Wen Jiabao, 2011 Report on the Work of the Government, March 5, 2011

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REPORT ON THE WORK OF THE GOVERNMENT

Delivered at the Fourth Session of the Eleventh National People's Congress on March 5, 2011

Wen Jiabao

Premier of the State Council

Fellow Deputies,

On behalf of the State Council, I now present to you my report on the work of the government for your deliberation and approval. I also invite the members of the National Committee of the Chinese People's Political Consultative Conference (CPPCC) to submit comments and suggestions.

I. Review of National Economic and Social Development During the Eleventh Five-Year Plan Period

The Eleventh Five-Year Plan period was a truly extraordinary time in the course of the country's development. In the face of complex domestic and international situations and a series of major risks and challenges, the Communist Party of China (CPC) united with and led the people of all the country's ethnic groups in comprehensively advancing reform, opening up and modernization, bringing about a historic change in China over the past five years.

-- The country's productive forces and overall national strength improved significantly. We effectively warded off the impact of the global financial crisis, maintained steady and rapid economic development and fulfilled the major objectives and tasks of the Eleventh Five-Year Plan, and the economy scaled new heights. GDP grew at an average annual rate of 11.2% to reach 39.8 trillion yuan. Government revenue increased from 3.16 trillion yuan to 8.31 trillion yuan. Major breakthroughs were attained in cutting-edge science and technology such as the manned space mission, the lunar exploration program and supercomputers. Great progress was made in the modernization of national defense and the army.

-- Progress in all social programs accelerated and people's lives improved significantly. Comprehensive progress was made in education, science and technology, culture, public health and sports programs. The number of new urban jobs increased by 57.71 million, and 45 million agricultural workers found urban employment. The per capita disposable income of urban residents rose by an annual average of 9.7% and the per capita net income of rural residents by 8.9% in real terms. The social security system covering both urban and rural areas was progressively refined.

-- Major progress was made in reform and opening up. New breakthroughs were achieved in crucial areas and key links of reform, and the socialist market economy further improved. Last year, total foreign trade volume reached US$ 2.97 trillion and the openness of the economy increased rapidly.

-- China's international prestige and influence grew significantly. We played an important and constructive role in international affairs; effectively safeguarded our national sovereignty, security and development interests; and made major progress in our all-around diplomacy. We successfully hosted the Beijing Olympics and Shanghai World Expo, thus fulfilling dreams the Chinese nation had cherished for a century.

These brilliant achievements clearly show the advantages of socialism with Chinese characteristics and the great power of reform and opening up. They greatly increased the confidence and pride of our people of all ethnic groups, strengthened the cohesiveness of the Chinese nation, and inspired us to forge ahead on our historic course.

The following are our main accomplishments over the past five years:

1. Strengthening and improving macro-control, and spurring steady and rapid economic development

We paid close attention to the orientation, focus and strength of macro-control and kept a firm grasp on the initiative in our economic work. In the early stages of the Eleventh Five-Year Plan period, we adopted correct policies and measures to address overheated investment growth, the excessive trade surplus, excess liquidity, and structural and imported inflation; effectively prevented emerging problems from evolving into trends; and prevented problems in any one area from becoming general problems. In the last two years, we responded coolly to the impact of the global financial crisis - a crisis of a severity seldom seen in the last century, made decisions scientifically and resolutely followed a proactive fiscal policy and moderately easy monetary policy. We steadfastly implemented a multi-point plan, greatly increased government spending and made structural tax reductions, carried out the plan for restructuring and reinvigorating key industries on a large scale, vigorously promoted innovation and increased support for work in science and technology, and substantially increased social security benefits. We steadfastly followed a strategy of expanding domestic demand; adopted policies and measures to encourage consumer spending; and increased urban and rural incomes, particularly for low-income people. As a result, consumer spending grew steadily and its structure constantly improved. We carried out a two-year investment plan to increase spending by 4 trillion yuan, including 1.18 trillion yuan from the central government. Of this amount, 43.7% was invested in low-income housing projects, projects to improve the wellbeing of rural residents, and social programs; 15.3% in innovation, restructuring, energy conservation, emissions reductions and ecological improvement; 23.6% in major infrastructure projects; and 14.8% in post-Wenchuan earthquake recovery and reconstruction. Government spending guided and drove nongovernmental investment, greatly increased domestic demand and effectively compensated for weak external demand. This helped to reverse the slowdown in economic growth in a relatively short time and make the Chinese economy the first in the world to pick up again. In this way, we not only got over the hard times and ensured and improved the wellbeing of the people, but also laid a firm foundation for long-term development.

2. Striving to do our work related to agriculture, rural areas, and farmers well, and consolidating and strengthening the agricultural foundation

Central government spending on agriculture, rural areas, and farmers totaled nearly 3 trillion yuan and grew at an average annual rate of more than 23%. Agricultural tax and various government charges were totally abolished, thereby ending the history of farmers paying taxes on the crops they grow and easing their annual burden by more than 133.5 billion yuan. We set up a subsidy system for grain growers and a benefit subsidy system for major growing areas, and paid out 122.6 billion yuan in production subsidies to grain growers last year. Minimum purchase prices and temporary purchase and storage policies were put in place for key grain varieties, and the minimum purchase prices for wheat and rice were raised by between 25% and 40%. We rigorously safeguarded arable land. We worked hard to make advances in agricultural science and technology. New record highs were set for grain production, which reached 5.4641 trillion tons last year, the seventh consecutive yearly increase. The per capita net income of farmers continued to grow rapidly and reached 5,919 yuan. We made steady progress with comprehensive reforms in the countryside and fully implemented the reform of tenure in collective forests and the system for managing state-owned farms. We accelerated agricultural and rural infrastructure development. We finished reinforcing 7,356 large and medium-sized reservoirs and key small reservoirs and ensured the safety of drinking water for 215 million rural residents. Farmers' lives constantly improved and rural development entered a new era.

3. Strongly promoting economic restructuring and improving the quality and performance of economic growth

First, we accelerated industrial restructuring and innovation. We vigorously carried out technological upgrading in enterprises and enterprise mergers and reorganizations, which noticeably raised the overall level and competitiveness of Chinese industries, particularly equipment manufacturing. Strategic emerging industries grew rapidly. We accelerated the development of the national innovation system; carried out knowledge innovation projects and technology innovation projects; and made breakthroughs in urgently needed cutting-edge technologies, core technologies and key equipment technologies. A large number of research results have been applied in industrial production. The service industry developed quickly and the proportion it contributes to GDP rose by 2.5 percentage points. We greatly accelerated infrastructure development. We expanded the railway system by 16,000 km over the past five years and the road system by 639,000 km, including 33,000 km of expressways. We built, improved or expanded 33 airports and built or reinforced 17,000 km of dykes.

Second, we made genuine progress in energy conservation, emissions reduction, ecological improvement and environmental protection. We formulated policies, measures and national objectives for controlling greenhouse gas emissions by 2020 and drew up a comprehensive work plan for conserving energy and reducing emissions. We vigorously developed clean energy. New power generating units with a capacity of 445 million kW were put on line, including hydropower plants with 96.01 million kW capacity and nuclear power plants with 3.84 million kW capacity. We decommissioned small thermal power plants with a capacity of 72.1 million kW and eliminated a number of outdated coal, steel, cement and coke production facilities. We made progress on key ecological forestry projects, and afforested a total of 25.29 million hectares. We applied a combination of approaches to control soil erosion on 230,000 km2 of land, and strengthened efforts to control water and air pollution in key watersheds, prevent and control air pollution and control industrial wastewater, waste gases and residues. We strongly promoted the development of the circular economy. Energy consumption per unit of GDP fell 19.1%, chemical oxygen demand by 12.45% and sulfur dioxide emissions by 14.29%.

Third, we worked to balance regional economic development. We implemented a master strategy for regional development, issued and implemented the national plan for development priority zones; formulated new 10-year guidelines for the large-scale development of the western region and a number of regional development plans; and introduced new measures to stimulate development by leaps and bounds in Tibet, Tibetan ethnic areas in Sichuan, Yunnan, Gansu and Qinghai provinces, Xinjiang and other ethnic minority areas. Development accelerated in the central and western regions and northeast China, and their economic growth rates and other main economic indicators were higher than the national average. The economic structure of the eastern region constantly improved, and its innovativeness and competitiveness gradually increased. Discrepancies in levels of basic public services among regions were decreasing, and the development of each region was taking on unique characteristics.

