As entrusted by the State Council, I now report to this session on the implementation of the 2002 Plan for National Economic and Social Development and on the 2003 Draft Plan for National Economic and Social Development. I present these to you for your examination and approval and also for comments and suggestions from members of the National Committee of the Chinese People's Political Consultative Conference.
I. Implementation of the 2002 Plan for National Economic and Social Development
Under the leadership of the Communist Party of China, the people of all our ethnic groups held high the great banner of DengXiaoping Theory and implemented the important thought of Three Represents over the past year. Acting on the decisions adopted at the Fifth Session of the Ninth National People's Congress, we vigorously furthered the reform, opening up and modernization drive, resulting in the sustained, rapid and sound development of the national economy and in all-round social progress. The 2002 plan was implemented satisfactorily, with the main targets for macroeconomic regulation attained successfully.
The policy of stimulating domestic demand continued to have positive effects, and the national economy maintained sustained and rapid growth. This country generated 10.2398 trillion yuan in GDP in 2002, 8% more than in the previous year. We steadfastly implemented a proactive fiscal policy and a prudent monetary policy, made good use of treasury bonds to stimulate investment, and worked hard to induce nongovernment investment. Investment in fixed assets for the whole country came to 4.3202 trillion yuan, a year-on-year increase of 16.1%. Long-term treasury bonds totaling 150 billion yuan were issued in 2002 with approval of the Fifth Session of the Ninth National People's Congress, which led to an additional increase of 2 percentage points in China's economic growth rate. A large number of high-quality assets have been created by projects financed through treasury bonds. This has increased China's capability for long-term development and played a positive role in optimizing the economic structure, improving the investment environment, increasing revenue, promoting technological progress in enterprises, increasing our ability to maintain sustainable development, and raising people's living standards. Localities and departments painstakingly organized the implementation of projects financed through treasury bonds. They ensured the quality of the work and the safety of the funds by tightening auditing, supervision and inspection and by increasing public scrutiny. We continued to expand consumption as an important part of our proactive fiscal policy and prudent monetary policy. Comprehensive measures were taken to increase personal incomes and improve consumer policies and the consumer environment, making greater spending possible among urban and rural residents. Retail sales of consumer goods for the whole country totaled 4.0911 trillion yuan, 8.8% over the figure for 2001. New growth areas emerged as the focus of consumer spending, including housing, communications, tourism, education and automobiles.
Fresh progress was made in industrial restructuring, resulting in improved quality and efficiency of economic growth. Good results were achieved in restructuring agriculture and the rural economy. Adjustment of the geographical distribution of agricultural production was accelerated, with continued shifting of production of grain, cotton and other major agricultural products to the most suitable areas. The livestock and aquatic farming sectors grew steadily. We developed a number of high-yield, high-quality crop varieties and breeds that are resistant to diseases and suited to adverse natural conditions and continually increased the overall capacity of agricultural production. This country produced 457.1 billion kilograms of grain in 2002, 1% more than in 2001. We vigorously promoted the industrial management of agriculture in order to increase rural incomes. Infrastructure development made great headway, with a large number of new projects for water conservancy, transport, communications, energy development and environmental protection completed and put into operation during the year. Our industrial structure continued to improve. Competitive high-tech industries that possess proprietary intellectual property rights are emerging. The industrial output value of our high-tech industries grew by 23% year-on-year. We put into operation a range of major domestically produced equipment, including urban rail transit facilities, environmental protection equipment, and large-capacity aluminum oxide production equipment. We intensified our efforts to reorganize traditional industries and upgrade their technology. There have been stable development in traditional service industries, rapid growth in modern ones, and vigorous development in telecommunications, logistics, consultancy, tourism and community services. The economic performance of enterprises improved significantly. State-owned and large non-state industrial enterprises generated 562 billion yuan in profit in 2002, 20.6% more than in the previous year.
Steady progress was made in developing China's west, and development of the central and western regions was expedited. Infrastructure development continued to accelerate. Construction started on a range of key projects such as piping natural gas from the west to the east and harnessing the Tarim River in a comprehensive way. Construction on the Qinghai-Tibet Railway and the project to divert electricity from the west to the east proceeded satisfactorily. Work was accelerated to ensure that every township has access to electricity, that every county seat is served by asphalt roads, and that every village receives radio and TV programs. Projects for ecological conservation such as those for returning farmland to forest, protection of natural forest resources, prevention and control of desertification, and restoration and development of natural grassland kept on schedule. In 2002, we returned 2.52 million hectares of farmland to forest and afforested an additional 2.88 million hectares of barren hills and uncultivated land. We sped up the development of small and medium-sized water conservancy projects, potable water sources for people and livestock, and roads in rural areas, improving the conditions for production and living there.
