REPORT ON THE WORK OF THE GOVERNMENT

Delivered at the Third Session of
the Eleventh National People's Congress
on March 5, 2010

Wen Jiabao
Premier of the State Council

I. Review of Work in 2009

II. Main Tasks for 2010

Fellow Deputies,

On behalf of the State Council, I now present to you my report on the work of the government for your deliberation and approval. I also invite the members of the National Committee of the Chinese People's Political Consultative Conference (CPPCC) to provide comments and suggestions.

I. Review of Work in 2009

The year 2009 was the most difficult year for our country's economic development since the beginning of the new century. This time last year the global financial crisis was still spreading, and the world economy was in a deep recession. Our economy was severely affected; our exports decreased significantly; a large number of enterprises had operating difficulties, and some even suspended production or closed down; the number of unemployed people increased significantly; many migrant workers had to return to their home villages; and the pace of our economic growth suddenly slowed down. In these unusually difficult circumstances, the people of all our ethnic groups fortified their confidence, tackled difficulties head on, worked tenaciously, and responded calmly to the impact of the global financial crisis under the firm leadership of the Communist Party of China (CPC). Our economy was the first in the world to have made a turnaround, and we made major new achievements in reform and opening up as well as socialist modernization. GDP reached 33.5 trillion yuan, an increase of 8.7% over the previous year (here and below). Fiscal revenue was 6.85 trillion yuan, up 11.7%. Grain production was 530.82 million tons, a new record and an increase for the sixth consecutive year. A total of 11.02 million urban jobs were created. The per capita disposable income of urban residents was 17,175 yuan, and the net per capita income of rural residents was 5,153 yuan, up 9.8% and 8.5% respectively in real terms. We took another steady step along the path of building a moderately prosperous society in all respects. Events again proved that no difficulties or obstacles can impede the course of the great rejuvenation of the Chinese nation.

The past year was truly extraordinary and inspiring. We held a grand celebration of the 60th anniversary of the founding of New China. The outstanding achievements we made in that time have greatly boosted the confidence and pride of the people, strengthened the cohesiveness of the Chinese nation, and raised China's international standing and influence. All this definitely encourages us to continue to forge ahead on the path of socialism with Chinese characteristics.

Over the last year, we mainly undertook the following work.

1. Strengthening and improving macro-control and promoting steady and rapid economic development. We carried out a proactive fiscal policy and a moderately easy monetary policy. We comprehensively implemented and constantly improved the package plan for addressing the global financial crisis. We significantly increased government spending, implemented structural tax reductions, rapidly increased supplies of money and credit, made our monetary policy more sustainable, and increased the amount of direct financing. We thus ensured funding for economic and social development, effectively boosted domestic demand, and quickly reversed the slowdown in economic growth.

We vigorously expanded consumer spending. Our policies to encourage consumption covered more areas, were stronger and benefited more people than ever before. The central government provided 45 billion yuan in subsidies for rural residents to purchase home appliances and motor vehicles, including motorbikes. Part of the subsidies also supported trading-in old motor vehicles and home appliances for new ones and purchasing agricultural machinery and tools. We halved the purchase tax on small-displacement automobiles. We reduced or exempted taxes on buying and selling homes to support the purchase of homes to be used as their owners' residences. Throughout the year 13.64 million motor vehicles were sold, an increase of 46.2%; commodity housing sales amounted to 937 million square meters, up 42.1%; and total retail sales of consumer goods increased 16.9% in real terms. Consumption played a much bigger role in fueling economic growth.

We promoted rapid growth in investment. We guided and stimulated non-government investment by means of well-leveraged government investment. We implemented a plan to invest an additional 4 trillion yuan over two years. In 2009, the central government's public investment was 924.3 billion yuan, 503.8 billion yuan more than in the previous year's budget. Of this, 44% was invested in low-income housing, projects to improve the wellbeing of rural residents, and social programs; 16% in independent innovation, restructuring, energy conservation, emissions reductions, and ecological improvement; 23% in major infrastructure projects; and 14% in post-Wenchuan earthquake recovery and reconstruction. Fixed asset investment increased 30.1% nationwide. We further improved the investment structure. Rapid investment growth effectively compensated for the shortfall created by shrinking external demand, strengthened weak links, and laid a solid foundation for long-term economic and social development.