4. Determinedly working to deepen reform and opening up, and strengthening the internal vitality of economic and social development

We gradually improved the system of transfer payments and set up a rudimentary mechanism for ensuring basic funding for county-level governments. We comprehensively carried out VAT reform. The reform of prices of refined oil products and related taxes and fees was implemented smoothly. Trials were launched for the reform of resource taxes, and the corporate tax systems for domestic and overseas-funded enterprises were unified. The reform to convert large state-owned commercial banks to stockholding companies was smoothly completed, and the reform of policy-based financial institutions and rural credit cooperatives is well underway. We steadily resolved the issue of floating non-tradable shares of listed companies; successfully launched the ChiNext stock market; and introduced stock index futures and securities margin trading. The market for government bonds developed steadily. We deepened the reform and opening up of the insurance industry. Orderly progress was made in reforming the mechanism for setting the RMB exchange rate, and the trials of settling cross-border trade accounts in RMB were constantly expanded. Positive progress was made in the reform to turn state-owned enterprises (SOEs) into stockholding corporations and the reform of the system for managing and overseeing state assets. We accelerated reform of the postal system. A series of policies were formulated and implemented to promote the development of small and medium-sized enterprises and encourage nongovernmental investment, the environment for the development of the non-public sector of the economy constantly improved, and economic entities under diverse forms of ownership developed side by side.

The breadth and depth of our openness to the outside world constantly increased. Total import and export volume grew by an average annual rate of 15.9%, and the structure of imports and exports constantly improved. Our trade surplus decreased for two consecutive years, and the year-on-year decrease was 6.4% in 2010. The utilization of foreign capital further improved. The pace of enterprises "going global" increased noticeably: outward foreign direct investment reached $220 billion and the total volume of contracts to build foreign projects and provide overseas labor services reached $335.2 billion. We energetically participated in the reform of global economic governance and the development of mechanisms for regional cooperation, and our multilateral and bilateral economic and trade cooperation continued to deepen. The scale of our foreign aid continued to grow. Opening to the outside world strongly stimulated economic development and restructuring, increased employment, attracted advanced technology and managerial expertise, and greatly improved China's international standing.

5. Accelerating the development of social undertakings and genuinely ensuring and improving the people's wellbeing

We constantly worked to keep economic development in line with social development, and plan development with a view to improving the wellbeing of the people. We gave high priority to employment in economic and social development. We improved vocational training and employment services; helped college graduates, rural migrant workers and urban residents who have difficulty finding jobs to find employment; and helped ex-soldiers find jobs and settle down. We implemented the Labor Contract Law and the Law on Promoting Employment, raised minimum wages, and promoted harmonious labor relations. We achieved breakthroughs in the development of the social security system for both urban and rural residents; basic pension insurance for urban workers was put under unified planning at the provincial level; a method was devised to transfer pension insurance coverage for workers moving to other provinces; and there was an average 10% increase per year over the last seven years in the basic pension for enterprise retirees. In addition, the trial of a new type of pension insurance for rural residents has been extended to 24% of all counties. We actively yet prudently carried out the reform of the pharmaceutical and healthcare systems, and completed a basic medical insurance system for non-working urban residents and a new rural cooperative medical care system, which benefit 1.267 billion urban and rural residents. We achieved complete coverage of the subsistence allowance system; basically put in place an urban-rural government assistance program; and made continued progress in programs related to social welfare, preferential treatment and arrangements for entitled groups, charities, and people who are physically or mentally handicapped. Moreover, the national social security fund now stands at 781 billion yuan, over 580 billion yuan more than five years ago. We devoted great efforts to constructing low-income housing and redeveloping run-down areas, and as a result, 11 million poor households were able to move into new homes. We worked tirelessly to ensure everyone has access to old-age care, medical treatment, and housing.

We formulated and implemented the National Medium- and Long-Term Plan for Education Reform and Development. Government spending on education nationwide totaled 4.45 trillion yuan, and grew at an average annual rate of 22.4%. We made urban and rural compulsory education free so that all children of school age can receive an education at no cost. We fully implemented the system that links the salaries of teachers in compulsory education to their performance. Secondary vocational education was made free for students from poverty-stricken rural households and low-income urban households and students whose majors are related to agriculture. We accelerated the implementation of the government financial aid system for students, and government investment increased from 1.8 billion yuan in 2006 to 30.6 billion yuan in 2010. The system was expanded from institutions of higher learning to secondary vocational schools and regular senior secondary schools, and has helped fund the education of 21.3 million students and provided living expenses for over 12 million students living on campus while receiving compulsory education. We accelerated the renovation of dilapidated primary and secondary school buildings in rural areas and the development of vocational education infrastructure. We improved the overall quality of higher education, and enhanced the innovation capacity of colleges and universities. We formulated and implemented the National Medium- and Long-Term Plan for Scientific and Technological Development. The central government allocated 619.7 billion yuan for science and technology, an average annual increase of 22.7%, which resulted in a series of major achievements. Great efforts were made to improve the services provided by community-based medical and health care facilities. A special fund was included in the state budget to renovate or build 23,000 town and township hospitals, 1,500 county hospitals, 500 county traditional Chinese medicine hospitals, and 1,000 county maternity and childcare hospitals, as well as to build 2,400 community health service centers. We formulated and implemented the National Medium- and Long-Term Plan for Human Resource Development. We smoothly attained population planning objectives. Important progress was made in the reform of the cultural management system. Development of the system of public cultural services noticeably accelerated, and the culture industry developed vigorously. Philosophy and the social sciences, the press and publishing, radio, film and television, and literature and art all flourished and advanced. The construction of urban and rural public sports and exercise facilities was accelerated, and the national fitness program has taken root. We comprehensively improved the legal system and smoothly implemented the fifth five-year plan to educate the public about the law. We made innovations in and strengthened the administration of society and maintained social harmony and stability.

We won major victories in the fight against the Wenchuan earthquake and other natural disasters. The post-earthquake recovery and reconstruction work in Wenchuan was basically completed in two years instead of the scheduled three, and recovery and reconstruction work following the strong Yushu earthquake and major mudslide in Zhugqu is proceeding in an orderly manner. Passing these severe tests made the Chinese people more mature, more confident and stronger, and the great, indomitable and unyielding spirit of the Chinese nation is invincible.

We constantly deepened reform of the administrative system. We accelerated the transformation of government functions, completed a new round of reforms of government agencies, intensively carried out administration in accordance with the law, developed law-based government, made the government more service-oriented, made government affairs more open, improved the administrative accountability system, tirelessly combated corruption, and made positive progress in government capacity building.

We worked steadily and made solid progress, and the Chinese people have every reason to take pride in this. Our achievements did not come easily. They were made thanks to the broad vision and correct leadership of the CPC Central Committee with Comrade Hu Jintao as General Secretary and the concerted efforts of the Party and the people of all ethnic groups across the country. On behalf of the State Council, I would like to express my sincere gratitude to the people of all ethnic groups, all democratic parties and mass organizations, and people from all walks of life. In addition, I would like to express my thanks to our compatriots in the Hong Kong and Macao special administrative regions and in Taiwan, and overseas Chinese. Finally, my sincere thanks go to the governments of other countries, international organizations and friends from around the world who care for and support China's modernization.

We are keenly aware that we still have a serious problem in that our development is not yet well balanced, coordinated or sustainable. This manifests itself mainly in the following: growing resource and environmental constraints hindering economic growth, imbalance between investment and consumption, large income gap, insufficient scientific and technological innovation capabilities, an irrational industrial structure, continued weakness in the agricultural foundation, uneven development between urban and rural areas and between regions, the coexistence of overall pressure to expand employment and structural shortage of qualified personnel in some industries, defects in systems and mechanisms that hinder scientific development, and our failure to meet three targets set in the Eleventh Five-Year Plan - the value-added of the service sector, its share in total employment, and spending on R&D as a percentage of GDP. Moreover, we have not yet fundamentally solved a number of issues that the masses feel strongly about, namely the lack of high-quality educational and medical resources, and their uneven distribution; increasing upward pressure on prices, and exorbitant housing price increases in some cities; increasing social problems resulting from illegal land expropriations and housing demolitions; significant problems concerning food safety; and rampant corruption in some areas. We must therefore have a strong sense of responsibility toward the country and the people and work tirelessly and painstakingly to solve these problems more quickly to the satisfaction of the people.

Looking back at the government's work during the Eleventh Five-Year Plan period, we have deepened our understanding and awareness in several areas.

First, we must steadfastly undertake scientific development. We have relied on development to overcome all types of severe challenges, and all our achievements and progress in every area come from development. We must therefore continue to rely on development to resolve the difficulties and problems on the road ahead. China is still in the primary stage of socialism and will remain so for a long time to come, so we must continue to take economic development as our central task and pursue scientific development. We need to put people first, make ensuring and improving their wellbeing the starting point and goal of all our work, unwaveringly work for prosperity for all and ensure that everyone shares in the fruits of development. We need to steadfastly take all factors into consideration, and coordinate urban and rural development, regional development, and economic and social development. We need to accelerate the transformation of the pattern of economic development; strongly promote innovation; conserve resources and protect the environment; ensure that economic and social development is coordinated with our population, resources and environment; and make development more comprehensive, balanced and sustainable.

