People's living standards improved markedly over the last five years. Urban per capita disposable income rose by 58.3 percent and rural per capita net income grew by 29.2 percent, both in real terms. About 42 million new jobs were created in urban areas. Consumer spending on housing, communications, cars and services grew significantly. Rapid progress was made in science and technology, education, culture, health, sports, and other social programs.

Further progress was made in socialist political, cultural, and social development over the past five years.

These splendid achievements have greatly increased the confidence of all our ethnic groups to forge ahead on the path of socialism with Chinese characteristics.

At the same time, we also encountered many difficulties and problems in economic and social development during the Tenth Five-Year Plan period. The main problems were an unbalanced economic structure, weak capacity for independent innovation, slow change in the pattern of economic growth, excessive consumption of energy and resources, worsening environmental pollution, serious unemployment, imbalance between investment and consumption, widening gaps in development between urban and rural areas and between regions, growing disparities between certain income groups, and inadequate development of social programs. We need to work hard to solve all these problems.

3. Guiding principles and major targets for economic and social development in the Eleventh Five-Year Plan period

The Eleventh Five-Year Plan period will be a crucial time in building a moderately prosperous society in all respects. A comprehensive analysis of all factors shows that on the whole the international environment will be conducive to China's development in the coming five years, but that there are quite a few unstable factors and uncertainties. Domestically, there are many favorable conditions as well as a number of restraining factors and difficulties. We should seize opportunities, exploit favorable conditions while avoiding dangers, remain vigilant against adversity, properly handle risks and challenges, and press ahead with reform and opening up and the modernization drive.

The Outline (draft) fully reflects a scientific outlook on development and embodies the important principles laid out in the Proposal of the Central Committee. These principles are: We must sustain steady, rapid economic development, speed up change of the pattern of economic growth, improve China's capacity for independent innovation, balance development between urban and rural areas and among regions, intensify efforts to build a harmonious society, deepen reforms and open wider to the outside world. To put these principles into practice, we need to change our way of thinking about development, create a new pattern of growth, improve the quality of development, and make economic and social development more people-oriented, comprehensive, balanced, and sustainable.

Major targets for economic and social development in the Eleventh Five-Year Plan period listed in the Outline (draft) were set on the basis of the guidelines and principles set out in the Proposal of the Central Committee. These targets are designed to meet the goal of building a moderately prosperous society in all respects, and they reflect conditions of the current stage of economic and social development as well as objective requirements. Now, I would like to briefly speak about just two of these targets.

First is the economic growth rate. GDP growth for the next five years is set at an annual average of 7.5 percent in the Outline (draft). This figure is based on necessity and feasibility and was determined taking all factors into account. According to recently published data from the first national economic census and the actual results of economic growth in 2005, the GDP growth rate during the Tenth Five-Year Plan period was higher than originally projected. If the average annual growth rate is maintained at 7.5 percent during the Eleventh Five-Year Plan period, the goal of doubling the 2000 per capita GDP by 2010 set in the Central Committee's Proposal will be surpassed. This is an ambitious target, but we can attain it with hard work. It should also be pointed out that this target is based on successfully improving economic structure and efficiency and reducing energy consumption. In actual implementation, each local government should balance the growth rate with structural and performance improvement, rather than single-mindedly competing with other areas for the fastest economic growth. Both historical and recent experiences show that it is crucial to maintain fast yet steady economic development.

Second is energy conservation and environmental protection. In the Outline (draft), the target for reducing energy consumption per unit of GDP is set at about 20 percent and the target for cutting the total discharge of major pollutants is set at 10 percent. These targets are designed to address the acute problem of mounting pressure on resources and the environment. They reflect the need to build a resource-conserving and environment-friendly society and are necessitated by current conditions and long-term interests. They therefore provide a clear guide for policy making. Though achieving them will be quite difficult, we have the confidence and determination to succeed.

4. Strategic priorities and major tasks during the Eleventh Five-Year Plan period

The Outline (draft) lays out the overall arrangements for economic and social development and for reform and opening up in the Eleventh Five-Year Plan period and sets out clear tasks and policy measures.

First, we must build a new socialist countryside. Among all the strategic tasks before us, the Outline (draft) gives top priority to solving the problems facing agriculture, rural areas and farmers. There is a heavy stress in the Outline (draft) on the need to continue balancing economic and social development in urban and rural areas and to make steady progress in building a new socialist countryside by developing production, improving living standards, fostering more civil behavior, improving the overall cleanliness of villages, and exercising democratic management. We need to increase overall agricultural capacity, promote agricultural restructuring, intensify development of rural infrastructure, and increase farmers' incomes. We will focus on implementing key projects to establish large production bases for grain, cotton and edible oil, industrialize production of superior quality grain varieties, build water conservancy facilities and safe drinking water supplies, build roads and methane production facilities, and develop education, culture and health in rural areas. We must also comprehensively promote overall rural reform and basically complete reform of town and township government bodies, rural compulsory education, and fiscal management in counties and townships. We need to create a new type of farmer who has a good basic education and understands both agricultural techniques and business operations. All localities and government departments must substantially change their thinking and priorities in their economic work. More development funds need to be directed toward solving the problems of agriculture, rural areas and farmers, and public services need to be made more widely available in rural areas. All of society should energetically support rural development.

Second, we must accelerate economic restructuring and change of the pattern of economic growth. Many problems impeding China's economic development arise from an unbalanced economic structure and an extensive pattern of economic growth. We must pursue development by taking a new road toward industrialization to improve the industrial structure, conserve resources and protect the environment. The Outline (draft) calls for improving and upgrading the industrial structure to make large industries stronger. This is an important task directed at the fact that although China's industries are already large, they have poor overall performance and competitiveness. The Outline (draft) sets forth the major tasks and arrangements for promoting IT application, developing high-tech industries, revitalizing the equipment-manufacturing industry, and developing the energy and raw material industries. It also contains plans for a number of major construction projects. The Outline (draft) emphasizes the importance of speeding up the development of the service sector, especially in the fields of information, finance, insurance, distribution, tourism and community services, to increase its level and its importance in the economy.

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