Economic restructuring was steadily deepened, adding fresh vigor and vitality to China's development. We continued and further standardized the reform of large and medium-sized state-owned enterprises to convert them into standard companies. The promulgation of the Law on Promoting Small and Medium-Sized Enterprises helped improve the environment for developing such enterprises. Development of individually and privately run businesses and other non-public sectors of the economy was accelerated. Substantive progress was made in restructuring the management system of such industries as telecommunications, civil aviation and electric power. Price reform continued to deepen with the introduction and strengthening of a system of public hearings for price-related government decisions. We began to collect fees for treatment of urban sewage and garbage, and instituted a system of advance notification of prices and administrative fees related to farmers. Significant achievements were made in upgrading electricity grids and restructuring the electricity supply system in rural areas to adjust the electricity rates there to conform with those in urban areas. Urban and rural residents in 70% of the counties are now paying the same rate for household electricity, reducing the financial burden on rural residents by 42 billion yuan a year. The fee-to-tax reform in rural areas was instituted in 20 provinces (autonomous regions and municipalities directly under the central government) on a trial basis. The reform to make the purchasing and marketing of grain and cotton more market-oriented was accelerated. Conclusive results were achieved in reforming the system of administrative examination and approval. We intensified our efforts to straighten out and standardize the order of the market economy, and we carried out a campaign to comedown hard on the production and marketing of counterfeit and shoddy food products, medicines and medical apparatus and instruments as well as other illegal acts. Efforts were stepped up to target wrongdoings in cultural activities, tourism, the building industry and rural market fairs. All this improved the market environment. Our World Trade Organization (WTO) membership began well, and we further developed our open economy. To fulfill our commitments to the WTO earnestly, we formulated, revised or revoked relevant laws and regulations, lowered the general tariff level, subjected non-tariff measures to phased elimination, and opened more areas to foreign investment. In addition, we began to establish anti-dumping, countervailing and safeguard mechanisms. The volume of our imports and exports for 2002 reached 620.8 billion US dollars, an increase of 21.8% over the previous year. Our trade mix continued to improve, with a significant increase in the export of mechanical and electrical and high-tech products and an increase in the import of key equipment, advanced technologies and resource goods that are badly needed in China. Foreign direct investment in China over the year amounted to $52.7 billion, 12.5% greater than in 2001. The foreign investment structure became more rational and the investment was used to finance more large capital-and technology-intensive projects. Fresh progress was made in implementing the "going global" strategy. Regional as well as multilateral and bilateral economic cooperation continued to deepen. Revenue continued to grow, and banking and financial operations remained stable. Revenue for the entire country amounted to 1.8914 trillion yuan, a year-on-year increase of 15.4%. Expenditures reached 2.2012 trillion yuan, up 16.4%, exceeding revenue by 309.8 billion yuan. The financial sector intensified its support for economic growth and restructuring while watching out for and defusing financial risks. The broad money supply (M2) and the narrow money supply (M1) both increased by 16.8%, and 158.9 billion yuan was put into circulation during the year. At the end of 2002, the outstanding loans for all financial institutions were 15.4% greater than at the end of 2001; the ratio of their non-performing loans dropped by 4.5 percentage points; and China's foreign exchange reserves reached $286.4 billion.
The pace of advances and innovation in science and technology was quickened, and the guiding role of education in China's development was enhanced. Important progress was made in basic and high-tech research, and our capability for independent innovation continually increased. The Shenzhou III and IV spacecrafts were launched successfully and returned safely, and major scientific and technological projects on super-large integrated circuits and software, and functional genomes progressed smoothly. Significant progress was made in establishing a national scientific and technological innovation system and in reforming research institutes. We redoubled our efforts to develop scientific and technological infrastructure such as key national laboratories and scientific projects. Translation of research results into productive forces was accelerated. Protection and management of intellectual property rights improved. Constant improvement was made in elementary education. A new system whereby county governments are held responsible for administering rural compulsory education began to take shape. Fresh progress was registered in making compulsory education universal in poverty-stricken areas. Significant results were achieved in developing infrastructure necessary for greater student enrollment in institutions of higher learning and regular senior secondary schools, and in renovating dilapidated primary and secondary school buildings. Development of regular senior secondary schools and secondary vocational and technical education was accelerated. Higher education continued to grow, with 3.21 million new undergraduate students and 203,000 new graduate students enrolled in regular institutions of higher learning.