Second, we must continue to closely integrate government control with market forces. Sound market forces and effective macro-control are both indispensable parts of the socialist market economy. We must be guided by realities in deciding when market forces are to play the greater role and when government control is to play the greater role. In responding to the impact of the global financial crisis, we tightened and improved macro-control, quickly corrected market distortions, remedied market failures and prevented serious economic fluctuations. All the measures we took have proven to be entirely correct. We must constantly improve the socialist market economy, and make full use of the basic role of the market in allocating resources to stimulate the internal vitality of the economy while using macro-control tools scientifically to promote long-term, steady and rapid economic development.

Third, we must consider the overall domestic and international situations. As economic globalization intensifies and China's opening up constantly deepens, our economy is becoming linked ever more closely to the world economy and the two are constantly interacting and becoming more interdependent. We must adopt a global perspective, strengthen our strategic thinking, be proficient at recognizing development opportunities presented by changes in the international situation, respond prudently to risks and challenges, make good use of both domestic and international markets and resources, correctly balance domestic development and our degree of openness to the outside world, and truly take into consideration both domestic and external demand to achieve balanced development.

Fourth, we must steadfastly use reform and opening up to provide the basic driving force for economic and social development. The only way to make the country strong and prosperous and to ensure the people's happiness is through reform and opening up, and we must implement them throughout the course of socialist modernization. We need to be more resolute and courageous in carrying out reform, and make reform decisions more scientific and reform measures better coordinated. We need to comprehensively carry out economic, political, cultural and social reforms and innovations; eradicate obstacles embedded in systems and mechanisms; fully liberate and develop the productive forces; and promote social fairness and justice. We must make improving the people's lives a pivot linking reform, development and stability; consider the intensity of reforms and the speed of development in light of the ability of society to accept changes; promote harmony and stability through reform; and make sure that people are content with their lives and jobs, society is tranquil and orderly, and the country enjoys long-term peace and stability.

II. Main Objectives and Tasks for the Twelfth Five-Year Plan Period

We have drawn up the Twelfth Five-Year Plan for National Economic and Social Development (draft) in accordance with the Proposal of the CPC Central Committee for Formulating the Twelfth Five-Year Plan for National Economic and Social Development and submitted it to you for your deliberation and approval.

The Twelfth Five-Year Plan period is crucial for building a moderately prosperous society in all respects and for deepening reform and opening up and speeding up the transformation of the pattern of economic development. From an international perspective, world multipolarization and economic globalization are deepening, and peace, development and cooperation remain the current of the times. The global financial crisis is having far-reaching effects; world economic restructuring is accelerating; profound changes are taking place in global economic governance; breakthroughs in scientific and technological innovation and industrial transformation are on the horizon, and the overall strength of developing countries, especially emerging market economies, is increasing. From a domestic perspective, factors favoring China's development and the positive long-term development trend have not changed. Industrialization, informationization, urbanization, marketization and internationalization are all intensifying; there is huge potential demand in the market; the supply of funds is ample; the overall scientific and educational level of the people is rising; the quality of the workforce is improving; infrastructure is getting better by the day; the government's ability to exercise macro-control and respond to major challenges has increased significantly; and society remains stable overall. Looking at the overall international and domestic situations, we have concluded that China's development is still in an important period of strategic opportunities.

We must hold high the great banner of socialism with Chinese characteristics, take Deng Xiaoping Theory and the important thought of Three Represents as our guide, thoroughly apply the Scientific Outlook on Development, adapt to the latest changes in the domestic and international situations, and satisfy the new expectations of the people of all ethnic groups for a better life. Taking scientific development as the theme and accelerating transformation of the pattern of economic development as the main thread, we need to deepen reform and opening up; ensure and improve the people's wellbeing; consolidate and expand upon the success of our efforts to respond to the impact of the global financial crisis; promote long-term, steady and rapid economic development and social harmony and stability; and lay a solid foundation for building a moderately prosperous society in all respects.

- We will propel economic development to a new level. We have set a target of 7% annual increase in the economy over the next five years with significant improvement in the quality and performance of economic growth. Based on 2010 prices, the country's GDP in 2015 should exceed 55 trillion yuan. We will continue to strengthen and improve macro-control; keep the overall level of prices basically stable; integrate short-term control policies with long-term development policies; adhere to the strategy of expanding domestic demand; fully tap the huge potential of domestic demand; and more quickly get economic growth to be driven by a balanced mix of consumer spending, investment and exports.

- We will accelerate the transformation of the pattern of economic development and economic restructuring. We will adhere to the new path of industrialization with Chinese characteristics, strive to fully integrate informationization with industrialization, upgrade the manufacturing industry, and foster and develop strategic emerging industries. We will accelerate the development of the service sector and raise its value-added contribution to GDP by 4 percentage points. We will actively yet prudently carry out urbanization, increase its level from 47.5% to 51.5%, improve its pattern and forms, and constantly work to raise its quality. We will continue to strengthen infrastructure, and further strengthen the foundation for economic and social development. We will work hard to develop modern agriculture and accelerate the development of a new socialist countryside. We will thoroughly implement the master strategy for regional development and the strategy of development priority zones, and gradually achieve equality of basic public services. We will promote positive interaction between urban and rural areas and among regions, and the balanced development of primary, secondary and tertiary industries.

-- We will work hard to develop social undertakings. We will continue to give top priority to education, and steadily raise the educational level of the people. We will adhere to the principle of making innovations and leapfrog advances in key areas supporting development and creating a better future; improve the system of and support policies for scientific and technological innovation; and strive to make major scientific and technological breakthroughs. We will increase spending on R&D to 2.2% of GDP and promote the conversion of advances in science and technology into actual productive forces. In order to meet the demands of modernization, we will strengthen personnel training and strive to develop a large number of high-caliber personnel. We will vigorously strengthen cultural development and make another great stride forward in the reform and development of culture in order to meet the ever-growing intellectual and cultural demands of the people. We will work hard to develop sports. We will further deepen reform of the pharmaceutical and healthcare systems, improve the basic medical and health care systems, and more quickly reach the goal of making basic medical and health services available to all citizens. We will make innovations in social administration systems and mechanisms, improve the legal and institutional bases and the capacity of social administration, and ensure society is full of vitality, harmonious and stable.

-- We will effectively conserve resources and protect the environment. We will actively respond to climate change. We will strengthen resource conservation and management, become better able to ensure adequate supplies of resources, intensify the protection of farmland and the environment, strengthen ecological development and systems to prevent and mitigate natural disasters, and comprehensively build our capacity for sustainable development. The proportion of non-fossil fuels in primary energy consumption should reach 11.4%; energy consumption and CO2 emissions per unit of GDP should be reduced by 16% and 17% respectively; the release of major pollutants should be reduced by 8% to 10%; forest stock should be increased by 600 million m3; and forest cover should be increased to 21.66%. We will substantially improve water conservancy facilities; make progress in better controlling important tributaries of large rivers as well as lakes and small and medium-sized rivers; and significantly improve agricultural irrigation, the efficiency of water resources use and resistance to flooding.

-- We will comprehensively improve the people's wellbeing. We will make increasing employment the foremost objective of economic and social development, create equitable job opportunities for the entire workforce, and create an extra 45 million urban jobs over the next five years. We will uphold and improve the distribution system whereby distribution according to work is dominant and multiple forms of distribution exist side by side, strive to coordinate increases in people's incomes with economic development and increases in workers' pay with improvements in labor productivity, gradually raise the proportion of national income distributed to individuals, increase the proportion of wages in the primary distribution of income, and quickly make the pattern of income distribution more reasonable. The per capita disposable income of urban residents and the per capita net income of rural residents will rise by an annual average of over 7% in real terms. We will raise the poverty line and reduce the number of people living in poverty. We will more quickly improve the social security system, and continue to raise social security benefits. The basic pension insurance and basic medical insurance systems will cover all urban and rural residents. Participation in the basic medical insurance system for working and non-working urban residents and the new rural cooperative medical care system will increase and stabilize, and we will increase the proportion of expenses for medical treatment paid out of the medical insurance fund to over 70% in accordance with relevant policies. Low-income housing will be made available to around 20% of the country's urban households. We will adhere to the basic state policy on family planning and progressively improve it. We will promote balanced population growth in the long term and raise the average life expectancy by one year to 74.5 years.

-- We will comprehensively deepen reform and opening up. We will pay greater attention to the top-level design and overall planning of reform, vigorously press ahead with economic restructuring, actively yet prudently advance political restructuring, accelerate reform of the cultural and social management systems, constantly improve the socialist market economy, expand socialist democracy, improve the socialist legal system, make the superstructure more responsive to the development of and changes in the economic base, and provide strong assurances for scientific development. We will uphold and improve the basic economic system, and create an institutional environment under which economic entities under all forms of ownership use factors of production equally in accordance with the law, engage in fair competition in the market, and enjoy equal legal protection. We will accelerate the reform of the fiscal, taxation, and financial systems; make fiscal and taxation systems conducive to transforming the pattern of economic development; and develop a financial system that is comprised of diverse organizations, provides efficient service, exercises prudent oversight, and keeps risks within bounds. We will deepen reform of the prices for resource products and environmental protection charges, and develop a sound, flexible mechanism for setting prices for resource products capable of reflecting supply and demand in the market, resource scarcity, and the cost of environmental damage. We will implement a more positive opening up strategy, cultivate new advantages beneficial to our participation in international cooperation and competition, and bring about a new phase of opening up that emphasizes mutual benefit.