We accelerated the post-Wenchuan earthquake recovery and reconstruction work. We have already invested 654.5 billion yuan, 65.5% of the total planned investment, in the worst hit areas. Thanks to the government's strong support, the selfless assistance of people throughout the country, and the hard work of residents of the earthquake area, the badly damaged areas have taken on a brand-new appearance, with new towns rising straight out of the ground, and villages brimming with vitality. All this fully reflects the boundless love of the Chinese nation and powerfully demonstrates the incomparable superiority of the socialist system.

2. Vigorously carrying out economic restructuring, and shoring up the foundation for long-term development. We closely integrated sustaining economic growth with economic restructuring, and moved more quickly to resolve structural problems limiting economic development.

We further strengthened the work related to agriculture, rural areas, and farmers. The central government used 725.3 billion yuan to support agriculture, rural areas, and farmers, an increase of 21.8%. We raised the minimum grain purchase prices by a large margin. We began implementation of the plan to increase grain production capacity by 50 million tons nationwide. We continued to improve living and working conditions in rural areas. We implemented rural drinking water safety projects that benefited 60.69 million people, increased the number of methane gas users by 5.1 million, built and upgraded 380,000 kilometers of roads and 266,000 kilometers of electric power lines and renovated 800,000 dilapidated houses in the countryside, and helped build permanent housing for 92,000 nomadic families. We also intensified our efforts to fight poverty. As a result, working and living conditions notably improved in poverty-stricken areas.

We intensified industrial restructuring. We formulated and implemented a plan for restructuring and invigorating ten key industries. We encouraged enterprises to accelerate technological upgrading, and provided 20 billion yuan to support 4,441 technological upgrading projects. Further progress was made in mergers and reorganization in key industries. We made great efforts to restrict excess production capacity and redundant development in some industries. We closed down 26.17 million kilowatts of small thermal power stations, and eliminated backward facilities with total production capacity of 16.91 million tons in the steelmaking industry, 21.13 million tons in the iron-smelting industry, 74.16 million tons in the cement industry, and 18.09 million tons in the coke industry. We accelerated the implementation of major national science and technology projects, and spent 151.2 billion yuan of central government funds on science and technology, an increase of 30%. We vigorously supported the widespread use of domestically innovated products, and the development of emerging industries such as clean energy and third-generation mobile communications. We vigorously strengthened infrastructure development; put 5,557 kilometers of newly built railway lines into operation; opened 4,719 kilometers of new expressways to traffic, accelerated urban rail development; and built, renovated or expanded 35 civil airports. We increased the installed power-generating capacity by 89.7 million kilowatts, began supplying gas through the western section of the second line of the project for shipping natural gas from west to east, accelerated construction on the South-to-North Water Diversion Project, and began reinforcing 6,183 dangerous reservoirs.

We made solid progress in conserving energy, reducing emissions and protecting the environment. We supported 2,983 key energy conservation and recycling projects through budgetary investment. We implemented a project to promote energy-efficient products for the benefit of the people, putting into use more than 5 million energy-saving air-conditioners and 150 million energy-efficient light bulbs. We continued to develop key ecological projects in the forestry industry, and completed the afforestation of 5.88 million hectares, thereby raising the percentage of land covered by forest to 20.36%. Through combined measures, we brought soil erosion on 48,000 square kilometers of land under control. We strengthened the prevention and treatment of water pollution in the key watersheds of the Huai, Hai, and Liao rivers and Tai, Chao, and Dianchi lakes, and improved the control of wastewater, gases and residues from industry. Over the first four years of the Eleventh Five-Year Plan period, energy consumption per unit of GDP fell 14.38 %, and chemical oxygen demand and sulfur dioxide emissions decreased 9.66% and 13.14% respectively. We made vigorous efforts to respond to climate change, and set forth our country's targets, policies and measures for controlling greenhouse gas emissions by 2020. We improved our weather forecasting and early warning, as well as earthquake monitoring, and constantly improved our disaster prevention and protection capabilities.

