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5. Steadfastly opening wider to the outside world and actively participating in international economic and technological cooperation and competition

As economic globalization is gathering momentum and international competition is becoming increasingly fierce, we can make better use of domestic and foreign markets and resources and accelerate our development only if we follow the tide of world development and open ourselves still wider to the outside world. Despite the grim international economic environment, we have created a new situation in our opening up by responding positively, striving to seek advantages and avoid disadvantages, and turning challenges into opportunities.

While pursuing the policy of expanding domestic demand, we have never slackened our drive to increase exports. In the second half of 1998, China's exports registered a negative growth because of the Asian financial crisis. Still, we refused to devalue the RMB and took a series of resolute policies and measures to encourage exports. We followed the strategies of market diversification and winning customers through quality, energetically opened up new markets, improved our export mix and enhanced the quality and grade of our merchandise. We also deepened the reform of our foreign trade and economic cooperation system, diversified foreign trade entities, strengthened port management and streamlined customs clearance. Thanks to these effective measures, we have overcome many difficulties and increased our exports substantially. At the same time, we imported large quantities of equipment and technologies urgently needed and raw and processed materials in short supply. This has promoted our economic development and technological progress. Facts have proved that the policy decisions and measures we took to keep the RMB stable and do everything possible to increase exports are correct.

We encouraged qualified enterprises, regardless of their forms of ownership, to go global, explore the international market, invest in enterprises abroad and increase exports of equipment, spare parts and accessories and labor services. Different ways of investment and cooperation were followed in light of the actual conditions of different countries. With respect to other developing countries, especially our neighboring countries, we provided them with economic and technological assistance, contracted for and invested in development projects, invested in business operations and provided interest free or low interest loans. This was highly significant in that it helped consolidate the traditional friendship between China and these countries and promoted mutual benefit and common development.

We took advantage of the new features of the international movement of capital to actively use more funds from foreign sources. We focused on improving the quality of foreign capital use and integrated it with readjustment of domestic industrial structure, revamping and reorganizing of state-owned enterprises and development of the western region. Our efforts in the past few years to improve the investment climate, develop transport and communications facilities, improve the legal system, increase policy transparency and provide better services have all borne fruit, and this has made China more attractive to foreign capital.

6. Implementing the strategy of invigorating the country through science, technology and education, raising the nation's scientific and technological capability for innovation and improving the overall quality of the population

Developing science, technology and education is a task of paramount importance for economic revitalization and the modernization of the country. Over the past few years, we have always made it an extremely important task to put the strategy of developing the country through science, technology and education into practice. This involves a series of measures pertaining to additional investment, deepened reform and better policies.

Spending on science, technology and education rose considerably in the past five years. The central government spent a total of 250 billion yuan on science and technology, more than double the figure for the previous five years. Spending on research and development nationwide increased from 50.9 billion yuan in 1997 to 116.1 billon yuan in 2002, an increase from 0.64% to 1.13% in terms of the GDP share. Investment from the central government on the state high-tech research and development plans, the state natural science fund and development of the national innovation system increased considerably. Conditions for scientific research were improved markedly, accelerating the country's scientific and technological innovation. Budgetary spending on education nationwide in 2002 was 336.6 billion yuan, 1.8 times that in 1997, an increase from 2.5% to 3.3% in terms of the GDP share. From 1998 onward, educational spending by the central government has increased by one percentage point each year as a proportion of its total expenditures, and that increase alone amounted to 48.9 billion yuan over the five years. In addition, the central government allocated huge sums of money to pay salaries in arrears to primary and secondary school teachers and to refurbish school buildings in poor conditions. At the same time, education assistance policies concerning scholarships, student loans, work-study programs, subsidies, and full or partial exemptions of tuition were introduced, in order to help students from poor families continue their schooling.

Reforms of the science, technology and education systems were deepened, and efforts were redoubled to promote their integration with economic and social development. Since 1999, we have carried out enterprise-oriented reforms in applied science research institutions operating under agencies of the State Council and those under provincial governments, as well as market-oriented reforms in eligible non-profit research institutions through various ways, thus introducing effective mechanisms for application and industrial production of research findings. Research institutions that have completed enterprise-oriented reforms are playing a vital role in our high and new-tech industry. Through these reforms, enterprises are gradually turning themselves into a mainstay of technological innovation, and state research institutes and research institutes in universities and localities have become stronger for science and technology development. We initiated a major reform of the management system of colleges through joint administration, restructuring, cooperation and mergers. A new system of dual management by the central and provincial governments, with the provincial government playing the principal role, was established. This helped reverse the situation where central departments and local ones compartmentalized their work, leading to undersized schools with too narrow disciplines, and enabled us to put our educational resources to better use. The reform of the curriculum and the examination and evaluation system was carried forward. A new management system for compulsory education in rural areas, which places responsibility on the local governments under the leadership of the State Council, was established, with the county playing the principal role. This gave a strong impetus to the reform and development of rural education.

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