-- We will constantly strengthen the government's internal reforms and self-improvement. All the government's power is entrusted by the people, and the government must therefore be responsible for the people, work to benefit them, and accept their oversight. We must mobilize and organize as many people as possible to manage state and social affairs as well as economic and cultural undertakings in accordance with the law. We must uphold the rule of law as a basic strategy, strengthen the legal system to safeguard the people's interests, and carry out administration in accordance with the law. We must make decisions scientifically and democratically; establish a sound operational mechanism for decision making, enforcement and oversight to check each other and function in concert; and ensure that power is exercised properly. We must make institutional changes to end the excessive concentration of power and lack of checks on power, and resolutely prevent and punish corruption. We must safeguard the people's democratic rights and legitimate rights and interests, and safeguard social fairness and justice.

In short, by achieving all the targets set forth in the Twelfth Five-Year Plan through hard work in the coming five years, China's overall strength will further increase, people will live better lives, and our country will undergo more profound changes.

III. Work for 2011

The year 2011 is the first year of the Twelfth Five-Year Plan period, and it is pivotal for us to do a good job this year in order to accomplish all the tasks and objectives set forth in the plan. Last year, we achieved significant results in all our work. GDP rose by 10.3%; the increase in the CPI was held in check at 3.3%; 11.68 million new urban jobs were created; and the balance of payments situation improved. All of this laid a good foundation for our work this year.

This year, our country still faces an extremely complex situation for development. The world economy will continue to recover slowly, but the foundation for recovery is not solid. Economic growth in developed economies is weak, their unemployment rates are and will remain high, and some countries are still under the threat of their sovereign debt crises. Major developed economies have further eased monetary policies, global liquidity has increased greatly, the prices of major commodities and the exchange rates of major currencies have become more volatile in the international market, asset bubbles and inflationary pressure have grown in emerging markets, protectionism continues to heat up, competition in the international market is becoming more intense, and there are still many unstable and uncertain factors. Some long-term and short-term problems in our country's economic activities are intertwined, and institutional incongruities and structural problems are stacked up together, making our macro-control more difficult. We need to correctly judge the situation, keep our heads clear, be more mindful of potential dangers, and be prepared to respond to risks.

The major targets for this year's national economic and social development are as follows: to increase GDP by around 8%, further optimize the economic structure, keep the CPI increase around 4%, create more than nine million new urban jobs, keep the registered urban unemployment rate at 4.6% or lower, and continue to improve the balance of payments situation. Our main purpose is to create a good environment for transforming the pattern of economic development, and to guide all sectors to focus their work on accelerating economic restructuring and raising the quality and results of development as well as on increasing employment, improving the people's wellbeing and promoting social harmony.

To achieve the above targets, we need to maintain continuity and stability in our macroeconomic policies; make them more targeted, flexible and effective; correctly strike a balance between maintaining steady yet rapid economic development, restructuring the economy and managing inflation expectations; pay more attention to maintaining overall price stability; and prevent large economic fluctuations.

We will continue to implement a proactive fiscal policy. We will keep the deficit and government bonds at appropriate levels. This year, we are projecting a deficit of 900 billion yuan, which consists of a 700 billion yuan central government deficit and 200 billion yuan in local government bonds, which will be included in local government budgets. This deficit is 150 billion yuan less than budgeted last year, and the deficit will decrease to around 2% of GDP. We need to focus on optimizing the structure of expenditures. We need to increase expenditures in key areas, such as agriculture, rural areas, and farmers; underdeveloped areas; the people wellbeing; social programs; restructuring; and scientific and technological innovation. We need to decrease ordinary expenditures; strictly control expenditures of Party and government bodies on office buildings and other facilities; keep the budgets for travel abroad, the purchase and operating costs of motor vehicles, and official entertainment at their present level in principle without any increase; and genuinely decrease administrative costs. We will continue to implement structural tax reductions. We will strengthen tax collection and administration in accordance with the law. We will comprehensively audit local government debt, carry out complete oversight and control, and establish a standardized financing mechanism for local governments to borrow money.

We will implement a prudent monetary policy. We will keep financing from all sources at an appropriate level, and we have set a target of a 16% increase in the broad money supply (M2). We will improve our policy framework for comprehensively exercising caution and utilize the tools of prices and quantity in an integrated manner to make our monetary policy more effective. We will increase the proportion of direct financing, and make full use of financing tools such as stocks, bonds and private equities to better satisfy the diverse demands for investment and financing. We will strive to optimize the credit structure, guide commercial banks to increase credit support to key areas and weak links, and strictly control loans to industries that consume large quantities of energy and resources, are highly polluting or have excess capacity. We will further improve the mechanism for setting RMB exchange rates. We will closely monitor and control cross-border capital flows and prevent the influx of hot money. We will strengthen investment management and risk management over our foreign exchange reserves and increase the returns on our investments.

This year, our focus is on doing the following work well.

1. Keeping overall price levels basically stable

Recently, prices have risen fairly quickly and inflation expectations have increased. This problem concerns the people's wellbeing, bears on overall interests and affects social stability. We must therefore make it our top priority in macroeconomic control to keep overall price levels stable. We need to make the most of favorable conditions, such as an ample supply of manufactured goods and our abundant grain reserves and considerable foreign exchange reserves, endeavor to overcome the adverse effects of imported and structural inflation, cushion the upward pressure for costs of factors of production, and correctly guide market expectations to resolutely curb price rises. We need to comprehensively strengthen our work controlling and monitoring prices mainly through economic and legal methods supplemented by administrative means when necessary. First, we will effectively manage market liquidity and control the monetary conditions for commodity prices rising too rapidly. We will decide proper timing, frequency and intensity of price adjustments for goods and services whose prices are regulated by the government. Second, we will vigorously develop production and ensure the production and supply of major farm products, daily necessities and important means of production. We will effectively implement the system of provincial governors taking responsibility for the "rice bag" (grain supply) program and city mayors taking responsibility for the "vegetable basket" (non-grain food supply) program. Third, we will develop the distribution system for farm products, actively encourage farmers and stores to link up, and guarantee the unimpeded transport of fresh farm products through "green channels," where vehicles carrying such goods are exempt from paying road tolls. We will improve the reserve system for important goods and the system for temporarily purchasing and stockpiling major farm products, seize the opportune moment for the state to manipulate reserves, adjust imports and exports, and strengthen our ability to control the market. Fourth, we will strengthen oversight and supervision of prices and maintain market order. We particularly need to strengthen law enforcement concerning pricing, and strictly investigate and deal with illegal behavior such as driving up prices through price collusion or market speculation. Fifth, we will improve the system of subsidies and institute a sound mechanism to raise social assistance and social security benefits when commodity prices rise. We cannot allow price rises to affect the normal lives of low-income people.

2. Further expanding domestic demand, especially consumer demand

Expanding domestic demand is a long-term strategic principle and basic standpoint of China's economic development as well as a fundamental means and an internal requirement for promoting balanced economic development.

We will actively boost consumer demand. We will continue to increase government spending used to help expand consumption, and increase subsidies to low-income urban residents and farmers. We will continue to implement the policies of providing subsidies for rural residents to purchase home appliances and subsidies for trading-in old home appliances for new ones. We will strengthen the infrastructure for the distribution of goods, culture and sports, travel, and broadband in rural areas and small and medium-sized cities. We will vigorously promote consumption in the areas of culture, travel and old-age care. We will promote chain-store operations and unified distribution in rural areas, optimize the distribution of urban commercial outlets, and develop new services such as e-commerce, online shopping and the Geographic Information System. We will energetically overhaul and standardize the market, and earnestly protect consumers' rights and interests. We will intensify our efforts to crack down on violations of intellectual property rights and the manufacture and sale of counterfeit or substandard goods.

We will strive to improve the investment structure. We will earnestly implement the State Council's 36 new guidelines for encouraging and guiding nongovernmental investment; work quickly to formulate open and transparent standards and supporting policies on market access; effectively relax restrictions on market access; genuinely eliminate all visible and invisible barriers; encourage and guide nongovernmental investment in areas such as basic industries, infrastructure, municipal public utilities, social programs, and financial services; prod privately run enterprises to strengthen their innovation, transformation and upgrading; encourage and guide the reorganization and mergers of nongovernmental capital and its involvement in SOE reform; strengthen services and guidance for and standardized supervision of nongovernmental investment; and promote its stable growth and structural optimization. We will get government investment to play the leading role in restructuring, give priority to ensuring funding for key projects that are under construction or expansion, and begin construction on the major projects in the Twelfth Five-Year Plan in an orderly manner. We will prevent haphazard investment and redundant construction. We will strictly enforce investment project approval standards on land use, energy conservation, environmental protection and safety, and improve the quality and benefits of investment.

