REPORT ON THE IMPLEMENTATION OF THE 2012 PLAN FOR

NATIONAL ECONOMIC AND SOCIAL DEVELOPMENT

AND ON THE 2013 DRAFT PLAN FOR NATIONAL

ECONOMIC AND SOCIAL DEVELOPMENT

First Session of the Twelfth National People’s Congress

March 5, 2013

National Development and Reform Commission

Contents

I. Implementation of the 2012 Plan for National Economic and Social Development

II. Overall Requirements and Major Objectives for Economic and Social Development in 2013

III. Major Tasks and Measures for Economic and Social Development in 2013

Fellow Deputies,

The National Development and Reform Commission has been entrusted by the State Council to submit this report on the implementation of the 2012 plan and on the 2013 draft plan for national economic and social development to the First Session of the Twelfth National People’s Congress (NPC) for your deliberation and approval and for comments and suggestions from members of the National Committee of the Chinese People’s Political Consultative Conference (CPPCC).

I. Implementation of the 2012 Plan for National Economic and Social Development

Last year, in the face of severe and complicated economic situations abroad and arduous tasks of reform, development and stability at home, all localities and departments followed the decisions and plans of the Central Committee of the Communist Party of China (CPC) and the State Council, and took developing in a scientific way as the underlying guideline and accelerating the change of the growth model as the major task. In accordance with the keynote of making progress while ensuring stability and based on the plan for national economic and social development adopted at the Fifth Session of the Eleventh NPC, we implemented the central leadership’s macro-control policies and maintained a good momentum in China’s economic and social development. Overall, we successfully implemented the plan for 2012.

1. On the whole the economy operated steadily.

Downward pressure on economic growth increased considerably in early 2012. In response the central leadership sized up the situation, gave higher priority to ensuring steady growth, adopted a number of targeted measures, and yielded the desired results. Preliminary estimates suggest China’s gross domestic product (GDP) amounted to 51.9322 trillion yuan, an increase of 7.8%, and 0.3 percentage points higher than the targeted figure. We followed a proactive fiscal policy and increased structural tax reductions, thereby ensuring spending on major areas including those related to the people’s wellbeing. National revenue totaled 11.721 trillion yuan, an increase of 12.8%, and the fiscal deficit was 800 billion yuan. We followed a prudent monetary policy, maintained stable, reasonable growth in the money and credit supply, and increased support for key areas and weak links. We granted 8.2 trillion yuan in RMB loans for the year, 732 billion yuan more than the previous year. At the end of 2012, the balance of broad money supply (M2) rose 13.8%. We improved regulation of economic activities, and ensured stable and orderly supplies of coal, electricity, petroleum, gas, and transport. The performance of enterprises steadily picked up, and the profits of large industrial enterprises reached 5.5578 trillion yuan, an increase of 5.3% over the previous year.

Domestic demand played a leading role in achieving stable growth. We further enhanced people’s ability to consume, cultivated new areas of high consumption, improved the consumption environment, and got consumption to be the main driving force behind economic growth. Retail sales of consumer goods totaled 21.0307 trillion yuan, an increase of 14.3%, and 0.3 percentage points higher than the target. Investment maintained stable growth, and the structure of investment was optimized. We launched a number of major projects laid out in the Twelfth Five-Year Plan, and accelerated development of infrastructure that has a bearing on people’s lives. China’s total fixed-asset investment amounted to 37.4676 trillion yuan, up 20.3%, and 4.3 percentage points higher than the target. This includes a 24.8% increase in nongovernmental investment, which accounted for 61.4% of the total fixed-asset investment, 2 percentage points higher from the previous year. Final consumption and capital formation contributed 51.8% and 50.4% to the economic growth, respectively.

