BEIJING, March 19 (Xinhua) -- The following is the full text of the Report on the Work of the Government delivered by Premier Wen Jiabao at the First Session of the 11th National People's Congress on March 5, 2008:

REPORT ON THE WORK OF THE GOVERNMENT

Delivered at the First Session of the

11th National People's Congress on March 5, 2008

Wen Jiabao

Premier of the State Council

　　Fellow Deputies,

　　On behalf of the State Council, I would now like to deliver to you a report on the work of the government over the past five years and on the arrangements for its work this year for your deliberation and approval and also for comments and suggestions from the members of the Chinese People's Political Consultative Conference (CPPCC).

　　I. Review of the Work of the Past Five Years

　　The past five years since the First Session of the 10th National People's Congress was a momentous period. Under the leadership of the Communist Party of China (CPC), governments at all levels and people of all the ethnic groups in China diligently followed the guiding principles set out at the 16th CPC National Congress and worked in concert and with dedication. We vigorously responded to the complex and volatile international environment, strove to overcome various difficulties hindering economic and social development, and prevailed over the sudden and severe outbreak of SARS and catastrophic natural disasters such as the recent snow and ice storms in the south that the region has rarely seen before. We made major achievements in reform, opening up and modernization, which attracted the attention of the world.

　　- The economy reached a new high. China's GDP in 2007 reached 24.66 trillion yuan, an increase of 65.5% over 2002 and an average annual increase of 10.6%, rising from the sixth highest one in the world to the fourth. Total government revenue reached 5.13 trillion yuan, a 171% increase over 2002. Our foreign exchange reserves exceeded 1.52 trillion U.S. dollars.

　　- The agricultural tax was rescinded, ending the centuries-old practice of farmers paying taxes. China's grain output rose four consecutive years to reach 501.5 million tons in 2007.

　　- Major progress was made in the reform of state-owned enterprises (SOEs), the financial system, fiscal and taxation systems, the system of foreign trade and economic cooperation, and the administrative system. China has entered a new stage in developing a more open economy. Total volume of imports and exports reached 2.17 trillion dollars in 2007, raising China from the sixth largest trading nation in the world to the third largest.

　　- Good progress was made in efforts to make China more innovative, and a number of major scientific and technological innovations with international impact were made. Manned space flights and our first moon exploration project were successfully carried out.

　　- Free compulsory education was made available to all rural students, marking an important milestone in the history of the development of education in China. The basic frameworks for a public health system and a system of basic medical services covering both urban and rural areas have been put in place.

　　- Steady improvement was made in the urban and rural system of public cultural services. Significant progress was made in reform of the cultural management system, and the development of cultural programs and cultural industries was accelerated. The Shanghai Special Olympics was successfully held. Preparations for the 2008 Olympics and Paralympics in Beijing and the 2010 World Expo in Shanghai proceeded smoothly.

　　- Progress was made in developing democracy and the legal system and in enhancing law-based government. Greater efforts were made to safeguard people's rights and interests and ensure social fairness and justice.

　　- People's living standards improved significantly. Fifty-one million urban jobs were created over the past five years. Urban per capita annual disposable income rose from 7,703 yuan in 2002 to 13,786 yuan in 2007, and rural per capita annual net income rose from 2,476 yuan to 4,140 yuan during the same period. The basic framework for a social safety net for both urban and rural areas was put in place. The number of people living in poverty was reduced every year.

　　All these improvements fully demonstrate that during the past five-year period great strides were made in carrying out reform and opening up and building a moderately prosperous society in all respects. During this time the productive forces and overall national strength were significantly improved, social programs were comprehensively developed, people received even greater benefits and China's international standing and influence constantly grew.

　　During the past five years we established and put into practice the Scientific Outlook on Development, worked hard on economic development, deepened reform and opening up, ensured the wellbeing of the people, improved their lives, and promoted social harmony. We made great efforts and accomplished a great deal.