3. Consolidating and strengthening the position of agriculture as the foundation of the economy

We will steadfastly make agriculture, rural areas, and farmers the top priority of the government's work; carry out agricultural modernization while deepening industrialization and urbanization; and consolidate and build upon the favorable situation in agriculture and rural areas.

We will ensure an adequate supply of agricultural products and increase farmers' incomes through multiple channels. We will make safeguarding food security our primary goal, and work tirelessly to increase agricultural production. We will keep the area planted in grain crops stable, and support the growing of cotton, oilseed and sugar crops in the most suitable areas. We will energetically develop the animal husbandry, fishery, and forestry sectors. We will effectively carry out the new round of the "vegetable basket" program and ensure that suburbs of large and medium-sized cities have a basic area for growing vegetables and a basic ability to supply fresh produce for urban residents. We will get science and technology to better support agriculture, develop and expand the crop seed industry, and launch large-scale efforts to increase agricultural production. We will continue to implement the policy of minimum grain purchase prices, raise the floor price for wheat by 5 to 7 yuan per 50 kg and increase the floor price for rice by 9 to 23 yuan per 50 kg this year. We will energetically develop nonagricultural industries in rural areas, strengthen county economies, improve farmers' vocational skills and their ability to start their own businesses and increase their incomes, and encourage them to find nonagricultural employment in their hometowns or nearby areas. We will raise the poverty line, and intensify our efforts to alleviate poverty through development.

We will put great effort into water conservancy, and comprehensively strengthen agricultural and rural infrastructure. We will focus on developing more irrigation and water conservancy projects, harnessing small and medium-sized rivers, reinforcing small reservoirs and faulty and dangerous sluices, and preventing and responding to geological disasters from mountain torrents. We will improve irrigation and drainage facilities, develop water-saving irrigation, reinforce river embankments, clear away silt and dredge waterways, eliminate hidden dangers in reservoirs, and increase their storage capacity to prevent floods. Through several years of hard work, we will comprehensively improve our ability to prevent floods, control droughts, and prevent and mitigate natural disasters. We will vigorously develop and improve rural land, develop arable land that meets high drought and flood resistance standards on a large scale, and accelerate our work to increase the country's grain production capacity by 50 million tons. We will intensify work on projects to provide running water and electricity to rural homes, build and improve roads, exploit methane and construct rural housing, and energetically improve rural working and living conditions, so that farmers can live in a nice environment.

We will increase funding for agriculture, rural areas, and farmers and improve our policies to strengthen agriculture and benefit farmers. We will direct more government spending toward agriculture and rural areas, and ensure that total expenditures and spending increases in this area are both higher than last year. Our budgetary fixed asset investment will be used mainly to develop agricultural and rural infrastructure, and we will ensure that both the proportion and the total amount of investment further increase. Proceeds from the transfer of land-use rights will be spent primarily on developing agricultural land, irrigation and water conservancy, and constructing rural infrastructure, and we will ensure that an adequate amount of funds is drawn from these proceeds and used for those purposes. This year's allocation for agriculture, rural areas, and farmers from the central government budget will be 988.45 billion yuan, an increase of 130.48 billion yuan over last year. We will continue to increase subsidies to agricultural production, and give high priority in the newly increased subsidies to major production areas, key crop varieties, major specialized households, and specialized farmer cooperatives. We will increase general transfer payments from the central government to the major counties that supply other parts of the country with grain, oilseed and pigs, and expand the size and scope of awards and subsidies. We will encourage financial institutions to increase their supply of credit for agriculture, rural areas, and farmers and ensure that this year's percentage increase in credit is no less than that of last year. We will increase policy-based financial support for agriculture, rural areas, and farmers. We will improve the policy-supported agricultural insurance system, and develop an agricultural reinsurance system and a mechanism for diffusing the risk of huge catastrophes.

We will deepen rural reform, and increase the vitality of rural development. We will adhere to and improve the basic rural operating system and improve the household contract responsibility system for land use including farmland, forestland and grassland. We will move forward with reform of the rural land management system in an orderly manner. We will explore and establish a compensation mechanism for protecting arable land. We will continue to carry out comprehensive rural reforms. We will fully implement the government award and subsidy system for village-level public works projects, the launching of which is determined by villagers themselves, and we will significantly increase the size of awards and subsidies. We will accelerate the development of specialized farmer cooperatives and the system whereby various sectors of society provide services for agriculture, and raise the level of organization in agriculture. By the end of this year, we will put in place sound public services for spreading agricultural technology; preventing and controlling animal and plant diseases; and monitoring the quality of agricultural products in townships, towns and regions all over the country.

Ensuring adequate food for 1.3 billion Chinese people is always a top priority, and we must never treat this issue lightly. We have the confidence and the ability to handle this important matter well.

4. Accelerating strategic economic restructuring

This is the major goal of transforming the pattern of economic development. China's economy needs to be quickly put on the path of endogenous growth driven by innovation.

We will adjust and optimize the industrial structure. We will quicken the establishment of a modern industrial system and give impetus to industrial transformation and upgrading.

First, we will transform and upgrade manufacturing industries. We will intensify technological upgrading in enterprises, with the focus on becoming better able to develop new products and build brand names; utilize energy and resources more comprehensively; increase the integration of technological and process systems; and raise the quality, technological content and value-added of products. We will encourage enterprises in key industries to enter into trans-regional acquisitions and reorganizations. We will improve the exit mechanism and accompanying policies for outdated production capacity.

Second, we will accelerate the cultivation and development of strategic emerging industries. We will vigorously develop the next-generation IT industry; build a high-performance broadband information network; accelerate the integration of the telecommunications network, the radio and television broadcasting network, and the Internet; and promote demonstrations on how to use the Internet of Things. We will energetically give impetus to the development of industries such as energy conservation, environmental protection, new energy, biotechnology, high-end equipment manufacturing, new materials and new energy vehicles. We need to promptly formulate standards, improve policies, enhance innovation capabilities, get small and medium-sized high-tech companies to play their role, and foster the healthy development of strategic emerging industries so they more quickly build their production capacity and core competitiveness.

Third, we will vigorously develop service industries. We will accelerate the development of producer services and actively develop consumer services. We will make every effort to develop and upgrade the software industry. We will strive to create a market environment that is conducive to the development of service industries, and quickly improve the policy system for stimulating their development. We will make the prices of power, water, gas and heating basically the same for both service industries encouraged by the state and the industrial sector as quickly as possible.

Fourth, we will strengthen the modern energy industry and the comprehensive transport system. We will actively promote changes in the way energy is produced and used and raise energy efficiency. We will give impetus to the clean use of traditional energy sources, intensify the construction of smart power grids, and vigorously develop clean energy. We will coordinate the development and accelerate the construction of a comprehensive transport system that is convenient, safe, cost-effective and highly efficient. We will steadfastly make coordinated development plans for land and sea and advance the development of the marine economy.

We will promote balanced development between regions. We will fully implement all regional development plans. In implementing the master strategy of regional development, we will steadfastly give high priority to the strategy of large-scale development of the western region, and earnestly implement the policies and measures for the new ten-year period of the large-scale development of the western region and all the measures to promote the leapfrog development of Tibet and Xinjiang. We will fully revitalize old industrial bases such as northeast China and continue to transform resource-dependent cities. We will vigorously foster the rise of the central region and make greater use of its geographical advantage of linking the eastern and western regions. We will actively support the eastern region in taking the lead in development, and leading the country in making innovations in systems and mechanisms and transforming the pattern of development. We will get Shenzhen and other special economic zones, Pudong New Area in Shanghai and Binhai New Area in Tianjin to better play a leading and exploratory role in reform and opening up. We will give greater support to the development of old revolutionary base areas, ethnic minority areas and border areas, promulgate and implement the 2011-2020 rural poverty alleviation and development program, launch the project to alleviate poverty through development in contiguous areas with particular difficulties, and lift impoverished areas out of poverty more quickly.

We will actively yet prudently move forward with urbanization. We will adhere to the path of urbanization with Chinese characteristics, abide by the principles of urban development and foster the sound development of urbanization. We will adhere to scientific planning and strict management. We will strengthen urban infrastructure and public service facilities, increase the overall carrying capacity of cities and towns, and raise the level of urban management and services. We will gradually make sure that rural migrant workers who have stable jobs and have lived in cities or towns for a number of years are registered as urban residents in line with local conditions and in a step-by-step manner. We need to help rural migrant workers who do not currently qualify as urban residents to resolve practical difficulties such as remuneration, schooling for their children, public health, renting homes, and social security. We need to fully respect the right of farmers to independently choose whether to seek jobs in cities or stay in their home villages, and genuinely protect their legitimate rights and interests concerning land they contract to work and the land on which their homes sit. We must steadfastly adhere to the correct orientation of ensuring that urbanization together with agricultural modernization and the building of a new countryside are mutually reinforcing.

