III. Explanation of the Outline of the Eleventh Five-Year Plan for National Economic and Social Development (Draft)

The Proposal of the CPC Central Committee for Formulating the Eleventh Five-Year Plan for National Economic and Social Development, adopted at the Fifth Plenary Session of the Sixteenth Central Committee, sets forth the objectives, guiding principles and main tasks for China's economic and social development for the next five years. On the basis of the Proposal, the State Council prepared the Outline of the Eleventh Five-Year Plan for National Economic and Social Development (draft), which has been submitted to this session for your deliberation and approval. I would now like to briefly go over several points.

1. The compilation process and major features of the Outline (draft)

The Central Committee and the State Council took the drafting of the Eleventh Five-Year Plan very seriously. The State Council began making arrangements for preparatory work for the drafting in July 2003. It organized central government departments, local governments, research institutions and experts in various fields to carry out research on major issues facing economic and social development, laying the groundwork for compiling the Outline (draft). Following the Fifth Plenary Session of the Sixteenth Central Committee, the State Council carried out in-depth research based on the Proposal of the Central Committee before compiling the Eleventh Five-Year Plan. A committee of experts from various fields was set up to carry out consultation and deliberation. Suggestions were solicited in various forms nationwide, and many suggestions were submitted by deputies to the people's congresses, members of CPPCC committees, and people from all sectors of society. Drafting the Outline was therefore a democratic, scientific policy-making process that pooled the wisdom of the Chinese people.

The Outline (draft) seeks to reflect requirements resulting from the development of the socialist market economy and implementation of the policy of reform and opening up. It is a macroscopic, strategic policy document that clearly defines the government's priorities and responsibilities. The document is original in both form and content. The content of the Outline (draft) gives specific expression to the strategic philosophy of implementing a scientific outlook on development and building a harmonious socialist society. It emphasizes the need to maintain the "five balances," strengthen weak links in economic and social development, solve the problems that concern the people and affect their vital interests, and properly balance market forces and macroeconomic regulation. The targets in the Outline (draft) are divided into two types: anticipated and obligatory. Anticipated targets are those that we expect or hope to meet, mainly by guiding the actions of market players. Obligatory targets are those that must be achieved, mainly by improving management in accordance with the law and providing services. In form, the Outline (draft) consists of a main body and a number of boxes, in which development targets and key projects are listed. The content of the main text is presented in a clear and easy-to-read way.

The Outline (draft) was compiled based on data from China's first economic census. This census, which took over two years to complete, gives the clearest picture yet of the basic state of the nation's economic and social development, and shows the true GDP and the true proportions of the economy accounted for by primary, secondary and tertiary industries, thus more closely and accurately reflecting China's national conditions and strength. Because it is based on the results of the first economic census, the Eleventh Five-Year Plan better reflects China's conditions and is more scientific.

2. Major economic and social developments during the Tenth Five-Year Plan period

The past five years were an unusual period of development in China, one in which we built on our past achievements and kept pace with the times. We avoided any serious impact from the Asian financial crisis, prevailed over the SARS outbreak, and overcame major natural disasters. We lost no opportunity to further reform and opening up, strengthened the basic role of market forces in allocating resources, improved macroeconomic regulation, and maintained fast yet steady economic development. The pace of China's progress in industrialization, urbanization, market development and internationalization increased significantly; overall production capacity, overall national strength and people's living standards all reached new highs; and the appearance of both urban and rural areas underwent great changes.

China's economic strength grew significantly over the last five years. GDP was 57.3% higher in 2005 than in 2000, an average annual increase of 9.5%. Government revenue rose by 136% over the same period, up an average of 364.7 billion yuan per year. Agricultural production, particularly grain production, took a significant turn for the better. The output of major manufactured products grew substantially. High-tech industries expanded rapidly. Tremendous achievements were made in strengthening basic industries and infrastructure development. Construction of many major projects was completed, and many others were launched in such fields as water conservancy, energy, transportation and communications. IT application in the economy and society expanded rapidly.

Great successes were achieved in reform and opening up over the past five years. Major progress was made in rural reforms, in reform of state-owned enterprises, and in reform of the financial, fiscal, tax and investment systems as well as in developing a market economic system and a social security system. China's accession to the WTO began a new stage in opening up. The total import and export volume tripled over the last five years, and the amount of foreign direct investment actually used came to $274.08 billion. A number of competitive enterprises went global. People's living standards improved markedly over the last five years. Urban per capita disposable income rose by 58.3% and rural per capita net income grew by 29.2%, 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% 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% 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% and the target for cutting the total discharge of major pollutants is set at 10%. 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.

Building a resource-conserving and environment-friendly society is given a high priority in the Outline (draft). It specifies clear tasks and measures and lists a number of key energy-saving projects, demonstration projects for developing a circular economy, and key projects to protect the ecology and improve the environment. Conscientiously fulfilling these tasks and measures will significantly increase the efficiency of resource consumption and basically halt the ecological and environmental deterioration. We must work ceaselessly if we are to create clean and pleasant living and working conditions for the people and leave our future generations with blue skies, green land, clear water and verdant mountains.

