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2. Unswervingly taking economic restructuring as paramount and working hard to improve the quality and efficiency of economic growth

Development is the fundamental principle, and the key to resolving all problems China is facing. We must maintain a comparatively high growth rate in our national economy. There must be new approaches towards development, and fast development will be genuine and healthy only if it enjoys full market access and delivers good returns. In China's new economic landscape characterized by conclusive changes for the period, we must make strategic readjustment to our economic structure. We have taken care to focus the energy of all quarters on structural readjustment and improved quality and efficiency of economic growth and done our best to strike a balance between speed on the one hand and structure, quality and efficiency on the other.

We have been steadfast in making comprehensive readjustments to the industrial structure and coordinating economic development between regions and between cities and the countryside. We grasped the key link of readjusting the industrial structure.First, we strengthened infrastructure. This was an inevitable choice in readjusting the industrial structure when the processing industries had surplus capacity, for it has not only removed bottlenecks but also spurred growth in equipment manufacturing and other related industries. In developing infrastructure, we have followed the principles of unified planning, stress on key projects, rational project distribution and high quality. Stringent control was exercised to block new projects in processing industries and avoid redundance in low-level development.Second, we energetically developed high and new-tech industries, the IT industry in particular, and vigorously promoted IT application to our national economy and society. We have carried out more than 1,000 demonstration projects in this regard, enabling us to bring over a short time a number of major proprietary scientific and technological achievements to industrial production. The role of high and new-tech industrial zones and industrial parks was fully exploited. Vigorous efforts were made to develop service providers for industrial application of high and new technologies. Through deeper reform and opening up and greater investment, our information industry has advanced by leaps and bounds.Third, we worked actively to renovate and upgrade traditional industries. We supported massive technological renovation and structural readjustment in key industries, key enterprises and key product lines by allowing interest discounts on treasury bond loans and simplifying the clearance procedures for technological transformation projects. In these five years, technological transformation projects with a total investment of 2.66 trillion yuan were completed, 67% over the figure for the previous five years. Many large enterprises upgraded their technology and increased their competitiveness through self-reliance and strenuous efforts. At the same time, starting with the textile industry and gradually moving to the coal, metallurgical, building material, petrochemical, sugar refining and other industries, we used economic, legal and necessary administrative measures to close a large number of enterprises that produced shoddy goods, wasted resources, seriously polluted the environment or were unsafe for production. This eliminated large quantities of old equipment and many obsolete technologies and production processes, and reduced the excessive production capacity.Fourth, we worked hard to develop service industries. Wider market access, a better business environment and the introduction of modern management and technologies have enabled our traditional service industries to develop further. At the same time, we took multiple measures to support and encourage faster development of modern service industries.

Our country's prosperity depends on producing better goods. Herein also lies the fundamental answer to better economic efficiency and competitiveness. By adopting international standards, popularizing advanced know-how, improving authentication and certification and strengthening quality control, China is constantly improving the quality of its goods and services in all industries and trades.

3. Steadfastly giving priority to solving the problems facing agriculture, rural areas and farmers and consolidating the position of agriculture as the foundation of the national economy

Problems facing agriculture, rural areas and farmers have a crucial bearing on the country's reform, opening up and modernization drive, and we should never overlook them or slacken our efforts to address them. The productive capacity of our agriculture has reached a new high in recent years, providing powerful support for our national economic development and social stability. Meanwhile, problems have arisen, including oversupply of agricultural products coupled with price drops and slow increases in farmers' income. Such a state of affairs, if allowed to stay unchanged, would seriously dampen farmers' enthusiasm to produce, undermine agriculture from its foundation, and may even threaten the overall health of the national economy. We gave top priority to agricultural development, rural economic health and increasing farmers' income in our economic work and devoted a great deal of attention to them.

First, we advanced structural readjustment in agriculture. Through policy support and improved information and technical services, the government guided farmers to grow crops and select crop varieties according to market demand, developed animal husbandry and aquatic farming and readjusted the location of agricultural producing areas. Energetic efforts were made to extend "companies plus households", "production on orders" and other methods of industrialized agricultural production and help large numbers of farmers to enter the market. At the same time, we took advantage of the abundance of grain to return more farmland to forests. These efforts have stimulated the restructuring of agriculture and directly increased farmers' income. In readjusting the agricultural structure, the government took a flexible approach in light of local conditions, refrained from dictating orders and respected the wishes of farmers.

Second, we deepened the reform of the grain and cotton distribution systems. The fundamental orientation of this reform is to let market forces direct the buying and selling of grain and cotton. In taking specific reform measures, we have proceeded surefootedly, mindful of the realities and taking into account the farmers' interests and preservation of the agricultural productive forces. In 1997, we started buying at protective prices all surplus grain farmers were willing to sell. In 1998, we went further by introducing a three-point policy calling for buying all surplus grain from farmers at protective prices, selling at market prices by state-owned grain dealers, and closed movement of funds earmarked for grain purchases, as well as an accelerated reform of the state-owned grain enterprises. In 2001, we lifted the control on grain purchase and grain prices in the major grain purchasing areas while continuing to buy all surplus grain at protective prices from farmers in the major grain producing areas. The results we

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