All social undertakings developed in a comprehensive way, and the people's lives continued to improve. Sound progress was made in culture, health, sports, radio, film, TV, the press and publishing. Efforts were constantly intensified to promote spiritual civilization. Progress was smooth in the development of a number of key cultural facilities, rural health facilities, traditional Chinese medicine hospitals and specialized hospitals. National fitness activities flourished, and Chinese athletes did well in major sports competitions both at home and abroad. Notable results were achieved in developing urban infrastructure having a direct bearing on people's lives. The poverty-stricken rural population decreased again. The per capita disposable income of urban residents increased by 13.4% in real terms, and the per capita net income of rural residents rose by 4.8%. We continued to strengthen the program to guarantee that the living allowances for workers laid off from state-owned enterprises and the basic pensions for retirees are paid on time and in full. The program to grant subsistence allowances to the urban poor was notably strengthened. Experiments to improve the urban social security system made great headway. The registered urban unemployment rate was 4% at the end of 2002. Progress was made in environmental protection and in the rational development and use of resources, increasing our ability for sustainable development. Greater efforts were made to improve the environment in key areas by closing a number of seriously polluting enterprises or suspending their operations. Conclusive results were achieved in the prevention and control of water pollution in the valleys of the Huaihe, Haihe and Liaohe rivers and Taihu, Chaohu and Dianchi lakes. Some cities and industrial and mining areas reduced their discharge of sulfur dioxide to bring the worsening acid rain under control. More environmental protection facilities such as sewage and garbage treatment plants were built in urban areas, and 40.3% of urban sewage was brought under centralized treatment. The pace of improving the ecological environment and protecting resources was accelerated. Construction on the south-to-north water diversion project started. The natural population growth rate was 6.45.
The achievements of the past year were made on the basis of what we had achieved since the policy of reform and opening up was introduced in the late 1970s, especially since 1998. During the past five years, the Chinese economy has experienced sustained and rapid growth. All social undertakings have developed rapidly. Our overall national strength has reached a new height. The socialist market economy has been basically established. A pattern of multidirectional opening to the outside world has taken shape. China's international influence has grown notably, and our national cohesion has greatly increased. Our country has enjoyed social stability, solidarity, good government and a united people.These five years constituted one of the best periods of development in China's history, during which a solid foundation has been laid for our long-term development in the years to come. In the extraordinary course of development over the past five years, our national economy enjoyed sustained, rapid and sound development despite a host of unfavorable factors in the international economic environment and numerous difficulties in the domestic economy. We clearly realize that all this is attributable to the scientific decisions and correct leadership of the central authorities and to the timely guidance and intensified oversight of the National People's Congress and its Standing Committee. Credit also goes to localities and departments for their concerted efforts and earnest work, and to the people of all our ethnic groups who have worked hard with one heart and one mind. We are also aware that there are still many conflicts and problems in our economic and social activities and that some of these are very serious. First, the problem of weak effective demand is coupled with an irrational supply structure. Because the main factors affecting rural incomes have yet to be eliminated, rural income growth has been slow. Some urban residents have very low incomes and are confronted with many difficulties in their lives. All this hinders the expansion of the consumer market. The investment potential of the collective and private sectors and of individually run businesses has yet to be fully tapped. Second, employment and reemployment prospects remain grim. A large number of urban residents need to find a job or get reemployed, and there is a huge surplus of rural labor that needs to be diverted to work in urban areas. This makes it very difficult to create enough new job opportunities to keep up with the demand for employment. Third,the reform of state-owned enterprises is a monument al task, with deep-seated problems still not totally solved. We still have a lot to do to make development through fair competition possible for businesses under different forms of ownership. Fourth, the order of the market economy remains fairly chaotic. We still have a long way to go to establish a social credibility system. Major industrial accidents occur frequently. The State Council is paying close attention to these problems and working hard to adopt measures to solve them.