2. Price increases dropped steadily.

We made keeping overall price levels stable our main task in carrying out macro-control measures, and strengthened comprehensive price regulation and oversight, with the rise in consumer price index (CPI) for the year dropping 2.8 percentage points to 2.6% and being kept below the targeted figure. Adequate market supply was ensured. We strengthened coordination of the production, transportation, and sale of important commodities, as well as handling of their reserves and adjustment of their imports and exports. We released a total of 18.5 million tons of policy-supported grain for the year. We successfully implemented the contingency plan for adjusting the market price of hogs, improved the reserve system for winter and spring vegetables in major northern cities, and carried out trials of the policy-supported insurance system for basic vegetables in an orderly fashion. We tightened oversight and control on market prices and charges, regulated preschool education fees and prices of teaching and tutorial materials for primary and secondary school students, lowered drug prices, and reviewed and rectified illegal and unreasonable road tolls and fees related to enterprises, thereby effectively lightening the burden on consumers and enterprises. We inspected problems in marking of commodity housing prices, fees charged by commercial banks and telecommunication services, and fees related to agriculture and imports and exports. We pushed forward law enforcement efforts to counter price fixing. Last year, we investigated and dealt with 37,800 cases of pricing irregularities, and imposed economic penalties worth 2.122 billion yuan.

3. The position of agriculture as the foundation of the economy was further consolidated.

We increased policy support to strengthen agriculture, benefit farmers, and enrich rural areas. Total central government expenditures on agriculture, rural areas, and farmers increased by 18%; the proportion of investment funds from the central government budget used in this area were raised to 50.5%; and supply of credit for this purpose rose by 20.7%. We implemented the strictest possible system for protecting arable land, and kept the total area of arable land above 121.3 million hectares. We fully implemented the plan to increase China’s grain production capacity by 50 million tons, and projects to develop the community-level service system for spreading agricultural technology were carried out in nearly all towns and townships. We accelerated the development of projects to harness major rivers and lakes and protect major water sources in an all-around way, and strengthened efforts to build and transform large and medium-sized irrigated areas, upgrade and retrofit large irrigation and drainage pumping stations, develop small water conservancy projects, and harness small and medium-sized rivers. We upgraded more sea fishing boats and built more large-scale standardized hog and dairy cow farms. We raised the price floors for wheat and rice, offered higher prices for corn, soybeans, and rapeseed purchased and stockpiled on a temporary basis, and increased temporary purchases and stockpiling of cotton and sugar. Total grain output increased for the ninth consecutive year and amounted to 589.6 billion kilograms, up 3.2%, and output of cash crops rose steadily. Working and living conditions in rural areas improved. We provided safe drinking water to 81% of the rural population, installed or upgraded an additional 317,600 kilometers of electric power lines in the countryside, laid or upgraded 194,000 kilometers of rural roads, made methane available to another 1.8 million rural households, and renovated dilapidated houses for 5.6 million rural households. We supported the construction of grain depots with a total capacity of 4.22 million tons, as well as the construction of 105 wholesale markets for agricultural products and cold-chain logistics facilities with a handling capacity of 8 million tons. We carried out the project on rural goods distribution to get retailers to open stores in more townships and villages, and got standardized rural stores to set up in 75% of the country’s villages.

4. We speeded up adjustment to the economic structure.

Fresh progress was made in scientific and technological innovation and development of high-technology industries. We introduced guidelines on deepening reform of the management system for science and technology and accelerating development of a national innovation system, and promulgated and implemented the plan to develop strategic emerging industries in the Twelfth Five-Year Plan period. Spending on R&D as a percentage of GDP reached 1.97%. New economic growth areas such as biomedicine, online information services, and ocean engineering equipment grew rapidly. Value-added of high-tech manufacturing industries grew 12.2%, 2.2 percentage points higher than the growth rate of value-added of large industries. Transformation and upgrading of traditional industries progressed further, projects to relocate some major coastal steel bases and steel mills in cities were launched, and the proportion of new dry-process cement reached over 90% of total cement output. Enterprise mergers and reorganizations continued to make progress, and fresh results were achieved in closing down outdated production facilities. We made progress in developing the service sector and quickly developed producer and consumer services. Value-added of the service sector increased 8.1%, 0.2 percentage points higher than the planned target, and this sector continued to rank first in employing people. Transportation infrastructure and energy production are now better able to meet demand. We put into operation 5,382 kilometers of new railway lines, including 2,723 kilometers of high-speed railway lines; opened 58,672 kilometers of new highways to traffic, including 9,910 kilometers of expressways; put into service 96 seaport berths for 10,000 ton-class or larger ships; and built two new civilian airports. We intensified construction of large energy production bases, and accelerated development of green mining and the comprehensive upgrading and renovation of coal-fired power plants. The installed power-generating capacity of on-grid wind power and photovoltaic power facilities increased 15 million kilowatts and 3 million kilowatts, respectively. The output of raw coal, crude oil, and natural gas rose by 3.8%, 2.3%, and 4.4% year on year, respectively. Electricity production increased by 4.8%.