We took new steps in balancing development between regions. We thoroughly implemented the overall strategy for regional development, and formulated several major regional development plans and policies. The central and western regions and northeast China accelerated opening up and development, welcomed industries relocated from other parts of the country, and continuously strengthened their foundation for development. The eastern region accelerated restructuring and independent innovation, and the vitality of its economic development increased. A favorable situation emerged in which regional development was better distributed, structured and coordinated.

3. Steadfastly deepening reform and opening up, and constantly improving institutions and mechanisms conducive to developing scientifically. We deepened reform and opening up to respond more powerfully to the global financial crisis, worked hard to remove institutional obstacles and continued to open wider to the outside world.

We accelerated reform in key areas and links. We comprehensively carried out VAT reform. The reform of the prices of refined oil products and taxes and fees on them was implemented smoothly, and a new mechanism for pricing them worked well. We made solid progress in commercializing the China Development Bank and introducing the joint stock system in the Agricultural Bank of China, and launched a pilot project to use the renminbi as the settlement currency for cross-border trade. The ChiNext stock market was officially launched, which opened a new financing channel for enterprises based on independent innovation and other growth enterprises. We proceeded with the reform of local government departments in an orderly manner, and steadily carried out a trial of reforming institutions by type. We comprehensively launched the reform of tenure in collective forests. We devolved tenure in 100 million hectares of forest land to rural households, equaling 60% of the country's total area of collective forests. This is another major reform of China's rural operation system, and follows in the footsteps of the household land contract responsibility system.

We constantly raised the level of the open economy. We introduced policies and measures to stabilize foreign demand, adopted methods that conform to international practices to support export companies, completed the issuance of short-term export credit insurance worth US$ 90 billion, and arranged $42.1 billion of export financing insurance for complete sets of large equipment. We encouraged increases in imports. Since the second half of last year, falls in imports and exports have clearly eased, and we have consolidated our share of international markets. Last year imports and exports totaled $2.2 trillion. We reversed the decline in utilized foreign investment, and actual utilized foreign direct investment amounted to $90 billion for the entire year. More enterprises "went global" in spite of the adverse situation; non-financial outward direct investment amounted to $43.3 billion, and receipts from overseas project contracting operations reached $77.7 billion. We actively participated in international macroeconomic policy dialogue and coordination as well as economic, trade and financial cooperation, and played a constructive role in the joint response to the global financial crisis.

4. Striving to improve people's wellbeing and accelerating the development of social programs. In the difficult circumstances of responding to the global financial crisis, we gave greater priority to ensuring and improving people's wellbeing and effectively solved the most practical problems of the greatest and most direct concern to the people.

We implemented a more active employment policy. We increased the responsibility of the government for stimulating employment. The central government allocated 42.6 billion yuan in special employment funds, an increase of 59%. For distressed enterprises, we postponed and in some cases reduced their payment of social security contributions. We also reduced or exempted reemployment tax and provided related subsidies to encourage enterprises to maintain or increase their levels of employment. We launched a series of employment service activities, created public-service jobs through multiple channels, and encouraged college graduates to take jobs at the primary level, enlist in the army, or join enterprises and institutions as interns. We provided job training for 21 million urban and rural workers. These measures helped bring about basic employment stability.

We accelerated improvements in the social security system. We established a nationwide pension planning system at the provincial level, and introduced a method for transferring pension accounts for workers of urban enterprises, some of whom are rural migrant workers. We launched a pilot project for a new rural pension insurance system in 320 counties – a historic step forward in the development of China's social security system. The central government allocated 290.6 billion yuan in social security funds, an increase of 16.6%. Pensions for enterprise retirees increased for the fifth consecutive year and registered another 10% rise per person. We provided better care for childless and infirm rural residents receiving guarantees of food, clothing, medical care, housing and burial expenses. We increased subsidies for entitled groups and subsistence allowances for both urban and rural recipients. The central government used 55.1 billion yuan to develop low-income housing projects, a two-fold increase over the previous year. We built, renovated or expanded 2 million low-income housing units of various types, and renovated or built 1.3 million housing units in different types of run-down areas. Nationwide, social security funds reached 692.7 billion yuan, an increase of 44.2%. We strengthened the social security system.

