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

Content

I. Review of National Economic and Social Development 
II. Main Objectives and Tasks for the Twelfth Five-Year Plan Period 
III. Work for 2011

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.