Regional development became better balanced. Construction began on 22 more major projects for the large-scale development of the western region, with a total investment of 577.8 billion yuan. Intensive pairing assistance was provided to Xinjiang, Tibet, and Tibetan ethnic areas in Sichuan, Yunnan, Gansu, and Qinghai provinces; the inland and border areas were opened wider to the outside world; and the reconstruction in Yushu, Qinghai, registered steady progress, and came to a successful end in Zhugqu, Gansu. We opened northeast China wider to the outside world. We achieved notable progress in ecological conservation and economic transformation in forest regions, and made coordinated efforts to promote transformation and upgrading of old industrial bases and sustainable development of resource-dependent cities and industrial and mining areas. We introduced the guidelines on the strategy for energizing development of the central region, and made significant progress in developing three different types of production bases and a system of integrated transportation hubs in the region. The central and western regions maintained powerful momentum in receiving industries relocated to them. The eastern region picked up speed in taking the lead in development and economic transformation. The Beijing-Tianjin-Hebei region and the Yangtze River and Pearl River deltas greatly improved the quality of their development. The pilot project to develop the marine economy proceeded smoothly. The functional zoning strategy was implemented thoroughly, with the central government increasing its transfer payments to national functional ecological zones of key importance by 23.7%, and with provincial-level plans being basically linked and coordinated with the national strategy. We increased support to old revolutionary base areas, ethnic minority areas, and border areas; and vigorously promoted poverty alleviation and development in contiguous areas with acute difficulties. We relocated 1.95 million impoverished rural residents from inhospitable areas, exceeding the planned target by more than 900,000. China’s urbanization rate reached 52.57%, 0.5 percentage points higher than the targeted figure.

5. Great efforts were made to conserve energy, reduce emissions, and protect the environment.

Energy consumption per unit of GDP met the planned target by dropping 3.6%, 1.59 percentage points more than the previous year. We continued with the project to promote energy-efficient products for the benefit of the people, and comprehensively stepped up efforts to conserve energy and reduce emissions in key areas such as manufacturing, construction, transportation, and public institutions. We further improved policies for encouraging development of a circular economy. We intensified efforts to carry out pilot projects for demonstration of recovering mineral resources from city waste, upgrading industrial parks to make their operations more circular, promoting remanufacturing, and facilitating comprehensive use of resources. We supported 489 major demonstration projects to develop a circular economy and conserve resources, capable of saving 260 million tons of water and recycling over 69 million tons of waste annually. We continued to carry out key ecological projects to protect virgin forests, return farmland to forests and grazing land to grasslands, build forest shelterbelts, control the sources of dust storms affecting Beijing and Tianjin, and comprehensively deal with stony deserts. During the year, 6.01 million hectares of land were afforested and 5.827 million hectares of degraded grasslands were improved. We modified ambient air quality standards by including the monitoring of fine particulate matter (PM2.5) and published relevant data in some areas and cities. We moved faster to construct urban sewage and garbage treatment facilities and sewer lines, increasing daily capacity of wastewater treatment by 11.06 million tons, recycled water production by 2.21 million tons, and garbage treatment by 93,000 tons. Sulfur dioxide emissions, chemical oxygen demand, ammonia nitrogen, and emissions of nitrogen oxide dropped 4.52%, 3.05%, 2.62%, and 2.77%, respectively, water consumption per 10,000 yuan of value-added of industry decreased 8%, and the percentages of urban sewage treated and urban household waste safely handled reached 84.9% and 81%, respectively, all meeting their planned targets. We made steady progress in responding to climate change. Carbon dioxide emissions per unit of GDP decreased 5.02%, 1.52 percentage points higher than the planned target. We energetically promoted South-South cooperation in responding to climate change, played a constructive role in international talks, and made important contributions to the positive outcomes achieved at the Doha United Nations Climate Change Conference.

