and raw and semi-finished materials that are urgently needed in China.

　　We will work to stabilize the amount of foreign capital utilized and to improve the quality and performance of utilization. Service industries will be opened to overseas investment on a step-by-step basis. We will work to create the proper conditions and encourage foreign investors, especially multinational corporations, to invest in our high and new technology industries and participate in the restructuring and upgrading of state-owned enterprises and infrastructure development. We will try to attract long- and medium-term overseas investment by exploring ways whereby foreign investors can acquire Chinese enterprises and set up investment funds. Experiments in allowing foreign businesses to participate in BOT projects and in attracting foreign capital by granting the right to operate and retain earnings from projects will be continued. Loans from international financial institutions and foreign governments will be utilized rationally and more areas will be opened to the use of such loans. Management of foreign debts will be strengthened to control corresponding risks.

　　In line with our "go global" strategy, we will make better use of both domestic and international resources and markets. Regional economic cooperation will be strengthened. We will establish and develop a policy support system and supervision system to encourage and guide enterprises with the proper conditions to invest and run plants outside of China and set up international operations.

　　8. Taking realistic and concrete steps for the large-scale development of the western region and promoting coordinated regional development. 

　　We will speed up water conservancy, transportation, energy, communications and urban infrastructure development. Proper arrangements will be made for carrying out important projects such as the facilities to divert electricity and gas from the west to the east. Preliminary work for the Qinghai-Tibet railway line will be accelerated so that construction work can be started as soon as possible.

　　Ecological protection and improvement efforts will be strengthened. Greater efforts will be made to carry out the projects to protect natural forest resources. We will continue the trial projects to return cultivated land to woodland or pasture being carried out in selected areas and follow through on related preferential policies promptly. Steady progress should be made in efforts to improve the overall condition of the ecology in key areas by working to control and prevent sand erosion through the restoration and development of natural vegetation cover. Development of bases to produce improved varieties of trees and other plants will be accelerated. Ecological protection and improvement projects will be launched in the area of the Three Gorges Reservoir on the Yangtze River.

　　We will develop special industries that take advantage of our strengths. We will set up bases for the development, processing and comprehensive use of our resource advantages. The pace of work will be stepped up on the potash fertilizer project in Qinghai Province and the aluminum oxide project and the forest base for papermaking in Guangxi. We will strengthen efforts to develop energy bases, making full use of hydropower, solar energy and wind power. We will develop our rich natural landscape and places of historical interest and vigorously promote tourism. The agricultural foundation in the western region will be reinforced and support will be given to the production of specialty agricultural products.

　　Priority will be given to development of science, technology and education. We will work to train people well, put them to best use and attract trained and qualified personnel. We will accelerate development of science and technology facilities in the western region. We will strengthen basic education in the region, assisting each of the western provinces and autonomous regions and the one city directly under the Central Government in developing a university and helping some counties improve their vocational and technical education. Areas in the east must help the designated areas in the west in efforts to improve education. We will work out plans and policies for the development of trained personnel in the western region and develop a mechanism allowing outstanding people to emerge and to take full advantage of their skills and knowledge. The exchange of cadres and expert personnel between regions will be increased.

　　The central region should make use of its regional advantages and its comprehensive advantages of resources to accelerate its pace of development. The eastern region should lead the country in institutional, scientific and technological innovation, opening to the outside world and economic development and vigorously support the development of the central and western regions.

　　9. Adhering to a strategy of developing China through science, technology and education and working for sustainable development while energetically developing all social undertakings.

　　Development of general, key and support technologies that promote structural improvement will be accelerated. Great efforts will be made to promote the new agricultural technological revolution. Basic and applied research will be strengthened. We will make a success of national key laboratories. We will encourage the integration of natural and social sciences to enhance the development of philosophy and other social sciences and management science. We will continue to improve the state scientific and technological innovation system. The pilot knowledge innovation project will be comprehensively promoted. We will deepen reform of the science and technology management system and vigorously promote the application of scientific and technological advances in production to solve the problem of work in science and technology being too far removed from the economy by making enterprises serve as the main body responsible for scientific and technological advances and innovations. A tax policy will be adopted to support the development of high and new technology products. We will improve credit services for science and technology enterprises and increase investment in the form of credit in science and technology. We will reward personnel who make outstanding contributions to the development of science and technology. In enterprises where conditions permit the fruits of research and technical patents may be turned into shares on a trial basis.