II. Regulatory Targets and Main Tasks for Economic and Social Development in 2003
The year 2003 is important for carrying out the guiding principles set forth at the Sixteenth National Congress of the Party and for making fresh progress in building a well-off society in an all-round way. A comprehensive analysis of the domestic and international economic environments shows that we enjoy favorable conditions for accelerating development but also face new challenges. Conditions might change and new problems could arise in the Chinese economy, and there are many uncertainties in the world economy as well. Only by enhancing our awareness of potential danger, preparing for adversity, adequately assessing our difficulties and problems, and fully considering policy measures can we avert peril and keep the upper hand. We must follow the guidance of Deng Xiaoping Theory and the important thought of Three Represents. In compliance with the overall requirements set by the central authorities for our economic work, we will continue to expand domestic demand, implement a proactive fiscal policy and a prudent monetary policy, and maintain continuity and stability in our macroeconomic policies to promote sustained, rapid and sound development of the national economy and all-round social progress.
Our main macroeconomic regulatory targets for 2003 are as follows:
-- Economic growth rate around 7%;
-- Over 8 million new jobs for urban residents, and registered urban unemployment rate confined to 4.5%;
-- Rise in the consumer price index of no more than 1%; and
-- Increase in the total import and export volume of 7%.
To attain the macroeconomic regulatory targets for this year, we need to focus on accomplishing the following tasks:
1. Accelerating the restructuring of agriculture and the rural economy and doing everything possible to increase rural incomes. We must work energetically to improve the quality of farm products, ensure that crops are grown in areas with the best conditions, and develop industrial belts for production of competitive farm products. More support will be provided for major grain producing areas. We need to develop and perfect a system of quality standards, an inspection and testing system and a certification system for farm products in order to improve their quality and safety. We will strengthen dissemination of agricultural science and technology and promote transformation of research achievements into productive forces. The policies and measures to support conduit enterprises will be further improved and implemented. We will develop intensive processing of agricultural products and improve the industrial management of agriculture. The rural land policy will be implemented in accordance with the law. Efforts will be intensified to improve agricultural and rural infrastructure, focusing on the so-called "one big" and "six small" projects. By the "one big" project we mean continued effort to develop key projects in agriculture, forestry and water conservancy. The "six small" projects are the small and medium-sized infrastructure projects for water-efficient irrigation, potable water for people and livestock, country roads, rural marshgas, rural hydroelectricity and pasture fencing. More resources will be devoted to anti-poverty programs. More work will be made available as a form of relief. Priority will be given to solving outstanding problems such as roads, potable water and electricity in poverty-stricken areas. We will accelerate restructuring, institutional innovation and technological progress in township and village enterprises and ensure the orderly development of urbanization. We will continue to guide the rational and orderly movement of rural labor and eliminate discriminative policies an dunfair charges affecting rural laborers working in urban areas to safeguard their legitimate rights and interests. The fee-to-tax reform will be carried out on a trial basis in all rural areas, and support policies will be improved. Reform of the grain and cotton distribution systems will be deepened to protect the interests of farmers. We will rectify prices and fees affecting farmers, institute an advance notification system, and develop special programs to solve particularly thorny problems so as to reduce the burden on farmers. The per capita net income for rural residents is expected to increase by 4% in 2003.
2. Giving fuller play to the role of treasury bonds in stimulating investment to promote economic restructuring and stable and rapid economic growth. In 2003, we plan to issue 140 billion yuan worth of long-term treasury bonds, and the country's fixed asset investment is expected to grow by 12%. We must put the funds raised from treasury bond issues to the best possible use in an optimized investment structure in accordance with the relevant resolutions of this session. These funds should first of all be used to continue and complete bond-financed projects currently under construction and to fund new projects that are necessary. Priority will be mainly given to four tasks in the allocation of these funds: improving conditions for production and living in rural areas; restructuring to promote technological progress and industrial upgrading and to support and guide the development of the service sector; supporting development of the central and western regions to ensure smooth progress in their key projects; and developing science and technology, education and the ecological environment to ensure implementation of the strategy of rejuvenating the country through science, technology and education and the strategy of sustainable development. Proper preparation must be made for launching projects, and management, inspection and supervision must be strengthened to prevent low-quality, redundant development. We will actively seek new forms of financing for infrastructure development. These could include transferring to non-state sectors of the right to operate projects and the equity in these projects and reinvesting the recovered funds. We will allow an appropriate increase in the amount of bonds issued by enterprises, provided that enhanced risk control and prevention are in place. We will increase interest subsidies for treasury bonds to attract and stimulate more nongovernment investment. Nongovernment capital will be given access to more areas. Intermediate services will be developed for nongovernment investment. Fair competition will be promoted in investment, financing, taxation and land use. Supervision and management will be strengthened in accordance with the law in order to guide non-public sectors of the economy to seek sound development.