　　1. Improving macroeconomic regulation to promote steady and rapid economic development.

　　We endeavored to make macroeconomic regulation more proactive, responsive and effective, with the focus on resolving major problems affecting economic operation. Over the past few years, we tightened controls on the supplies of land and credit, raised market access requirements, adjusted financial and monetary policies as needed, improved industrial policies and the land policy, adjusted the economic structure, shored up weak links and effectively regulated economic operation to address problems such as overheated growth in fixed asset investment, excessive supplies of money and credit, excessively large trade surplus, and weakness in agriculture, the foundation of the economy, which could cause economic development to become unstable, unbalanced and unsustainable. In response to changes in the economy, we have repeatedly made timely adjustments in the required reserve ratio and the benchmark interest rates for savings and loans in financial institutions and rescinded or reduced export tax rebates for resource products and products whose production is energy intensive or highly polluting. These macroeconomic regulatory measures produced significant results, and China's economy maintained steady and rapid development throughout the five-year period, without experiencing major fluctuations. 　　

　　We adopted a series of major measures related to institutions, policies and investment to increase grain production and rural incomes as a matter of priority and strengthen agriculture as the foundation of the economy. We completely rescinded the agricultural tax, livestock tax and tax on special agricultural products throughout China, reducing the burden on farmers by an average of 133.5 billion yuan per year. In addition, we set up a subsidy scheme for agriculture, instituting direct subsidies for grain producers, subsidies for superior crop varieties, subsidies for the purchase of agricultural machinery and tools, and general subsidies for agricultural production supplies and providing incentives to major grain-producing counties and subsidies to counties and townships with serious financial difficulties. Investment in agriculture and rural areas was greatly increased. Central government allocations for agriculture, rural areas and farmers reached 1.6 trillion yuan over the past five years, including nearly 300 billion yuan that was used for developing rural infrastructure. Local governments also substantially increased their input. During the five-year period, an additional 6.667 million hectares of farmland was equipped with water-saving irrigation facilities, methane gas was made available to 16.5 million more households, 1.3 million kilometers of rural roads were built or upgraded, and safe drinking water was provided to an additional 97.48 million rural residents. A system for the prevention and control of major animal diseases was set up, and the spread of highly pathogenic avian influenza was prevented. These measures greatly encouraged farmers to grow more, gave a strong impetus to the development of a new socialist countryside and brought historic changes to rural China to the great satisfaction of hundreds of millions of rural people. Agricultural development played an important role in ensuring the overall stability and development of China's economy and society.

　　We formulated the Outline of the National Program for Long- and Medium-Term Scientific and Technological Development, which contains comprehensive plans for the development of science and technology in China from 2006 through 2020 and calls for the launching of a number of major projects. This will have an important and far-reaching impact on efforts to strengthen China's capacity for independent innovation and make it an innovative country. Work in basic research and research in leading-edge technologies was intensified; a number of major innovations such as high-performance computers, third generation mobile communications, and super-hybrid rice were achieved; and a number of products that are competitive and carry Chinese intellectual property rights were developed. The central government spent 340.6 billion yuan on science and technology over the past five years. China's total investment in research, experimentation and development rose from the 128.8 billion yuan of 2002 to 366.4 billion yuan in 2007, with its share in the GDP rising from 1.07% to 1.49%. Major progress was made in developing a system for technological innovation in which enterprises play a key role. The capacity of scientific and technological innovation to sustain and boost economic and social development was markedly increased.