6. Reform and opening up continued to deepen.

We carried forward reforms in major areas and key links. Ministries directly under the State Council eliminated or streamlined another 314 items subject to examination and approval, making this the sixth time they did this and bringing the total number of eliminated or streamlined items to 2,497, 69.3% of the total. We upheld and improved the basic economic system, and steadily carried out the reform and reorganization of state-owned enterprises. Nine companies of which central government enterprises hold the controlling interest became listed on domestic or overseas stock markets, and the pilot project for standardizing boards of directors was extended to 51 central government enterprises. We formulated and implemented the guidelines on further supporting the sound development of small and micro businesses, and introduced 42 detailed rules for implementing the guidelines on encouraging and guiding the sound development of nongovernmental investment. We intensified efforts to reform prices of resource products, progressed smoothly with trial reforms of progressive pricing for household electricity consumption and the pricing mechanism for natural gas, and further improved the pricing mechanisms for electricity generated from renewable energy sources and for hydropower and nuclear power. We accelerated reform of the fiscal, taxation, and financial systems. We extended trials to replace the imposition of business tax with value-added tax (VAT) to nine provinces and municipalities directly under the central government and three cities specially designated in the state plan. We established experimental zones for comprehensive financial reform and pushed forward rural financial reform. We expanded the floating range for interest rates on RMB deposits and loans, made the exchange rates for RMB against other currencies more flexible, and steadily widened the use of RMB in cross-border trade and investment. We achieved fresh progress in comprehensive rural reforms and the tenure reform for collective forests, and carried out the trial reform of state-owned forestry farms in an orderly manner. We obtained significant results in the reform of the medical and health care systems and launched the plan for deepening it in the Twelfth Five-Year Plan period. We consolidated the system for basic drugs, and pressed ahead with the comprehensive reform of community-level medical and health care institutions and the trial reform of county-level public hospitals. The three basic medical insurance schemes have covered over 95% of the country’s urban and rural residents. We made new breakthroughs in reforming and making innovations in cultural systems and mechanisms, and basically completed the tasks of turning the nation’s state-owned theatre troupes into enterprises or dissolving or merging them.

Our external economy maintained steady growth. In the face of world economic stagnation and weak external demand, we promptly introduced policies and measures to stabilize and stimulate foreign trade. As a result, China’s total trade volume grew 6.2%, and we maintained and expanded our market share in international trade. Exports grew 7.9%, and imports grew 4.3%, resulting in a trade surplus of $231.1 billion. The Revised Catalogue of Industries for Foreign Investment was implemented, and there was an obvious trend of foreign investment going to service industries. Non-financial foreign direct investment actually utilized in 2012 totaled $111.7 billion, down 3.7%. Chinese companies expanded their overseas presence more quickly, and last year China’s non-financial outward direct investment reached $77.2 billion, up 28.6%. Receipts from overseas contracting projects amounted to $116.6 billion, an increase of 12.7%.

7. New results were achieved in ensuring and improving the people’s wellbeing.

The overall employment situation remained stable. An additional 12.66 million urban jobs were created, 3.66 million more than the targeted amount, and the urban registered unemployment rate at the end of 2012 stood at 4.1%, well below the target. Individual income increased rapidly, with urban per capita disposable income reaching 24,565 yuan and rural per capita net income reaching 7,917 yuan, up 9.6% and 10.7%, in real terms after adjusting for inflation, respectively, both higher than the economic growth rate. We further increased the level of social security benefits. We realized the full coverage of the new type of old-age insurance for rural residents and the old-age insurance system for non-working urban residents, launched the major disease insurance pilot program for rural and non-working urban residents, and increased government subsidies for the new type of rural cooperative medical care system and the basic medical insurance scheme for non-working urban residents to 240 yuan per person per year. By the end of 2012, urban population covered by basic old-age, basic medical, unemployment, worker’s compensation, and maternity insurance totaled 324.8 million, 535.89 million, 152.25 million, 189.93 million, and 154.45 million, respectively, and the number of people covered by the new type of old-age insurance for rural residents reached 462.69 million. The system of subsistence allowances benefited 53.409 million rural residents and 21.425 million urban residents. While continuing to strengthen regulation of the real estate market, we further increased support for government-subsidized housing development. Last year we basically completed work on 6.01 million units of government-subsidized housing in urban areas and began construction on an additional 7.81 million units, with both numbers exceeding the planned figures.