　　Development of education will be accelerated. More support will be given to efforts to make nine-year compulsory education available throughout the central and western regions. Senior secondary school education will be made universal in large and medium cities and in developed areas. We will deepen reform of the way schools are operated and step up efforts to restructure education. Education designed to improve the overall quality of students will be promoted. We will speed up the application of IT in education. We will increase investment in infrastructure development in colleges and universities. The second phase of the "211" Project for higher education will be launched. Plans call for the enrollment of 160,000 graduate students in 2001, an increase of 24%, and 2.5 million undergraduate students in colleges and universities, an increase of 13%. Parties other than the government will be encouraged to run schools in a variety of forms, resulting in the development of a variety of vocational and community schools at different levels. More investment should be made in the training of skilled people.

　　Efforts to protect the environment will be intensified. More effort will be made to comprehensively control air, water, garbage and noise pollution to improve the environment of large and medium cities. We will continue to prevent and control pollution in the key areas such as the Huai, Hai and Liao rivers and Tai, Chao and Dianchi lakes and to bring sand storms under control, concentrating on the source of sand in the areas surrounding Beijing and Tianjin. Greater efforts will be made to build the major shelter-forests in northeastern, northern and northwestern China and in the middle and lower reaches of the Yangtze River. We will conscientiously survey land and resources and adopt vigorous measures to restore and control the ecological environment in and around mining areas. We will promote cleaner production in all areas and develop environmentally friendly industries, exploring ways to industrialize sewage and refuse treatment. Great efforts will be made to monitor the rural environment and improve it in a comprehensive way, making a point of preventing and controlling agricultural chemical pollution.

　　Development of all social undertakings will be promoted. We will step up efforts to develop a socialist spiritual civilization and promote the fine culture of our nation. We will continue to keep population growth under control and improve the quality of the population. We will encourage financing through various channels to promote development of undertakings in culture, health, radio and TV, film, the press and publishing. Radio and TV coverage will be expanded. More cultural facilities will be set up. We will deepen reform of the drug and health management system. Health services and facilities in both urban and rural areas, especially in rural areas, will be improved. We will prevent and reverse the spread of large-scale epidemics. We will carry out a national fitness campaign and develop competitive sports. Infrastructure for public security organs, procuratorial organs, people's courts and judicial organs will be strengthened.

　　III. Rectifying and Standardizing Order in the Market Economy
to Create a Favorable Environment for Sound Economic Development

　　We must firmly resolve to clear up the chaos currently plaguing order in the market economy. This is a prevalent problem in economic activities, one which not only greatly undermines the interests of the state and the people by tarnishing the credibility of the state and the image of reform and opening up, but also seriously threatens sound economic development. There are many reasons for this chaos, including inadequate legal and regulatory footing for the market economy, lax management, ineffective supervision, poor discipline and the corruption of a small number of government employees. We must make it an important part of our economic work to rectify and standardize order in the market economy. We need to deepen reform, strengthen the legal system, tackle both the symptoms and the root causes, focus on priorities, combine rectification and development and strive for initial results in about one year's time.

　　Concentrating efforts on rectification.We will continue the fight against smuggling, fraudulent export tax rebates, evasion of foreign exchange repayment and obtaining foreign exchange under false pretenses and production and sale of fake and shoddy goods. We will rectify the commodity, financial, capital, construction and cultural product markets in an all-round way and to standardize order in business operations. Our priorities are as follows: First, we should make a conscientious and coordinated effort to crack down on criminal activities such as the production and marketing of fake and shoddy products. We should investigate key commodities, markets and areas to clear up major cases, focusing on fake and shoddy goods that make people especially indignant and threaten their health and the safety of their person and property. Second, we should intensify our campaign specifically directed against fraudulent export tax rebates, smuggling, sale of smuggled goods, evasion of foreign exchange repayment and obtaining foreign exchange through fraudulent means. We should mainly crack down on organized criminal gangs who falsify VAT receipts and obtain export tax rebates through fraudulent means and the criminal activities of vertically organized criminal rings. Third, we should continue to straighten out financial order. We will severely punish financial institutions involved in business activities that violate laws and regulations, abolish all illegal financial institutions and put an end to unlawful fraudulent financial activities, resolutely punishing any party who commits financial crimes in accordance with the law. Fourth, we will rectify and regulate the behavior of the major players in the market. We will outlaw enterprises with no capital, premises and facilities and businesses operating without a license, strictly investigate and deal with enterprises and intermediary institutions engaged in illegal activities such as falsifying account books, concealing income or issuing false certificates of credit. Fifth, we should rectify and standardize the construction market. We should implement the Public Bidding Law in real earnest, prohibit deception and the abuse of power to illegally interfere with public bidding and crack down on activities such as illegal subcontracting and contract transfer and under-the-counter operations. Sixth, we should put a stop to regional protectionism and market segmentation. Unfair competition should be strictly investigated and punished to break departmental monopolies and regional blockades and ensure fair competition in the market. Departments responsible for economics and trade, finances and taxation, pricing, banking, securities regulation, foreign exchange administration, customs, industry and commerce administration, quality inspection, commodity inspection and drug administration must carry out all their duties, cooperate with each other, coordinate their efforts and strengthen management in order to obtain real results.