　　We formulated and implemented a series of industrial policies and special plans designed to improve and upgrade the industrial structure. Development of new and high technology industries in information, biology, aerospace, new energy sources, new materials and oceanography was accelerated. Efforts to boost the equipment manufacturing industry produced significant results. Development of modern service industries such as tourism, banking and distribution was accelerated. Great progress was made in the development of infrastructure and basic industries, marked by the completion of or smooth progress on a number of major projects. The Qinghai-Tibet Railway was opened to traffic a year ahead of time; the Three Gorges Project is fully playing its designed role in flood prevention, power generation and shipping; the projects to send electricity and gas from China's western region to the eastern region are fully operational; the project to divert water from southern China to northern China is progressing smoothly; and construction has been started on a number of major projects such as the Xiluodu Hydroelectric Plant, Hongyanhe Nuclear Power Plant, Beijing-Shanghai high-speed railway, a ten million-ton capacity oil refinery and a million-ton capacity ethylene plant. Major progress has been made in the prospecting and development of the Puguang Gas Field and the Nanpu Old field. Newly added power-generating capacity over the five years totaled 350 million KW, equivalent to all the capacity added between 1950 and 2002. A total of 192,000 kilometers of highways were built, including 28,000 kilometers of expressways. A total of 6,100 kilometers of new railway lines went into operation. An additional 568 berths that can handle ships larger than 10,000 tons were completed. The number of telecommunications users was increased by 494 million. All of the above measures effectively improved the capacity of the energy, transportation and communications sectors and strengthened the basis for further economic and social development.

　　We gave high priority to conserving resources and protecting the environment. Obligatory targets for saving energy and reducing emissions were set in the Outline of the Eleventh Five-Year Plan for National Economic and Social Development. In the last two years, a general work plan for saving energy and reducing emissions was introduced; a system of targets for this work, a monitoring system, a system for assessing work performance and a system of accountability for reaching the targets were put in place; and a state plan to address climate change was promulgated. A large number of backward production facilities were shut down in accordance with the law. They include small thermal power plants with a total capacity of 21.57 million KW, 11,200 small coal mines, backward iron smelting facilities with a total capacity of 46.59 million tons, backward steel plants with a total capacity of 37.47 million tons and cement plants with a total capacity of 87 million tons. Ten major energy-saving projects were launched. Breakthroughs were made in carrying out desulfurizing projects for coal-fired power plants. The central government provided financial support for 691 projects to prevent and control water pollution in major river valleys. Work continued on ecological conservation projects such as those to protect natural forests and control the factors causing sandstorms in Beijing and Tianjin. During the five-year period, the area of farmland retired for forestation and other lands planted with trees amounted to 31.91 million hectares, and grazing land returned to natural grasslands totaled 34.6 million hectares. Protection of land and water resources was strengthened, with a total of 1.526 million hectares of farmland being upgraded, reclaimed or newly developed over the last five years. Thanks to the strong efforts of the whole country, encouraging progress was made in conserving energy and reducing emissions. In 2007 there was a 3.27% year-on-year drop in energy consumption per unit of GDP, and for the first time in recent years there was a reduction in both chemical oxygen demand and the total emission of sulfur dioxide, with the former down 3.14% and the latter down 4.66% from the previous year. People became more aware of the importance of conserving resources and protecting the environment and made greater efforts in this area.

　　We followed a master strategy for regional development. Continued progress was made in the large-scale development of the western region, with central government financial support for key projects totaling over 280 billion yuan over the last five years. Substantial progress was made in infrastructure development and ecological and environmental conservation projects, and development of key areas and industries with local advantages was accelerated. We formulated and implemented the strategy of rejuvenating the old industrial bases such as northeast China, increased efforts to develop large grain production bases, made breakthroughs in reforming, reorganizing and upgrading SOEs, made major progress in using domestically-produced key equipment in place of imports, and made smooth headway in the trial to transform the economies of cities dependent on resource exploitation. The old industrial bases are now showing new signs of vitality. We formulated and implemented policies and measures to promote development in the central region and made accelerated progress in developing modern agriculture in major grain-producing areas. Major energy and raw material industries, the equipment manufacturing industry and the overall transportation system were further developed. The eastern region continued to lead in development, with significant gains in economic strength and overall improvement. The process of developing and opening up the special economic zones, the Shanghai Pudong New Area and the Tianjin Binhai New Area was accelerated. These major measures promoted a better distribution and more balanced development of regional economies.

