Full text: Report on China's economic, social development plan

II. General Requirements and Major Targets and Policies for Economic and Social Development in 2014

The year 2014 is the first year for implementing the decision of the CPC Central Committee to comprehensively deepen reform and a crucial year for fulfilling the targets and tasks set in the Twelfth Five-Year Plan. We need to thoroughly implement the guiding principles of the Eighteenth National Party Congress and the second and third plenary sessions of the Eighteenth CPC Central Committee, accord with the policy decisions and arrangements of the Central Committee and the State Council, adhere to the general work principle of making progress while maintaining stability, carry out reform and innovation in all areas of economic and social development, maintain continuity and stability in our macroeconomic policy, strive to invigorate the market, accelerate the shift in the growth model and structural adjustment, intensify development of the basic public services system, work hard to ensure and improve people's wellbeing, genuinely raise the quality and returns of economic development, and promote sustained, sound economic growth and social harmony and stability.

In view of these requirements and after consideration of what is needed versus what is possible, we have set the following main targets for economic and social development in 2014.

- Keeping economic growth within a proper range. GDP is projected to grow by around 7.5%. This target has been set on the basis of overall consideration of the need to implement reform, promote adjustment, improve people's wellbeing, and guard against risks. On the one hand, development still holds the key to solving all our country's problems. To move economic structural adjustment forward, stabilize and increase employment and ensure and improve people's wellbeing, we must keep the economy growing within a reasonable range. We must rely on development even more to further reduce poverty and finish building a moderately prosperous society in all respects. On the other hand, there are quite a few favorable conditions for us to maintain steady growth this year. Our efforts to comprehensively deepen reform will give fresh impetus and vitality to economic development, policies and measures introduced earlier to keep growth stable will continue to have an effect, and consumption, investment and external demand will all provide support for our economic growth. At the same time, it is inappropriate to set a growth rate that is too high. China is now in a crucial stage of hastening the shift in the growth model and the job of industrial transformation and upgrading is heavy. The growth rate of around 7.5% is an economic growth target that is flexible and guiding. Local governments should properly set their own growth rates in line with their actual conditions, and must not seek faster growth or compete with each other to have the highest growth rate.

- Focusing on raising the quality and returns of economic development and promoting industrial upgrading. We will accelerate development of modern service industries, and the share of value-added by the service sector in GDP will continue to rise. Our R&D spending will account for a higher proportion of GDP, the transformation and upgrading of traditional industries will be accelerated, and strategic emerging industries will enjoy healthy development. A new type of urbanization will proceed in an orderly way, and development in different regions will become better balanced. Positive ecological progress will be made. Energy consumption per unit of GDP will drop more than 3.9%; carbon dioxide emissions per unit of GDP will fall 4%; the emissions of sulfur dioxide, chemical oxygen demand, and ammoniacal nitrogen will all drop 2%, and nitrogen oxides emissions, 5%. Water consumption per 10,000 yuan of value-added of industry will decrease 5.2%. Accelerating economic transformation and upgrading is an onerous and pressing task facing us, and we must not sacrifice structural adjustment as well as natural resources and the environment for the sake of rapid growth. This combination of targets that has been put forward will guide all sectors to channel their energy into improving the industrial structure, pressing ahead with a new type of urbanization, better balancing development in different regions, and promoting ecological advancement; to remove major structural barriers; and to improve the quality and returns of economic development.

- Keeping prices basically stable. The rise in the CPI will be kept at about 3.5%. In setting this target, we have considered factors causing inflation and people' s ability to tolerate it, and have also left space for reform and structural adjustment. On the one hand, the present basic equilibrium between aggregate supply and aggregate demand, the year-to-year increases in grain output, and the ample supply of almost all products provide a good foundation and many beneficial conditions for keeping overall prices basically stable. On the other hand, there is some upward pressure on inflation this year, and there are both the carry-over effect of last year' s inflation and new factors causing inflation. At the same time, there is the need to move forward with the reform of prices of resource products. We will therefore need to work hard to attain this target.