3. Working hard to increase job opportunities and constantly improving the social security system. Efforts to bring the unemployment rate under control and increase job opportunities should be incorporated into the plans of governments at all levels for economic and social development. We will spare no effort to reach the projected targets for creating new job opportunities in cities and towns. Development of the service sector will be the main source of new employment and reemployment. In particular, we must make full use of the important roles of individually and privately run businesses and of small and medium-sized enterprises in increasing employment. Great efforts should be made to create jobs in urban communities. The labor market needs to be standardized and further developed. Unemployed people are encouraged and supported to seek jobs on their own and to start their own businesses. We will conscientiously implement policies and measures for reducing or exempting taxes and fees, granting guaranteed microcredit with interest subsidies and subsidizing social insurance so as to promote reemployment. Large and medium-sized state-owned enterprises are encouraged to make appropriate arrangements for their redundant personnel by separating their core business from their secondary businesses and changing the way the secondary businesses operate. We must ensure that the number of workers laid off or channeled to other work and the pace of this process are appropriate, taking into full consideration the resilience of our financial resources, enterprises, workers and social security system. Vocational training will be strengthened to improve the skills workers need for employment. We will continue to provide employment assistance to people having difficulty finding jobs. We will provide proper guidance and services to new graduates from institutions of high learning and vocational schools to help them find jobs or start their own businesses. The social security system will be improved. We will further consolidate the system of guaranteeing that the basic living allowances for workers laid off from state-owned enterprises and the basic pensions for retirees are paid on time and in full. We will improve the system of guaranteeing a minimum subsistence level for needy urban residents. And we will properly coordinate the implementation of the three programs for ensuring basic living allowances for workers laid off from state-owned enterprises, for improving unemployment insurance and for guaranteeing a minimum subsistence level for needy urban residents. We will continue to ensure success of the trial program to improve the urban social security system.
4. Accelerating adjustment and improvement of the industrial structure in accordance with the requirements for taking a new road to industrialization. We will give priority to development of the information industry by applying IT in all areas of economic and social development and promoting e-government vigorously. We will accelerate development of new and high technology industries and continue implementing the major high-tech projects for developing deep submicron integrated circuits, digital TV, satellite systems for direct transmission of radio and TV programs, biology, new medicines and modern agriculture. These projects will exert a far-reaching influence on national economic development. We will further develop national engineering research centers and national high-tech industry bases to increase our ability to apply advances in new and high technology in industrial production. We will revitalize the equipment manufacturing industry and accelerate the pace of producing essential equipment domestically through the development of major projects, so as to increase our capability for independent development and raise our overall level of technology. Technological upgrading in key industries and enterprises will be accelerated. We will make a success a number of key projects in the fields of energy and raw materials. Planning and guidance for the automobile, iron and steel, and building materials industries will be strengthened in order to avoid unplanned development and disorderly competition. We will actively explore new ideas and methods to transform and revitalize the northeastern region and other old industrial bases, and support cities and areas mainly engaged in natural resource exploitation to solve their outstanding problems and develop alternative industries. Obsolete equipment, technologies and production processes will be abandoned. Enterprises wasting resources, causing serious environmental pollution or operating under unsafe conditions will be closed down. Vigorous efforts will be made to develop modern service industries and modern distribution methods such as chain operations and centrally managed distribution. We will make full use of the role of the service sector in guiding investment and promote its comprehensive development.
5. Actively developing the western region to promote coordinated economic development between regions. We will continue to redouble our efforts to develop infrastructure and improve the ecological environment, focusing first on two priorities. On the one hand, we will speed up implementation of key projects that have a bearing on the nation as a whole. We will make funds available for key projects to ensure their successful implementation. These include the Qinghai-Tibet Railway, the projects to divert natural gas and electricity from the west to the east, key water conservancy projects, trunk highways, the Tibet-Xinjiang Project as well as projects for ecological conservation and environmental protection. Construction will start on an additional number of major projects for water conservancy and environmental protection and for building highways, railways and airports at appropriate times. On the other hand, we will launch projects to improve the conditions for living and production in rural areas, focusing on three projects. The first project is to gradually ensure that every county seat in the western region is served by asphalt roads. The second is to return more farmland to forest and return more grazing land to grassland. In 2003, another 3.37 million hectares of farmland will revert to forest and an additional 6.67 million hectares of grazing land to grassland, and another 3.77 million hectares of barren hills and uncultivated land will be afforested. The third is to improve the supply of potable water and energy to rural households and properly resettle the households displaced for ecological reasons. In addition, we will speed up reform and opening up, develop science, technology and education, support and nurture competitive industries in the western region and gradually establish long-termstable channels for funding development there. More resources and support will be devoted to old revolutionary base areas and ethnic minority areas to accelerate their development. We will further strengthen economic cooperation among the eastern, central and western regions, so that they can complement each other and work for common development.