We made education more equitable. We increased education spending nationwide significantly, including central government spending of 198.1 billion yuan, an increase of 23.6%. We comprehensively implemented the urban and rural compulsory education policy, spent 66.6 billion yuan of central government funds on rural compulsory education, and reached the target of raising public spending for rural secondary and primary school students to an average of 500 yuan and 300 yuan per student respectively a year ahead of schedule. We implemented a performance-based pay system for compulsory education teachers. We started to implement the policy of free tuition for rural students attending secondary vocational schools whose families have financial difficulties and students in such schools who are studying agriculture-related majors. We constantly improved the national student financial aid system, which benefited 28.71 million students and basically ensured that no children from poor families were denied schooling due to financial difficulties.

We made steady progress in the reform and development of the pharmaceutical and healthcare fields. We organized the implementation of the reform of the pharmaceutical and healthcare systems. The central government spent 127.7 billion yuan on medical and health care, an increase of 49.5 %. A total of 401 million urban workers and non-working urban residents subscribed to basic medical insurance, and coverage of the new type of rural cooperative medical care system reached 830 million people. The central government allocated 42.9 billion yuan to solve the problem of medical insurance for retired workers from closed and bankrupt state-owned enterprises. The basic drug system has been implemented in 30% of primary-level medical and health care institutions. Central government funds were used to support the construction of a number of county-level hospitals, town and township central hospitals, and community health service centers. We launched major public health service projects, including one to increase vaccinations against hepatitis B. We intensified special campaigns for food and drug safety. Faced with the sudden outbreak of influenza A (H1N1), we carried out scientific and orderly prevention and control work in accordance with the law, and thereby effectively protected people's lives and maintained normal order in society.

It was not at all easy for our country to make all these achievements against the backdrop of the severe impact of the global financial crisis and the negative growth of the world economy. They were the result of the overall planning and correct leadership of the Party Central Committee with Comrade Hu Jintao as General Secretary as well as the concerted and strenuous efforts of the whole Party, the entire army, and the people of all of our ethnic groups. On behalf of the State Council, I hereby express our sincere gratitude to the people of all of our ethnic groups and to the democratic parties, mass organizations, and people from all sectors of society. I also express our sincere thanks to our compatriots in the Hong Kong and Macao special administrative regions, in Taiwan, and overseas, as well as to foreign governments, international organizations, and friends in other countries that take an interest in and support China's modernization.

In the course of the past year, as we conscientiously applied the Scientific Outlook on Development, vigorously responded to the global financial crisis and completed all of our government work, we came to the following conclusions: We must continue to make use of both market mechanisms and macro-control, that is, at the same time as we keep our reforms oriented toward a market economy, let market forces play their basic role in allocating resources, and stimulate the market's vitality, we must make best use of the socialist system's advantages, which enable us to make decisions efficiently, organize effectively, and concentrate resources to accomplish large undertakings. We must balance long- and short-term interests, take into account long- and short-term needs, and address both the symptoms and root causes of problems. We must overcome short-term difficulties and solve major problems as well as strengthen key areas and weak links in order to lay a foundation for long-term development. We must continue to consider domestic and international situations, make it a long-term strategic policy to boost domestic demand, adhere to the win-win strategy of opening up, and quickly formulate a pattern in which domestic demand and foreign demand drive economic growth in concert. We must always remember that developing the economy is inseparable from improving people's wellbeing and safeguarding social fairness and justice; make improving people's wellbeing the focus of development, and the starting point, goal, and lasting driving force of economic development; strive to safeguard fairness and justice; ensure that all of the people share in the fruits of reform and development; and promote social harmony and stability. We must give free rein to the initiative of both the central and local authorities. While stressing unity of thinking and keeping overall interests in mind, we also need to encourage everyone to proceed in light of local conditions and make explorations and innovations, in order to form a powerful, concerted force for overcoming present difficulties. All of these experiences are of vital and profound significance for keeping to the path of socialism with Chinese characteristics, improving our ability to run the socialist market economy, and pushing ahead the process of modernization.