We will strengthen energy conservation, environmental protection and ecological development, and actively respond to climate change. We will focus on conserving energy in areas such as the industrial sector, construction, transportation and public institutions. We will continue to implement key energy conservation projects. We will vigorously conserve energy in the industrial sector, popularize energy-conserving technology and equipment, and improve energy efficiency. We will invest more in improving energy conservation in existing buildings and actively promote energy conservation in new buildings. We will vigorously develop the circular economy. We will move forward with the pilot project to build low-carbon cities. We will strengthen our capacity to adapt to climate change and respond to extreme climate events in particular. We will put in place well-equipped statistical and monitoring systems for greenhouse gas emissions, energy conservation and emissions reduction. We will accelerate the planning and building of sewer networks and garbage disposal facilities in urban areas and expand the use of recycled water. We will strengthen the environmental management of chemicals. We will start the work of denitration in coal-fired power plants and strengthen prevention and control of particles pollution; step up the treatment of marine pollution; accelerate the treatment of water pollution in key river basins, the treatment of air pollution, the treatment of heavy metal pollution in key areas and the comprehensive improvement of the rural environment; and control pollution from non-point rural sources. We will continue to carry out major ecological restoration projects, intensify the protection and management of major functional ecological zones, implement the second phase of the project to protect natural forest resources, implement the subsidy and reward policy for grassland ecological conservation, consolidate achievements already made in turning reclaimed farmland into forests and grasslands as well as grazing land to grasslands, vigorously carry out afforestation, strengthen wetland protection and recovery, and make progress in comprehensively dealing with desertification and stony deserts. We will improve contingency plans for preventing and mitigating natural disasters, and accelerate the development of surveying and evaluation, monitoring and early warning, prevention and control, and emergency response systems in areas prone to geological disasters from mountain torrents.

5. Vigorously implementing the strategy of reinvigorating the country through science and education and the strategy of strengthening the country through human resource development

Science and technology, education and human resources are the foundation of national development, and they must therefore always be given an important strategic position.

We will continue to give high priority to education. We will promote the scientific development of education programs, and provide people with more diverse, more equitable and higher-quality education. In 2012, government spending on education will reach 4% of GDP. We will speed up the development of preschool education. We will encourage both governmental and nongovernmental bodies to provide preschool educational services in order to increase resources and promptly solve problems concerning access to preschool education. We will promote the balanced development of compulsory education. We will strengthen standardization in compulsory education schools, and ensure that the allocation of public resources gives priority to rural schools and weak urban schools. Relying mainly on local governments and public schools, we will guarantee equal access to compulsory education for the children of rural migrant workers who live in cities. We will support the development of education and promote bilingual instruction in ethnic minority areas. We will comprehensively promote well-rounded education. We will accelerate education reforms; genuinely lighten the school workload of primary and secondary school students; and give high priority to guiding students and fostering their ability to think independently, solve practical problems and be innovative. We will ensure that primary and middle school students do one hour of physical exercise in school every day. We will vigorously develop vocational education. We will guide senior secondary schools and universities to emphasize their unique features, raise the quality of their teaching, and help their students to become better able to find employment or start their own businesses. We will strengthen the development of key disciplines and accelerate the development of a number of world-class universities. We will support the development of special education. We will implement and improve the government financial aid system for students and ensure no children are obliged to discontinue schooling at any stage of education due to their family's financial difficulties.

We will comprehensively strengthen human resource development. With the focus on high-level and highly skilled personnel, we will more quickly foster a large number of innovative scientists and engineers and skilled workers who are urgently needed and in short supply. We will invest more in human resource development and carry out major projects to foster talented personnel. We will deepen the reform of the systems for selecting and employing personnel; strive to create an equitable, open and competitive system as well as social environment in which people are selected on their merits; encourage outstanding people to emerge; and create an environment that encourages talented people to tap their full potential.

We will vigorously promote scientific and technological innovation. We will speed up the implementation of major national science and technology projects, make breakthroughs in a number of core and key technologies, and enhance our capabilities to carry out major integrated innovation projects. We will strengthen basic research and research in cutting-edge technologies and increase our capacity for original innovation. We will give impetus to the establishment of systems and mechanisms for enterprises to take the lead in R&D and innovation. We will encourage enterprises to undertake jointly funded R&D on key generic technologies and share both risks and rewards. The government needs to provide policy and financial support to projects in areas of national strategic interests. We will deepen reform of the system for managing science and technology, and promote the optimal allocation, efficient use and public sharing of scientific and technological resources. We will provide incentives to research institutes, universities, scientists and engineers to encourage them to cooperate with enterprises in various ways. We will steadily increase government spending on science and technology, and improve the performance of research expenditures. We will unswervingly implement the national strategy on intellectual property rights; improve our ability to create, apply, protect and manage them; and arouse an innovative spirit throughout society.

6. Strengthening social development and ensuring and improving the wellbeing of the people

The more the economy develops, the more attention we need to pay to strengthening social development and ensuring and improving people's wellbeing.

We will do everything in our power to expand employment. We will continue to implement a more proactive employment policy. This year the central government plans to invest 42.3 billion yuan to assist and promote employment. In light of the workforce structure in China, we will energetically develop labor-intensive industries, service industries, small and micro-businesses and innovative high-tech enterprises, and strive to satisfy the employment needs of different groups of people. We will continue to give top priority to the employment of university graduates and key groups. We will strengthen vocational training and encourage people to start their own businesses. We will strengthen public services for employment, and improve the unified, standardized and flexible human resources market. We will more quickly develop job information networks and achieve nationwide connectivity. We will strengthen the supervision and enforcement of labor safeguards, improve mechanisms for resolving labor disputes, safeguard the rights and interests of workers in accordance with the law, and build harmonious labor relations.

We will adjust income distribution in a reasonable manner. This is both a long-term task, and an urgent issue we need to address now. This year we will concentrate on the following three measures.

First, we will focus on increasing the basic incomes of low-income people in both urban and rural areas. We will steadily increase the minimum wage of workers, basic pensions of enterprise retirees, and subsistence allowances for both urban and rural residents. We will establish a sound mechanism of regular pay raises for workers and strictly enforce the minimum wage system.

Second, we will put more effort into adjusting income distribution. We will raise the individual income tax threshold on salaries, reasonably adjust the tax rate structure, and genuinely reduce the tax burden on low- and middle-income people. We will effectively regulate excessively high incomes, strengthen the dual controls on total wages and wage scales in industries in which incomes are excessively high, and strictly standardize the management of executive pay and bonuses in SOEs and financial institutions.

Third, we will vigorously overhaul and standardize income distribution. We will resolutely prohibit illicit income. We will quickly establish a system for monitoring income distribution. Through unremitting efforts, we will reverse the trend of a widening income gap as soon as possible and ensure that the people share more in the fruits of reform and development.

We will accelerate the improvement of the social security system that covers both urban and rural residents. We will extend the pilot project for the new type of old-age insurance for rural residents to 40% of counties. We will move forward with the trials of old-age insurance for urban residents, solve longstanding problems concerning pensions for retirees of collectively owned enterprises, and put in place a mechanism to regularly adjust the basic pensions of enterprise retirees. We will actively press ahead with the reform of the old-age insurance system for government agencies and institutions. We will include employees of SOEs and collectively owned enterprises who suffer from old work-related injuries in the workers' compensation system. We will improve the subsistence allowance system for both urban and rural residents. We will continue to enlarge the pool of social security funds through multiple channels. Funding for raising and educating orphans and rehabilitating orphans with disabilities will be provided for in the government budget. We will continue to push forward the development of a social security system and a service system for people with disabilities. We will speed up the informationization of social security management. We will get commercial insurance to play a role in improving the social security system. We will also vigorously develop charity programs.

We will resolutely regulate the real estate market. We will act more quickly to improve the long-term mechanisms for regulating the real estate market, focus on solving housing difficulties for low- and middle-income families in urban areas, genuinely stabilize housing prices and meet the reasonable demands of residents for housing.

First, we will build more low-income housing. This year, the total number of units of new low-income housing and units in run-down areas that will undergo renovation will reach 10 million, and 1.5 million dilapidated rural houses will be renovated. We will give priority to developing public rental housing. The central government is allocating 103 billion yuan in this year's budget for subsidies to support this work, an increase of 26.5 billion yuan over last year. Governments at all levels need to raise funds through various channels and substantially increase spending in these areas. We will promptly establish an administrative system for the use, operation and return of low-income housing; increase transparency; and strengthen public oversight to ensure that eligible families benefit from low-income housing.