6. Continuing to implement the market-oriented reform and rectify and standardize the order of the market economy. We will continue to carry out the reform to transform large and medium-sized state-owned enterprises into standard or joint-stock companies. We support qualified large enterprises in their effort to go public on overseas stock markets. We also support the development of small and medium-sized enterprises under all types of ownership, especially science and technology-oriented and labor-intensive ones. We will intensify our effort to adjust and reorganize enterprises in defense-related and other industries in difficulty and turn around their operation. Achievements in the reform of the telecommunications, civil aviation and electricity industries will be consolidated, and reform of other monopoly industries energetically carried forward. We will formulate laws for the management of state assets and reform their management system in an orderly way from top to bottom so as to prevent their loss. We will improve the mechanism whereby prices are determined mainly by market forces under government macroeconomic regulation. We will improve such systems as holding public hearings on government price-related decisions, expert reviews, group reviews and supervision and examination of prices for important goods and services. We will intensify oversight and management of prices and charges. We will speed up the reform of the investment and financing systems, give enterprises the right to make independent investment decisions and improve macro-regulation of the country's fixed-asset investment. Vigorous efforts will be made to rectify and standardize the order of the market economy. We will deal severely with illegal and criminal activities such as manufacturing and marketing fake or shoddy goods, smuggling, distribution of smuggled goods, and pyramid schemes. Special campaigns against wrongdoings in the market will continue, and we will come down hard on major economic crimes and irregularities that seriously endanger the order of the market economy. We will promptly establish systems for enterprise and individual credit information, so as to develop an honest, credible and lawful market environment as soon as possible. We will strengthen supervision and management of production safety to prevent serious accidents.
7. Opening the country wider to the outside world and making better use of both domestic and international markets and resources. We will continue to do good work in all areas related to China's WTO membership during our grace period. Great efforts will be made to encourage more enterprises to engage in foreign trade and to diversify our export markets. Policies and measures favoring exports will be retained, and methods including tax exemptions, discounts or rebates for goods exported by producers on their own will be improved. We will improve the mechanism to respond rapidly to anti-dumping charges against Chinese enterprises. Proper arrangements will be made to import key equipment, technologies and important raw and semi-processed materials badly needed in the country. The investment environment will be further improved, and service industries will open to the outside world in an orderly manner. In attracting foreign investment, we will focus on acquiring advanced technologies and modern managerial expertise and on recruiting specialists. We will strengthen the unified management of our foreign debt. We will step up the implementation of the "going global" strategy, encouraging and supporting suitable enterprises to invest abroad and operate transnationally in various forms. Regional economic cooperation will be strengthened, and international economic and technological exchanges will be increased.
8. Developing and expanding consumer demand and constantly raising people's living standards. We will work conscientiously to improve the consumer environment and to develop and expand consumption. In particular, we will pay close attention to developing rural markets. Unreasonable regulations that stifle consumption will be eliminated. Existing focuses of consumer spending will be strengthened. New consumption growth areas will be developed in community services, entertainment, sports and exercise, sanitation and health care. A system will be established and perfected to ensure the supply of low-rent housing to improve the living conditions of low- or middle-income urban residents. Consumer credit will be standardized and developed. Further efforts will be made to develop the tourism infrastructure and to improve the quality of tourism services. We will deepen the reform of the wealth distribution system to increase personal incomes, particularly for the low-income population. A system for assisting low-in come people through a variety of means will be established and perfected to help exceedingly indigent urban families solve their problems in housing, children's schooling, medical treatment and heating. In 2003, the per capita disposable income of urban residents is expected to increase by 6%, and retail sales of consumer goods for the whole country, by 9%.