　　2. Working hard on reform and opening up, concentrating on institutional development and innovation.

　　Rural reforms were deepened across the board. Major progress was made in the current stage of the overall rural reform, mainly consisting of reform of town and township government bodies, reform of the rural compulsory education system and reform of the fiscal systems at the county and township levels. Government control of grain purchasing was lifted, and the purchase and sale of grain are now market based. Successful trials were carried out in reforming the system of collective forest rights. Smooth progress was made in the reform of supply and marketing cooperatives and state-owned farms.

　　Continued progress was made in improving the basic economic system. We consolidated and developed the public sector of the economy, made progress in reform of the management system for state-owned assets and adjustment of the distribution and structure of the state sector of the economy, and set up and improved a system for investors of state assets. We accelerated the reform to institute a stockholding system in SOEs, and a number of large companies and conglomerates with the ability to compete internationally were formed. Reform of the postal service system proceeded smoothly, and encouraging progress was made in reforming the power, telecommunications, civil aviation and railway industries. The total value of assets of Chinese SOEs in 2006 grew by 60.98% compared to 2002, their total profits increased by 223%, and their tax contributions grew by 105%. The vitality of the state sector and its impact and influence on the economy as a whole were greatly enhanced. We formulated and implemented a series of policies and measures to foster a legal framework and market environment conducive to fair competition, and encouraged, supported and guided the development of the nonpublic sector, which includes individual-proprietorship businesses and private enterprises. As a result, the nonpublic sector of the economy is playing an increasingly bigger role in stimulating economic growth, creating jobs, increasing tax revenue, and invigorating the market.

　　We vigorously promoted reform of the banking, fiscal and taxation systems. We resolutely carried out reform addressing the poor performance and greater financial risks of state-owned commercial banks. The Industrial and Commercial Bank of China, the Bank of China, the China Construction Bank and the Bank of Communications were turned into stockholding companies and listed on stock markets. This brought about significant improvement in the quality of their assets and profitability as well as major changes in the banking industry. We resolutely carried out reform of the shareholder structure in listed companies and resolved this longstanding institutional problem that hindered the development of the securities market. Key state-owned insurance firms were reorganized and went public, promoting rapid development of the insurance industry. Substantive progress was made in making interest rates more market-based. We reformed the RMB exchange rate regime to gradually make the exchange rate more flexible. Comprehensive progress was made in reform of the system for managing foreign exchange. Reform of the fiscal and taxation systems was deepened, and the system of transfer payments and the system of public finance were steadily improved. The central government turned over 4.25 trillion yuan in transfer payments to local governments from 2003 to 2007, with 87% of it allocated to the central and western regions. A budget system for managing state capital was introduced in some enterprises on a trial basis. We launched and expanded trials to reform the value-added tax. The income tax systems for domestic and overseas-funded enterprises were unified. A unified state civil servant salary system based on both position and rank was set up, and the system of subsidies and allowances was basically standardized. Further progress was made in reform of the investment system and pricing system.

　　Work to develop the market system was intensified. Market forces played an increasingly important role in trade in the factors of production. The modernization of commodity distribution was accelerated. Significant achievements were made in the effort to rectify order in the markets for land and mineral resources and improve the quality of products and the safety of food and drugs. Protection of intellectual property rights was strengthened, and we severely cracked down on violations of the law such as the production and sale of counterfeit goods, pyramid schemes, commercial fraud, piracy and infringement on others' rights.

　　We continued to open China wider to the outside world. We honored all the commitments we made when we entered the World Trade Organization and made all the required adjustments for the transition period. We deepened reform of the externally oriented economic system to facilitate trade and investment. We lifted controls over access to foreign trade, greatly lowered tariffs, rescinded non-tariff measures such as import quotas and permits, and opened banking, commerce, telecommunications and other service sectors wider. There was gradual improvement in the mix of imports and exports. There was further improvement in the utilization of foreign capital. The "go global" strategy was resolutely implemented and significant results were obtained in mutually beneficial economic cooperation with other countries.

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