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Report on the Work of the Government (2005)

(Delivered at the Third Session of the Tenth National People's Congress on March 5, 2005)

Wen Jiabao

Premier of the State Council

_____________

Notes:

1. News dispatches are embargoed until the conclusion of today's meeting.

2. The official version of this speech in Chinese will be released by Xinhua News Agency.

Fellow Deputies,

On behalf of the State Council, I now submit a report on the work of the government for your examination and approval and also for comments and suggestions from the members of the National Committee of the Chinese People's Political Consultative Conference.

I. Review of the Work in 2004

Under the leadership of the Communist Party of China (CPC), the people of all our ethnic groups held high the great banners of Deng Xiaoping Theory and the important thought of Three Represents, worked together in an innovative spirit, and made major achievements worth celebrating in the socialist modernization drive in 2004.

We made progress while responding to new challenges and tests during the past year. Some new problems have emerged in China's economic activities over the last two years, mainly tight grain supply, overheated investment in fixed assets, excessive money and credit, and shortages of coal, electricity, petroleum and transportation. If allowed to grow unchecked, these isolated problems could have had an overall impact. After sizing up the situation, the CPC Central Committee and the State Council promptly made decisions and arrangements for strengthening macroregulation. Acting on the principles of adopting resolute and effective measures, taking timely and appropriate steps, dealing with problems individually and stressing practical results, they worked to solve prominent problems threatening steady and rapid economic development through a combination of economic and legal means, plus administrative means when necessary. Thanks to the concerted efforts of the whole nation, their macroregulation achieved significant results. Destabilizing, unsound factors threatening economic performance were contained, weak links were strengthened, and large economic fluctuations were avoided.

The main achievements over the past year were: the economy maintained steady and rapid development, overall national strength increased, significant progress was made in our reform, breakthroughs were achieved in opening up, social development was accelerated, and people's lives improved. China's GDP in 2004 reached 13.65 trillion yuan, an increase of 9.5% over the previous year. Government revenue came to 2.63 trillion yuan, up 21.4%. Retail sales of consumer goods totaled 5.4 trillion yuan, up 13.3%. The volume of imports and exports totaled US$ 1.15 trillion, an increase of 35.7%, moving China up to third place in the world from fourth in the previous year. Some 9.8 million urban residents entered the workforce for the first time, a figure that exceeded the target. Urban per capita disposable income grew by 7.7% in real terms, and rural per capita net income rose by 6.8% in real terms. All of the above shows that China has taken another solid step forward on the road of building a moderately prosperous society in all respects.

The work we accomplished during the past year mainly consisted of the following.

1. Adopting more direct and effective policies and measures to stimulate increases in grain production and rural incomes.Our macroregulatory initiative started with efforts to strengthen agriculture. The major measures we took were reducing or exempting the agricultural tax, rescinding all taxes on special agricultural products except tobacco, directly subsidizing grain producers, providing subsidies to farmers in certain areas to purchase improved crop strains and agricultural machinery and tools, and setting a floor price for the purchase of major cereal varieties. Investment was substantially increased in agriculture and rural areas, particularly in major grain-producing areas. Altogether, the central government spent 262.6 billion yuan on agriculture, rural areas and farmers, an increase of 22.5%. We also promoted agricultural restructuring to increase rural incomes through multiple channels. The intensity of these policies and measures and the substantial benefits to the farmers have rarely been seen in recent years. This greatly aroused the enthusiasm of farmers, resulting in a rebound in grain production. Grain output for 2004 totaled 469.45 billion kilograms, 38.75 billion kilograms more than the previous year. The increases in grain production and farmers' incomes played a crucial role in maintaining overall economic stability.

2. Bringing excessive investment in fixed assets under control and strengthening weak links.We curbed expansion of investment demand and the haphazard investment and low-level, redundant construction in some industries mainly by maintaining strict control over the twin valves of approval for land use and availability of credit. We thoroughly rectified and standardized order in the land market and straightened out all types of development zones. We froze the transfer of land from agricultural to nonagricultural purposes for six months, formulated the Decision on Deepening Reforms for Tightening Land Management, and improved the system for managing land and resources. We increased the reserve requirements for commercial banks and raised the basic interest rates on deposits and loans for financial institutions and the ceiling for interest rates on loans. We increased the required proportion of up-front capital for construction projects in the steel, cement, electrolytic aluminum and real estate industries. We straightened out projects under and awaiting construction in accordance with the law. Fixed asset investment across the country increased by 25.8% for the whole year, 17.2 percentage points less than the first quarter. The growth of money and credit slowed significantly.

Efforts were focused on restructuring, and investment was increased in agriculture, water conservancy, energy, transportation, environmental protection and social undertakings. A 4,000-kilometer-long pipeline to divert natural gas from the west to the east was completed in its entirety and put into operation. Further progress was made on major projects such as the Three Gorges Dam Project, the West-to-East Electricity Transmission Project, the Qinghai-Tibet Railway, and the South-to-North Water Diversion Project. Coal production capacity was expanded by 120 million tons, installed power-generating capacity was increased by 50.55 million kilowatts, and an additional 1,433 kilometers of railways and 46,000 kilometers of highways were opened to traffic in 2004.

We continued to promote the development of the western region by starting construction on ten key projects involving investment of 80 billion yuan. The work of revitalizing Northeast China and other old industrial bases got off to a good start. With state support, 197 improvement or upgrading projects were undertaken. Work was begun to bring 15 sinkholes in coalmining areas under control.

Improved regulation of economic activities alleviated shortages of coal, electricity, petroleum and transportation. Effective measures were adopted to increase supply, curb ir

（责任编辑：中大编辑）

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