Second, we will further implement and improve policies for regulating the real estate market and firmly curb the excessively rapid rise of housing prices in some cities. We will formulate and announce an annual housing development plan, designate sites for building low-income housing in the plan for new construction sites, and make sure that all designated sites are used to develop low-income housing. Emphasis will be placed on building more ordinary small and medium-sized commodity housing units. We will standardize and develop the housing rental market. We will strictly implement differentiated housing credit and tax policies, adjust and improve tax policies on real estate, tighten tax collection and administration, and effectively curb the purchase of homes for speculation or investment purposes. We will strengthen monitoring of the real estate market and oversight of market behavior, and strictly deal with all violations of laws and regulations.

Third, we will establish sound evaluation and accountability mechanisms. Provincial governments have general responsibility and municipal and county governments have direct responsibility for stabilizing housing prices and guaranteeing the availability of low-income housing. Relevant government authorities need to more quickly improve inspection, appraisal, admonition and accountability systems. Localities that put insufficient effort into stabilizing house prices and promoting the construction of low-income housing and thereby affect social development and stability will be held accountable.

We will press forward with the reform and development of the pharmaceutical and healthcare fields. This year will be crucial for implementing the three-year plan for reforming the pharmaceutical and healthcare systems, and we need to ensure that all targets are met.

First, we will fully implement the national system for basic drugs at the primary level. We will put in place a sound system to guarantee supplies of basic drugs, strengthen drug oversight, ensure drug safety and genuinely cut drug prices.

Second, we will do a good job in the pilot projects for reforming public hospitals. We will encourage all localities to make bold explorations concerning hospital management systems, the mechanism for setting prices for medical services and oversight mechanisms. We will improve the mechanism for settling medical disputes, and improve relations between hospitals and patients.

Third, we will raise the level of basic medical insurance. We will steadily cover more working and non-working urban residents under the medical insurance system and more farmers under the new rural cooperative medical care system. This year, government subsidies for the new rural cooperative medical care system and medical insurance for non-working urban residents will be increased to 200 yuan per person.

Fourth, we will complete the construction of the three-tiered county, township and village health service network in rural areas and community-based health service agencies in cities. We will increase government expenditures on basic public health services to an average of 25 yuan per person this year. We will strengthen the prevention, control and standardized management of major communicable diseases as well as chronic, occupational, endemic and mental illnesses. We will strengthen work concerning maternity and child health, and continue the trials of conducting free cervical cancer and breast cancer screenings for women and providing necessary medical treatment to those suffering from these diseases. We will conscientiously do the work of preventing and controlling HIV/AIDS. We will vigorously develop traditional Chinese medicine and ethnic minority medicine and implement supporting policies.

Fifth, we will encourage nongovernmental investors to establish medical institutions. We will expand market access for nongovernmental and foreign investors looking to establish medical institutions. We will improve and advance the system whereby doctors are allowed to work in more than one practice, encourage the reasonable flow of doctors between all types of medical institutions, and encourage them to set up community-level clinics in order to provide convenient medical and health services for the masses.

We will comprehensively carry out population and family planning. We will keep the birthrate low. We will do a good job of providing family planning services to and managing the floating population. We will strengthen efforts to prevent birth defects, further expand the pilot projects of free pre-pregnancy checkups, and do a good job ensuring the health of pregnant and post-natal women, infants and preschool children. The rate of hospital deliveries is expected to exceed 95% for women in rural areas. We will implement a new round of the Program for the Development of Women and Children and effectively protect the rights and interests of women and minors. We will accelerate the establishment of a sound social services system for the elderly and intensify the development of nonprofit old-age service facilities.

We will strengthen and make innovations in social administration. We will strengthen the government's social administration functions, extensively mobilize and organize the masses to participate in social administration in accordance with the law, make use of the positive role of social groups, and improve the structure of social administration. With urban and rural communities as the channel and public demand as our guide, we will integrate social administration functions and service resources in the areas of population, employment, social security, civil administration, public health, and culture, and establish effective connections and positive interactions between government administration and primary-level self-governance. We will accelerate the establishment of sound mechanisms for safeguarding people's rights and interests, and for evaluating the risks of administrative decisions and correcting wrong decisions. We will strengthen the work related to the handling of petitioners' letters and visits and step up people's, administrative and legal mediations; expand the channels for people to report on social conditions and popular sentiment; and effectively solve problems that cause great resentment among the masses, such as unauthorized expropriations of arable land and illegal demolitions of houses. We will strengthen and improve the system of public security. We will improve the contingency response system, and enhance society's capacity to manage crises and withstand risks. We will intensify our information security and secrecy, and improve management of information networks. We will improve all facets of public security, and be on high alert for and crack down on all kinds of crime in accordance with the law. We will get enterprises to assume primary responsibility for workplace safety and product quality, and resolutely curb major workplace accidents. We will improve oversight systems and mechanisms for food safety; improve relevant laws and regulations; strictly enforce standards; improve monitoring, evaluation, inspection and testing systems; make local governments assume more oversight responsibility; strengthen oversight and law enforcement; and comprehensively raise our capacity to ensure food safety.

Governments at all levels must pay more attention to social administration and public services and effectively solve the most practical problems of the greatest and most direct concern to the people.

7. Vigorously enhancing cultural development

Culture has an increasingly profound and lasting impact on a nation and country. We will better satisfy the diverse cultural demands of the people; have culture play its role in guiding society, educating the people, and promoting development; and enhance national cohesiveness and creativity. We will strengthen the development of civic morality; build up the common ideal of and belief in socialism with Chinese characteristics in the whole of society; and speed up the establishment of moral and behavioral norms that carry forward traditional Chinese virtues, conform to socialist cultural and ethical requirements, and are suited to a socialist market economy. We will strengthen the development of a credibility system, and put in place relevant systems, laws and regulations. We will improve our ability to provide public cultural products and services, concentrate on strengthening cultural infrastructure in the central and western regions and urban and rural communities, and continue to implement cultural projects that benefit the people. We will support nonprofit cultural undertakings and strengthen the efforts to protect, use and pass on our cultural heritage. We will further enrich philosophy and the social sciences. We will develop the press and publishing, radio and television, film, literature and art and archives. We will step up the use and administration of the Internet. We will deepen reform of the cultural management system and actively push forward the transformation of cultural institutions that are operating as commercial entities into real businesses. We will energetically develop cultural industries, foster new cultural formats and push cultural industries to become a pillar of our national economy. We will vigorously carry out the national fitness program and promote the balanced development of recreational sports and competitive sports. We will intensify cultural and sports exchanges and cooperation with foreign countries and constantly expand the international influence of Chinese culture, so that the world may share China's extensive and profound cultural achievements.

8. Deepening reforms in key areas

We will continue to advance the strategic adjustment of the state sector of the economy and improve the mechanisms for redirecting investments of state capital to ensure its rational flow. We will improve the system for overseeing state-owned financial assets, non-operational state-owned assets and natural resource assets, and strengthen oversight of state-owned assets overseas. We will continue to encourage, support and guide the development of the non-public sector of the economy. We will improve the fiscal and taxation systems so that the financial resources of governments are in line with their respective responsibilities, clear up and amalgamate special transfer payments, increase general transfer payments, and improve the mechanism for ensuring basic funding for county-level governments. We will carry out a pilot project to institute VAT reform on some producer services, and carry forward the reform of resource taxes. We will deepen the reform of the budget management system, formulate budgets for all government funds, compile budgets for more state capital operations, and compile budgets for social security funds on a trial basis. We will continue to deepen the reform of financial enterprises and quicken the establishment of a modern financial enterprise system. We will accelerate the cultivation of new rural financial institutions. We will continue to energetically develop financial markets and encourage financial innovation. We will push forward the market-based reform of interest rates. We will expand the use of the RMB in cross-border trade and investment and press ahead with making the RMB convertible under capital accounts. We will strengthen and improve financial oversight, and establish a sound early warning system and a risk response mechanism to prevent systemic financial risks. We will improve the mechanism for setting prices on refined petroleum products and natural gas and pricing mechanisms for all kinds of electricity. We will proceed with the reform of water prices. We will carry out studies and formulate guidelines to launch a pilot project for paying for the use and trading of pollution emission rights. We need to fully consider the ability of the people, particularly low-income people, to bear price reforms. We will actively yet prudently push forward the reform of institutions by type and in accordance with the requirements that institutions stop performing government and business functions, that supervision be separated from day-to-day operations and that for-profit institutions be separated from non-profit ones.

9. Further improving our work of opening to the outside world

China cannot develop without interacting with the rest of the world. We need to develop mutually beneficial multilateral and bilateral trade and economic relations and constantly expand our opening up into new fields and spaces. We will continue to give impetus to the Doha round of trade talks, oppose protectionism in all forms, and work to make the international economic order more just, equitable and mutually beneficial.