Social programs developed faster than before. Steady progress was made in promoting education reform and development. In 2012, government spending on education reached the target of 4% of GDP, and the three-year safety renovation program for primary and secondary school buildings was basically completed. We continued to build dormitories for teachers at rural schools in remote areas and areas with harsh conditions, promote rural preschool education, and carry out the pilot project to improve nutrition for rural students receiving compulsory education. We promulgated and implemented the regulations on ensuring school bus safety. The tuition exemption policy for secondary vocational education was extended to cover all rural students. We basically solved the problem of ensuring children of rural migrant workers have access to compulsory education in cities where they live, and worked in an orderly manner to help these children take part in local high school and college entrance examinations. The retention rate of nine-year compulsory education was 92%, up 0.5 percentage points over the previous year, the gross enrollment ratio for senior secondary education reached 85%, up 1 percentage point, and regular undergraduate and graduate enrollment totaled 6.888 million and 590,000, respectively, all meeting the targets. We improved our ability to provide medical and health care services. The community-level medical and health care service system was further improved in urban and rural areas. We accelerated development of the emergency medical service system in rural areas, the prevention and control system for major diseases, health oversight institutions at the county level, and the children’s medical service system. We gradually tied in information about medical services, drug oversight, medical insurance, public health, and overall medical management. Training of general practitioners was intensified. Hospitals and health clinics provided 3.73 beds per 1,000 people, up 6.6% year on year. The public cultural services system continued to improve. We continued to extend radio and television coverage to villages. We supported ethnic minorities’ capacity building in the press and publishing, and also supported development of prefecture-level facilities for public cultural services and facilities for preserving national cultural and natural heritage sites. We started implementing the fifth phase of the Tibet-Xinjiang Project to extend radio coverage in the western region. Museums, libraries, and cultural centers were opened to the public free of charge. The culture industry system further improved, and the culture industry as a whole grew in both scale and strength. We promulgated and implemented the plan for improving tourism infrastructure and the plan for carrying out the second phase of the project to develop tourist sites related to the early history of the CPC. Annual income from tourism totaled 2.59 trillion yuan, an increase of 15.2% over the previous year. Public sports venues of all kinds exceeded one million. The natural population growth rate, which met the target, was 4.95‰.

Over the past year, the Central Committee of the Party and the State Council united with and led the people of all ethnic groups in China in implementing the Scientific Outlook on Development; accelerating the change of the growth model; correctly handling the relationships between ensuring steady and rapid economic development, adjusting the economic structure, and managing inflation expectations; and overcoming various difficulties and adverse effects. The national economy showed a good momentum of stabilized growth, improved structure, stable prices, and improved people’s lives. These hard won achievements can be attributed to the broad vision and scientific policymaking of the Central Committee of the Party and the State Council, to the close cooperation and solid work of all regions and departments, and to the unity and hard work of the people of all ethnic groups in China.

At the same time, we are keenly aware that China still faces many risks and challenges in its development.

The world financial crisis is continuing to have a profound effect, the global economy is growing sluggishly, latent inflationary pressure is on the increase, developed economies are subject to high fiscal and financial risks, and protectionism in international trade and investment has intensified.

Domestically, unbalanced, uncoordinated, and unsustainable development remains a serious problem, and is very acute in some areas.

First, the foundation for economic turnaround is not firm. Consumption is unable to provide a very strong impetus to economic growth, enterprises are less able and willing to invest, and external demand will not change for the better in the near future.

Second, some enterprises have difficulties with their production and operations. The rising cost of factors of production and weak innovation capabilities have caused a profit squeeze among enterprises. The proportion of loss-making large industrial enterprises has increased by 2.2 percentage points over the previous year, and the difficulties of small and micro businesses have been even more severe.

Third, overcapacity is a serious problem. Traditional manufacturing industries, especially those that are energy intensive and have high emissions, are plagued by overcapacity, and some emerging industries are undergoing haphazard development, thus making it difficult to improve enterprises’ performance and industrial competitiveness.

Fourth, it has become harder to promote steady growth of agricultural production and increase rural income. Arable land, fresh water, and other natural resources are highly strained, agricultural infrastructure is weak, and increases in rural residents’ income from both agricultural and nonagricultural work may slow down. In addition, slowing economic growth and enterprises’ difficulties will continue to affect employment over time. The imbalance between government revenue and expenditures is serious. Latent risks exist in the financial sector. The need to protect the ecological environment is pressing. Some cities are under pressure for housing prices to rebound. The problem of various kinds of wastefulness is staggering. Many issues concerning land expropriation, housing demolition, workplace safety, food safety, and income distribution have quite an impact on social harmony and stability.

We must take these problems very seriously and adopt measures to solve them.

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