9. Working hard to increase revenue and reduce expenditures and fully exploiting the role of finance in supporting economic growth. We will further improve tax collection and administration to ensure a steady increase in revenue. We will continue to adjust the pattern of budgetary expenditures to ensure first of all that wages and salaries are paid on time and in full. Expenditures will be increased for social security programs. There will be more funds for agriculture and rural compulsory education and health. Transfer payments will be increased for the central and western regions and for areas in straitened circumstances. We will resolutely combat waste and extravagance. Except for key projects requiring additional funding that must be provided in accordance with the relevant laws, regulations and policies, zero growth must be registered in other areas of expenditure. China's budgetary projections for 2003 are revenue of 2.0501 trillion yuan, expenditures of 2.3699 trillion yuan, and deficit in the central budget limited to 319.8 billion yuan. We will deepen reform of the financial system to improve the quality of financial services. State-owned commercial banks will continue providing support loans for projects funded through treasury bonds, lend more money to profitable and trustworthy enterprises with a ready market for their products, and provide more credit to agriculture, small and medium-sized enterprises and county economies. We will further deepen reform of rural credit cooperatives and continue to grant microcredit to individual rural households and guaranteed loans to groups of rural households. We will strengthen financial regulation to reduce the proportion of non-performing bank assets and watch out for and defuse financial risks. We will ensure an appropriate increase in money supply, with the broad money supply (M2) and the narrow money supply (M1) both rising by about 16%, and the money in circulation not exceeding 150 billion yuan in 2003. We will standardize and develop the securities and insurance markets.
10. Continuing to implement the strategy of rejuvenating China through science, technology and education and the strategy of sustainable development, and promoting comprehensive progress in all social undertakings. We will strengthen basic research and high-tech research and continue to implement the March 1986 High-Tech Program, the March 1997 Program on Basic Research and other major scientific and technological programs as well as specific national scientific development projects. We will promote the establishment of a national innovation system and acquire core technologies and proprietary intellectual property rights in key areas and certain frontier areas of scientific and technological development. We will strengthen infrastructure development for science and technology and deepen the reform of their management system. We will establish an incentive-based system for scientific and technological innovation, attract highly qualified professionals from abroad and encourage overseas Chinese students to return and pursue careers in China. We will increase research in philosophy and other social sciences. More efforts will be made to disseminate science and technology among the public. We will vigorously develop education and promote competence-oriented education. We will pay close attention to and strengthen elementary education, and we will work hard to make nine-year compulsory education universally available and to eliminate illiteracy among young and middle-aged people in poverty-stricken and ethnic minority areas. Distance education projects will be implemented in rural primary and secondary schools. Work will continue to renovate dilapidated primary and secondary school buildings and develop the infrastructure necessary for the increased enrollment of students in key senior secondary schools. We will pay particular attention to improving the quality of higher education. We will continue implementing the second phase of the 211 Project for Higher Education and accelerate the process of outsourcing college support services to independent service providers. Plans call for the enrollment of 3.35 million undergraduate students and 270,000 graduate students in regular institutions of higher learning in 2003. We will fully implement the Law on Promoting Privately Run Schools. We will progressively strengthen vocational, technical and adult education and improve the system of lifelong education.
The basic state policies of family planning, environmental protection and resource conservation will be adhered to. We will keep the birthrate low, confining the natural population growth rate to 7.5��. We will increase funding for controlling environmental pollution and conserving natural resources, rationally develop and effectively utilize resources, and comprehensively improve land and resources. We will quickly increase reserves of petroleum and other strategic resources. We will strictly control the volume of pollutants discharged by means of comprehensive management and the use of pollution discharge permits. We will strengthen measures to prevent and control water pollution in major river valleys, in the area of the Three Gorges Reservoir and along the routes of the south-north water diversion project. We will intensify our efforts to prevent and control pollution in areas that are sources of sulfur dioxide and acid rain. We will increase the proportion of urban sewage and garbage that are treated and improve the level of treatment.
Socialist spiritual civilization will be promoted. We will foster and develop a national spirit centering on patriotism and promote the development of culture, health, sports, radio, film, TV, the press and publishing. We will put more resources into the development of public cultural facilities and expand the area of radio and TV reception. Cultural relics will be better protected. We will energetically promote urban pilot reforms of the basic medical insurance system for urban employees, the medical and public health systems, and the system for producing and distributing medicines. A new cooperative medical system will be gradually set up and improved in rural areas. We will continue to improve the system for prevention and control of diseases. Good preparation will be made for the 2008 Olympic Games in Beijing and for the 2010 World Exposition in Shanghai.