We will effectively change the way foreign trade develops. We need to ensure its steady growth on the basis of putting great effort into optimizing the trade mix and increasing profitability. In both general trade and processing-trade exports, it is essential we continue to make the most of our advantages in labor resources; reduce the consumption of energy and resources; move higher up the industrial chain; and raise quality, grade and value-added. We will actively expand exports of Chinese brand goods. We will energetically develop trade in services and service outsourcing and constantly raise the proportion of trade in services in our foreign trade. We will attach equal importance to exports and imports; increase imports of advanced technical equipment, key parts and components, and energy and raw materials; and promote increases in imports from the least developed countries and from countries with which China has a large trade surplus to gradually correct trade imbalances and properly handle trade frictions.

We will promote the coordinated development of overseas Chinese investment and the utilization of foreign capital in China. We will accelerate the implementation of the "go global" strategy, improve relevant support policies, simplify examination and approval procedures, and provide assistance for qualified enterprises and individuals to invest overseas. We will encourage enterprises to operate internationally in an active yet orderly manner. We will strengthen macro guidance over overseas investments, improve the mechanisms for stimulating and protecting them, and guard against investment risks. We will adhere to the policy of using foreign capital actively and effectively, focus on introducing advanced technology and skilled personnel as well as intellectual resources, encourage multinational corporations to set up R&D centers in China, and effectively raise the overall level and benefits of utilizing foreign capital. We will promptly revise the List of Industries for Foreign Investment, and encourage more foreign investment in new and high technologies, energy conservation and environmental protection, modern service industries, and the central and western regions.

10. Strengthening efforts to promote clean government and combat corruption

Building clean government is a long-term yet urgent task as well as the ardent hope of the people. We will act more quickly to solve serious problems in combating corruption and promoting clean government, effectively develop the system for preventing and punishing corruption, and make investigating and dealing with large and major corruption cases an important measure in fighting corruption while also paying closer attention to institutional development.

First, we will conscientiously clear up problems related to government employees who abuse power for personal gain, neglect their duties, or infringe upon others' rights. In regard to problems in key areas such as construction, sale of land-use rights, exploitation of mineral resources, trading of state-owned property rights, and government procurement, we will intensify investigations and prosecutions of violations of the law or discipline and resolutely punish corruptionists.

Second, we will genuinely increase incorruptibility and self-discipline; conscientiously implement the Code of Conduct for Building Clean and Honest Government; and implement the system whereby leading cadres regularly report their incomes, real estate and investments, as well as what their spouses and children do and whether they live abroad; and voluntarily accept supervision. We will strengthen auditing and supervision work. We will strengthen oversight over leading cadres of government organizations and leaders of SOEs and institutions.

Third, we will resolutely oppose extravagance, waste and formalism. We will reduce the number of meetings and documents and streamline and standardize all sorts of activities, such as reaching standards, making evaluations, and awarding commendations as well as forums and celebrations, by strictly controlling such expenses. We will standardize the allocation and management of official cars and actively reform the system of their use. We will more quickly release government budgets to the people to keep them informed about how much the government spends and what it spends money on. Governments at all levels need to work hard to accomplish practical results for the people; and all public servants should genuinely become servants of the people.

Fellow Deputies,

Consolidating and developing the great unity of all our ethnic groups is a fundamental guarantee for the long-term stability and prosperity of the country and serves the fundamental interests of the people of all ethnic groups. We will adhere to and improve the system of regional ethnic autonomy and fully implement the central leadership's policies and measures for supporting the development of ethnic minorities and ethnic minority areas. We will formulate and implement a five-year plan to support development of ethnic groups with small populations, press ahead with the "bring prosperity to border areas and their residents" campaign, and develop programs for ethnic minorities. Let the people of all ethnic groups work hard together and write a new chapter of the history of development and prosperity of the Chinese nation.

We will comprehensively implement the Party's basic policy on religious work, thoroughly implement the Regulations on Supervising Religious Affairs, and get religious figures and believers to play an active role in promoting economic development and social harmony.

We will continue to improve our work related to overseas Chinese affairs. We will protect the just rights and interests of overseas Chinese and the legitimate rights and interests of returned overseas Chinese and their families, and make full use of their unique role in promoting the reunification of the motherland and the rejuvenation of the Chinese nation.

Fellow Deputies,

Strengthening national defense and building a powerful people's army are important guarantees for safeguarding national sovereignty, security and development interests and building a moderately prosperous society in all respects. Keeping the overall work of the Party and government firmly in mind and directing our attention to effectively carrying out the army's historic mission in this new century and this new stage, we need to comprehensively make our army more revolutionary, modern and standardized, and constantly enhance its capability to accomplish a range of military tasks, the most paramount of which is winning local wars under information age conditions. We will steadfastly give top priority to raising the overall ideological and political standards of the army. We will vigorously adapt our military training to the information age. We will accelerate the full modernization of the logistics support system. We will promote integrated military and civilian development, increase defense-related research, and strengthen the development of weapons and equipment. We will energetically yet prudently press ahead with reform of national defense and the military. We will steadfastly run the army with strict discipline and in accordance with the law. The military will resolutely carry out urgent, difficult, dangerous and daunting tasks, such as handling emergencies and relieving disasters. We will modernize the armed police force to improve its ability to carry out duties, respond to emergencies, combat terrorism and safeguard stability. We will strengthen defense mobilization and reserve forces. We will consolidate and develop unity between the army and the government and between the army and the people.

Fellow Deputies,

We will unwaveringly implement the principle of "one country, two systems" under which the people of Hong Kong administer Hong Kong and the people of Macao administer Macao, both with a high degree of autonomy, and fully support the Hong Kong and Macao special administrative regions in developing their economies and improving their people's wellbeing. We will support Hong Kong in consolidating and elevating its position as an international financial, trade and shipping center. We will support Macao in developing itself into a world center of tourism and leisure and appropriately diversifying its economy. We will make full use of the unique role Hong Kong and Macao play in China's overall development strategy. We will base cooperation between the mainland and Hong Kong and Macao more firmly on a set of mechanisms, and support the deepening of intra-regional cooperation between Guangdong and Hong Kong and Macao for mutual benefit. In the historical course of the great rejuvenation of the Chinese nation, people on the mainland will join hands and forge ahead with our compatriots in Hong Kong and Macao, sharing the dignity and honor of our great country. We will adhere to the major principles and policies for developing relations between the two sides of the Taiwan Straits and promoting the peaceful reunification of our motherland in the new situation. We will continue to carry out cross-Straits negotiations, vigorously implement the Economic Cooperation Framework Agreement (ECFA), strengthen industrial cooperation, accelerate cooperation in and the development of emerging industries, finance and other modern service industries, and support qualified mainland enterprises to invest in Taiwan. We will support the Western Taiwan Straits Economic Zone in leading the way and exploring new paths for exchanges and cooperation between the two sides. We will increase cross-Straits exchanges between people of all walks of life, and vigorously expand cultural and educational cooperation across the Straits. We will enhance mutual political trust, consolidate the political foundation for peaceful development of cross-Straits relations, and work together to safeguard the favorable situation of peaceful development of cross-Straits relations. We are convinced that as long as all Chinese people at home and abroad work together, the great cause of peaceful reunification of the motherland will be realized.

Fellow Deputies,

We will continue to hold high the banner of peace, development and cooperation; adhere to an independent foreign policy of peace and the path of peaceful development; pursue an open strategy of mutual benefit; promote the building of a harmonious world with lasting peace and common prosperity; and create a more favorable external environment and more beneficial external conditions for China's modernization.

We will maintain the sound, steady development of our relations with major powers, actively promote dialogue and cooperation, and expand common interests and the foundation for cooperation. We will adhere to our foreign policy of friendship and partnership with neighboring countries, deepen good-neighborly relations of friendship and cooperation with them, and promote the processes for regional and sub-regional cooperation. We will enhance our traditional friendships and cooperation with other developing countries, further make use of and build on our achievements in cooperation, and give impetus to innovations in cooperation and the development of related mechanisms. We will take an active part in multilateral diplomacy, and use the G20 summit and other diplomatic forums as our main platform for strengthening the coordination of macroeconomic policies; advancing the reform of the international economic and financial system; promoting robust, sustainable and balanced growth of the world economy; playing a constructive role in helping resolve hot issues and global problems; and fulfilling our international responsibilities and duties. The Chinese government and people are willing to work with the international community to respond to risks and challenges, share in development opportunities, and make new contributions to humanity's lofty causes of peace and development.

Fellow Deputies,

Looking back, we are proud of our extraordinary, glorious achievements, and looking forward, we are even more confident in the splendid future of our country. Under the leadership of the Party Central Committee with Comrade Hu Jintao as General Secretary, let us firmly seize historic opportunities, boldly meet all challenges, break new ground, work diligently in unity, strive to get the Twelfth Five-Year Plan off to a good start, and continue to advance the great cause of socialism with Chinese characteristics.