　　Rectification and standardization of order in the market economy should be accompanied by efforts to bring criminals to justice and curb corruption. We must break a number of major cases that have wide implications and involve a large amount of money, heavy losses and serious negative social impact. The principal offenders in such cases as well as habitual offenders should be severely punished in accordance with the law to deter other people from committing such crimes. Corrupt state functionaries who collude with, cover up for or otherwise aid criminals should be subjected to strict investigation and prosecution.

　　Instituting rules and regulations and administering according to law.We must strengthen the socialist legal system, establish and develop market rules and standardize the actions of government departments, enterprises and intermediary institutions. We will review local statutes and department regulations and rescind those that run counter to the laws and statutes of the state. We will work to improve the quality of personnel in charge of enforcing the law in customs, entry and exit inspection and quarantine, tax, industry and commerce administration, quality and technical supervision, drug administration, price inspection and project inspection. We will strengthen the political integrity and professional skills of law enforcement officials to ensure strict law enforcement. State functionaries must perform their duties strictly within their jurisdiction and the procedures prescribed by laws and statutes.

　　Strictly enforcing the law, tightening discipline and strengthening supervision.We should improve supervisory and regulatory mechanisms, tighten fiscal discipline, strengthen management and supervision, plug up all loopholes and earnestly investigate and punish those guilty of fiscal indiscipline. We will strengthen regulation of the prices for the products and services of monopoly industries. We will crack down on unlawful practices such as price fraud. We will continue to review all types of fees to eliminate arbitrary fees and crack down on evasion of debt repayment in accordance with the law. Efforts to develop intermediary institutions in the market will be intensified. Intermediary institutions affiliated to government departments should gradually cut their ties with these departments and perform their functions as prescribed by law following a principle of fairness, transparency and justice. We will continue to strengthen the system of public supervision by establishing and improving a supervision system mainly composed of legal restrictions, government administration, press scrutiny and consumer participation. We should give full play to the role of TV, radio, newspapers, periodicals, the Internet and other media to facilitate supervision through public opinion.

　　Strengthening education to address both the symptoms and root causes.We will increase people's awareness of the legal system for the market economy and the importance of maintaining good credit through a general education campaign so that they will become fully aware of the necessity and importance of straightening out and standardizing order in the market economy. We will rule the country both according to law and by high ethical standards. We will step up efforts to educate people in order to strengthen their work ethics, enhance their awareness of the importance of maintaining credibility and encourage them to foster a strong sense of honesty and trustworthiness and handle business matters in accordance with the law. This will create the proper atmosphere in society for combating the production and sale of fake goods, smuggling, sale of smuggled goods, evasion of foreign exchange repayment, obtaining foreign exchange under false pretenses and other crimes and encourage people to take it as their duty to develop and safeguard an orderly market economy. We will work in a spirit of reform in order to rectify and standardize order in the market economy, straighten out the overall system, transform the mechanism and standardize the system of credit relationships. The State Council will soon formulate relevant laws and regulations and a decision on rectifying and standardizing order in the market economy. This decision will assign responsibility and define necessary measures to intensify rectification efforts in order to address the root causes of the chaos in the market economy.

　　Improving management and ensuring safe production.This is a matter that has a direct bearing on the safety of the life and property of the general public and on the sound operation of the national economy. We need to raise people's awareness of the need for safety in production. We will continue to put safety and prevention of accidents first. We need to work hard to improve management, enforce relevant regulations, invest more in safety facilities and do more to maintain equipment and eliminate hidden hazards. We must tighten the responsibility system for safety in production, subject local authorities or organizations where major accidents occur to strict investigation and prosecution and bring to justice any offenders and leading officials who are found responsible for accidents.

Fellow Deputies,

　　Mankind has entered a new century. China is in a new stage in which people throughout the country are working for a comfortable life and accelerating the socialist modernization drive. We must rally closely around the Party Central Committee with Comrade Jiang Zemin at its core, hold high the great banner of Deng Xiaoping Theory and earnestly implement the guidelines set at the Fifteenth National Congress of the Party and the Fifth Plenary Session of the Party's Fifteenth Central Committee. We must have a clear understanding of the current situation, capitalize on the favorable conditions and work diligently and with full confidence to promote sustained, rapid and sound development of the national economy and pave the way for accomplishment of the tasks set forth in the Tenth Five-Year Plan.