III. Working Hard Together with a Pioneering Spirit to Make Fresh Progress in Developing a Well-off Society in an All-Round Way
The target of building a well-off society in an all-round way was set at the Sixteenth National Congress of the Communist Party of China. This is a long-term strategic task of ours and, at the same time, the point of departure and focus of our economic work this year. The key to attaining this target is to give top priority to development in governing and rejuvenating the country in accordance with the requirements of the important thought of Three Represents. We must concentrate on construction and development. We must use development to resolve difficulties and problems that may arise in our way forward. We must come up with new ideas for development, make breakthroughs in reform, break new ground in opening up and take new moves in all fields of endeavor.
To come up with new ideas for development, we must energetically promote the strategic restructuring of the economy, rely on scientific and technological advances and improvement in the overall quality of the work force, and balance the pace of development with the economic structure and the quality and efficiency of economic growth. In response to the call to build a well-off society in an all-round way, we need to make great efforts to adjust the urban-rural, regional and industrial structures to reverse the trend of widening differences between industry and agriculture, between urban and rural areas and between regions. We need to make unified plans for both urban and rural economic and social development in order to modernize agriculture and speed up urbanization. We must unremittingly promote development of the western region and bring about coordinated development of the eastern, central and western economies. We must take a new road in which IT drives industrialization, and industrialization, in turn, stimulates the application of IT. We will optimize and update the industrial structure to create an industrial pattern with high and new technology industries as the leader, with basic and manufacturing industries as the linchpin, and with service industries developing in an all-round way. We must strengthen our capability for sustainable development to ensure harmony between man and nature.
The key to making new breakthroughs in reform is to improve the basic economic system, promote market-oriented reform, work persistently to eliminate institutional obstacles to development of the productive forces, and accelerate innovation in systems and mechanisms. We will unwaveringly consolidate and develop the public sector of the economy and encourage, support and guide the development of the non-public sectors, integrating both in the socialist modernization drive. The basic role of the market in allocating resources will be expanded. A unified, open modern market system that ensures orderly competition will be established and improved to create an environment in which enterprises under all types of ownership can engage in fair competition. Macroeconomic regulation will be strengthened and improved. We will perfect the macroeconomic regulatory system that integrates state planning with fiscal and monetary policies and utilize all economic levers jointly to regulate the economy.
To break new ground in opening up, we need to both "bring in" and "go global" and participate in international economic and technological cooperation and competition on a broader scale, in more areas and at a higher level. By fully exploiting China's comparative advantages in labor resources and market, we will create a better investment environment to attract more foreign investment. In addition, utilization of foreign capital will be combined with the economic restructuring, reorganization and technological upgrading of state-owned enterprises and development of the western region. We will constantly improve the quality and level of the utilization of foreign capital. The material and technological foundation, channels for exchange with foreign countries and useful lessons acquired in the process of "bringing in" will be fully utilized to encourage and support relatively strong enterprises under all types of ownership to invest abroad, thereby stimulating export of goods and labor services and creating more room for economic growth. A group of strong multinational enterprises and name brands will be developed, and Chinese enterprises will be made more competitive internationally.
To take new moves in all fields of endeavor, we will mainly make our work a success, focusing on deepening reform, accelerating development and safeguarding stability. We must do a good job in macroeconomic regulation and in economic monitoring and early warning to promptly pinpoint and solve major problems affecting the overall interests of the nation, or representing or indicative of unfavorable trends, so as to ensure smooth operations and sound development of the economy. We will work energetically to discover the laws governing macroeconomic regulation and seek effective ways to strengthen and improve macroeconomic regulation. Macroeconomic regulatory authorities must remain modest, prudent and free from conceit and impetuosity and preserve plain living and hard struggle in their workstyle. They must work earnestly to fulfill their duties, solve prominent problems in economic activities and advance the interests of the overwhelming majority of our people. We must willingly subject ourselves to the oversight and guidance of the National People's Congress, and conscientiously heed opinions and suggestions from the National Committee of the Chinese People's Political Consultative Conference. We must increase our awareness of the law and enhance our ability to act in accordance with it, never forgetting that we are obligated to serve the people as public servants. We must continue to perform our official duties legally, diligently, honestly and devotedly, and constantly improve the quality and efficiency of our work.
Successfully carrying out the economic work for this year will be an arduous task, but one of great significance. Let us act in accordance with the requirements set at the Sixteenth National Congress of the Party and follow the leadership of the Party Central Committee with Comrade Hu Jintao as General Secretary and the guidance of Deng Xiaoping Theory and the important thought of Three Represents. Let us keep up with the times and work hard with a pioneering and innovative spirit, take advantage of the favorable situation to make progress, strive to complete all the tasks for national economic and social development in 2003 and take fresh steps in building a well-off society in an all-round way.