Government Work Report (2006)
(Xinhua)
Updated: 2006-03-15 11:05

While acknowledging our successes, we must also clearly realize that there are still many difficulties and problems in China's economic and social activities. Many long-standing and deep-seated problems have yet to be fundamentally solved, and a number of new problems have arisen that require our attention. First, it has become difficult to further increase grain production and rural incomes. There is downward pressure on grain prices and upward pressure on the prices of agricultural supplies, making it difficult for farmers to increase their earnings and discouraging them from growing grain. Moreover, the total area of useable farmland continues to decrease, and the overall agricultural production capacity is weak. This poses a threat to the nation's food security. Second, fixed asset investment is still expanding too fast. Investment in some industries is increasing too quickly, and too many new projects have been launched. Investment is too concentrated in some areas, and there is significant pressure for a rebound in investment. Third, the adverse consequences of overheated investment in some industries are becoming apparent. The problem of excess production capacity is getting worse, causing the prices of goods to drop and inventories to increase. Corporate profits are down and losses are increasing, creating greater potential financial risks. Fourth, many problems affecting the vital interests of the people have yet to be satisfactorily solved. There is strong public concern over the difficulty and high cost of getting medical treatment and receiving an education. The people's interests are adversely affected by violations of regulations and policies in a number of areas, including land expropriation, housing demolition and resident relocation, relocation of people from reservoir areas, and corporate restructuring, as well as by environmental protection. Fifth, there are serious problems in production safety. Major coalmine and traffic accidents occur frequently, causing serious loss of life and property.

We are also aware that there are still quite a few defects and shortcomings in the work of governments at all levels. The process of transforming government functions is behind schedule, some tasks have not been adequately carried out, and efficiency is low. The problem of formalism and going through the motions is still fairly serious. Some government employees engage in fraud, some are extravagant and wasteful, and some are even corrupt.

We must heighten our sense of mission and our sense of urgency, build on our achievements, improve our work, boost our morale, work conscientiously, strive to do all government work better, and do our best to live up to people's expectations and prove ourselves worthy of the great trust the country has placed in us.

II. Major Tasks for This Year

The tasks related to reform, development and stability for 2006, the first year in the Eleventh Five-Year Plan, are huge. To do the work of the government well and get the Eleventh Five-Year Plan off to a good start, we need to adopt the following basic line of thinking: Take Deng Xiaoping Theory and the important thought of Three Represents as our guide, closely follow the guidelines set out at the Sixteenth CPC National Congress and the third through fifth plenary sessions of the Sixteenth Central Committee, fully implement a scientific outlook on development, continue to accelerate reform and opening up and stimulate independent innovation, continue to promote economic restructuring and change of the pattern of growth, always put problems affecting the vital interests of the people high on our agenda, intensify all aspects of the effort to build a socialist economy, promote development of the country politically and culturally, and create a harmonious society.

Taking all relevant factors into consideration, we have set the following major targets for economic and social development in 2006 as follows: GDP should grow by about 8 percent, and energy consumption per unit of GDP should fall by about 4 percent. The rise in consumer prices should be kept under 3 percent. Urban employment should increase by 9 million persons, and the urban registered unemployment rate should be kept under 4.6 percent. The equilibrium in the balance of payments should stay basically balanced.

We need to keep the overall situation in mind and firmly adhere to the following principles to ensure success in the work of the government this year. First is to maintain consistency in government policy and carry out fine-tuning as needed. We need to continue to properly exercise macroeconomic regulation, ensure continuity and stability in macroeconomic policies, maintain the correct orientation and strength of macroeconomic regulation, handle each case on its own merits, provide guidance tailored to the situation, and take specific measures to solve major problems in economic development. Second is to always keep the big picture in mind and pay close attention to key areas. We need to correctly balance reform, development and stability, use reform and opening up to drive all aspects of our work, and strive to solve the major problems affecting the overall situation in order to promote all aspects of economic and social development. Third is to take all factors into consideration in making overall plans and pay close attention to the well-being of the people. We need to continue to put people first, maintain the "five balances" [balancing urban and rural development, development among regions, economic and social development, development of man and nature, and domestic development and opening wider to the outside world, tr.], pay closer attention to balancing development between urban and rural areas and among regions, developing social programs, and promoting fairness and stability in society, and enable all our people to share in the fruits of reform and development. Fourth is to stay firmly rooted in the present while looking ahead to the future. We need to do a good job of this year's work, gear our work to meeting the targets set in the Eleventh Five-Year Plan, strive to make progress, refrain from taking on more than we can handle, and achieve concrete results.

We need to focus on the following aspects of our work this year.

1. Maintaining fast yet steady economic development

Looking at the current international environment and domestic conditions, we can see that there are many conditions conducive to economic development this year. But there are also a number of problems that could hold back development, as well as some uncertainties. We need to adopt sound policies to deal with these problems and uncertainties to prevent large fluctuations in the economy.

We will keep macroeconomic policies stable, mainly by continuing to follow prudent fiscal and monetary policies. Since the economy is now performing well and there is a lot of activity in non-state investment, this year we will again appropriately reduce the deficit and the amount of long-term treasury bonds for development. We plan to issue 60 billion yuan worth of long-term treasury bonds, 20 billion yuan less than last year, while increasing regular construction investment from the central government budget by 10 billion yuan. The deficit in the central government budget is projected to be 295 billion yuan, 5 billion yuan less than last year. Funds from the sale of long-term treasury bonds and budgetary investment will be mainly used to maintain adequate funding for key projects already underway and to fund an appropriate number of major new projects that impact on overall development in agriculture, forestry, water conservancy, science, education, culture, health, ecological improvement, environmental protection and development of the western region. Starting this year, China will follow standard international practices by adopting the method of outstanding balance management for its national debt. We need to administer taxes in accordance with the law, improve tax collection and management, and standardize management of non-tax revenue. We need to take all factors into consideration in making overall plans for budgetary expenditures, limit expenditures to what we can afford, ensure adequate funding for key items and economize wherever possible. We will strengthen budgetary oversight and control the rise in administrative expenses. We need to maintain appropriate growth of money supply and credit, improve the mix in loan portfolios and create new financial products. We need to increase credit support for agriculture, rural areas and farmers and for small and medium-sized businesses, employment, and students having difficulty paying educational expenses. Long- and medium-term credit should be kept at an appropriate level. We will improve the mechanisms for setting and transmitting interest rates. We will improve the system of managed floating foreign currency exchange rates and keep the Renminbi exchange rate basically stable at an appropriate and balanced level.