- Giving high priority to improving people's wellbeing. More than ten million urban jobs will be added this year; the registered urban unemployment rate will be kept under 4.6%, and the survey-based unemployment rate in large cities will be kept at an appropriate level. Both urban and rural incomes will increase basically in step with economic growth. The social security system will be improved. Basic public services will be made more equally available. The natural population growth rate will be kept under 6.5 per thousand. Work on 4.8 million government-subsidized housing units will be basically completed in urban areas, and construction will begin on an additional seven million-plus units. This year' s target for urban job creation is one million more than last year mainly to better meet the needs of the urban workforce entering the job market for the first time and to respond to the fact that employment pressure will be considerable because more students will graduate from college this year. At the same time, we have the conditions to meet this target because as the GDP base increases and service sector growth speeds up, more jobs will be created with every percentage point growth in GDP.

- Maintaining basic balance in international payments. Total imports and exports will grow roughly 7.5%, and the trade in services will develop more rapidly. Overseas investment will increase steadily. Total foreign investment in China will remain stable and its structure will be improved. The policies for promoting steady import and export growth will continue to produce effects, which will help boost business confidence and maintain stable growth of foreign trade. However, at the same time, competition in the international market is escalating, investment and trade protectionism is clearly reasserting itself, and China's export situation remains grave. We are thus under considerable pressure to consolidate and expand external demand.

To achieve these targets for economic and social development and do our economic work well in 2014, we must seek progress while ensuring stability and carry forward reform and innovation. To this end, we will continue to implement a proactive fiscal policy and a prudent monetary policy, constantly improve our methods and tools of macro control, and make controls more forward-looking, targeted and balanced.

We will continue to implement a proactive fiscal policy. The national deficit for this year is projected to be 1.35 trillion yuan or 2.1% of GDP, an increase of 150 billion yuan over last year' s budget. Of this amount the central government deficit is 950 billion yuan, and the remaining 400 billion yuan is local government deficit in treasury bonds of the central government [xx please leave these xx alone for now]. Our policy priorities will be as follows:

First, we will improve the structural tax reduction policy by extending the trial of replacing business tax with VAT to more industries, extending preferential tax policies to more small businesses with low profits, and implementing fiscal and tax policies to encourage the development of annuities in business and industry retirement plans.

Second, we will improve the structure of expenditures. We will continue to focus on ensuring and improving people's wellbeing and give preferential treatment to agriculture, education, social security, health, environmental protection, and science and technology. We will strictly control our expenditures on official overseas visits, official vehicles, and official hospitality to cut administrative costs.

Third, we will use additional capital well, seek greater returns on assets on hand, develop a mechanism for clearing carryover funds on a regular basis, and use funds more through overall planning.

Fourth, we will strengthen management of local government debt, move faster to create a mechanism for local governments to borrow money mainly through issuance of government bonds, and work to put in place standardized, proper mechanisms for managing central and local government debts and giving early warning against debt risks.

We will continue to implement a prudent monetary policy. M2 is forecast to grow at around 13% this year. Our policy priorities are:

First, we will apply a combination of monetary policy tools, strengthen macro-prudential management, guide steady and appropriate growth in the supply of money and credit and the aggregate financing to the real economy, maintain proper liquidity, and create a stable monetary and banking environment.

Second, we will improve the allocation of financial resources, make good use of both existing and additional financial resources, and speed up the turnover of funds. We will encourage and guide financial institutions to increase their financial support for agriculture, rural areas and farmers, small businesses with low profits, and structural adjustments; and we will increase the ability of the financial services sector to serve the real economy and support industrial transformation and upgrading. We will diversify financial markets and products as well as market actors, and increase the proportion of direct financing.

Third, we will improve the mechanism for coordinating oversight and supervision efforts in the financial sector; tighten oversight over risks from credit, bonds, wealth investment products, interbank trading, trusts and similar businesses; and hold to the bottom line of making sure that no systemic or regional financial risks occur. We will keep a close watch on the cross-border flow of capital and prevent major shocks to economic and financial activities caused by the high-volume abnormal flow of capital. We will keep the RMB exchange rate basically stable at an appropriate, balanced level.