Third, we must promote balanced development among regions. The Outline (draft) defines the key tasks for the development of different regions. It calls for improving the market mechanism, the mechanism for promoting cooperation, the mechanism for mutual assistance and the support mechanism to ensure balance and interaction among different regions. The Outline (draft) groups state-owned land into four types of development priority zones ĘC optimal development zones, key development zones, restricted development zones and non-development zones ĘC based on resources, the carrying capacity of the environment, and development potential. Different policies will be adopted for different zones. In addition, the document emphasizes the need to actively and steadily promote urbanization to take full advantage of the leading role of groups of cities in driving development.

Fourth, we must strive to increase our capacity for independent innovation. This features strongly in the Outline (draft). We need to follow a policy of making independent innovations and "leapfrog" advances in key areas of science and technology and supporting and guiding future development. We need to more quickly turn China into an innovation-oriented country by comprehensively enhancing our capability to make original innovations, integrate innovations and assimilate advanced foreign technologies and further refine them. The Outline (draft) calls for launching a number of major scientific and technological projects in strategic industries such as information technology and biotechnology, and projects to address important, pressing problems in energy, resources, the environment and the health of the people, as well as technologies with both military and civilian applications. Successfully implementing these projects is of major and immediate significance and will have far-reaching importance for integrating our limited scientific and technological resources, speeding up the solution of crucial scientific and technological problems with a bearing on China's overall situation and long-term development, and raising the overall technological level in those areas. Accelerating development of education in science and technology and training professionals are essential in order to improve our capacity for independent innovation. The Outline (draft) also contains a master plan for this task.

Fifth, we must deepen reforms and open further to the outside world. None of the achievements made in China's economic and social development during the past 20 some years would have been possible if we had not resolutely carried out the reform and opening up policy. In order to complete the tasks for the present phase of development, we must unwaveringly and comprehensively deepen reforms and open still wider to the outside world. The Outline (draft) contains the requirement to speed up improvement of the socialist market economic system, and establish systems and mechanisms conducive to changing the pattern of economic growth and promoting comprehensive, balanced and sustainable development. We need to improve overall guidance and coordination for reforms and continue to promote reform of the political and cultural systems and the system of social management while carrying out economic restructuring. Reform, development and stability must be properly balanced. In line with the requirement to balance domestic development and opening to the outside world, we will follow a win-win strategy in opening the country and promote reform and development by opening wider to the outside world. In opening wider to the outside world, we must pay particular attention to safeguarding China's economic security.

Sixth, we must work hard to build a harmonious society. This is an important objective of social and economic development and guarantee for it. The Outline (draft) calls for doing a good job in population work; creating more jobs; improving the social security system, people's living standards and health and public safety; building socialist democracy; promoting cultural progress; and improving the system of social management. By working hard over the next five years, we can certainly make China a more harmonious country and enable the people to live even better lives!

Fellow Deputies,

Fulfilling all the tasks for this year and the entire period of the Eleventh Five-Year Plan places increased demands on governments at all levels. This means we must greatly intensify internal reform and self-improvement efforts.

We will accelerate reform of the administrative system and further transform government functions. We will continue to separate government functions from enterprise management, reduce the number of matters requiring administrative examination and approval, and standardize procedures for doing so. We will resolutely transfer responsibility for matters the government should not manage to the markets, enterprises, civil organizations and intermediary organizations. We will change the way the government manages the economy and improve its social management and public service functions. We will make government more open and improve the system for releasing information. We will establish a sound administrative accountability system, improve the government's ability to perform its duties and strengthen public trust.

We will work hard to build a clean government and combat corruption. We will conscientiously carry out all tasks and measures for punishing and preventing corruption. We will launch a campaign this year to combat bribery in business, focusing on unhealthy practices in construction, land transfers, property transactions, purchase and sale of drugs, and government procurement, in order to resolutely put a stop to irregular transactions, and we will investigate and prosecute cases of bribery in business in accordance with the law. We will continue to remedy improper practices that harm public interests and strive to resolve such outstanding problems as arbitrary educational charges and excessively high medical costs.

We must implement the Civil Servant Law and improve the training, supervision and oversight of civil servants. We will run the government strictly and mete out reward or punishment on clear grounds. Government employees at all levels, especially leading officials, must be devoted, diligent and responsible and serve the people wholeheartedly. They need to keep the overall picture in mind, be well disciplined, carry out administrative decrees promptly, and implement all laws, regulations, principles and policies to the letter. They need to work hard, be thrifty, and oppose waste and extravagance. They also need to be realistic and pragmatic in their approach to work, refrain from making empty promises, triumph over bureaucracy, formalism, deception and exaggeration, and fully carry out all tasks and assignments.

Fellow Deputies,

China is now standing at a new historical starting point as we march toward the goal of building a moderately prosperous society in all respects. We must unite even closer around the Central Committee with Comrade Hu Jintao as General Secretary, hold high the great banner of Deng Xiaoping Theory and the important thought of Three Represents, pool the wisdom and strength of our 1.3 billion people, work diligently and confidently to achieve success, strive to make the great Eleventh Five-Year Plan into a bright reality, and write a new chapter in the history of our socialist modernization drive. No difficulties or obstacles can impede our progress. We must achieve our goals! And we definitely can achieve them!