Government Work Report (2006)

The following is the full text of the Report on the Work of the Government delivered by Premier Wen Jiabao at the Fourth Session of the Tenth National People's Congress on March 5, 2006.

(Delivered at the Fourth Session of the Tenth National People's Congress on March 5, 2006)

On behalf of the State Council, I would like to present to you the following report on the work of the government for your deliberation and approval. I also welcome comments and suggestions on my report from the members of the National Committee of the Chinese People's Political Consultative Conference.

-- Economic growth was fast yet steady. China's GDP reached 18.23 trillion yuan in 2005, an increase of 9.9 percent over the previous year. Government revenue exceeded 3 trillion yuan, 523.2 billion more than the previous year. The consumer price index rose by 1.8 percent. China's economy was in good shape and characterized by fast growth, improved economic returns and stable prices.

-- Major steps were taken in reform and opening up. Breakthroughs were achieved in some key areas. China's import and export volume totaled 1.42 trillion U.S. dollars, an increase of 23.2 percent. Total foreign direct investment actually used reached 60.3 billion dollars, and the country's foreign exchange reserves totaled 818.9 billion dollars at the end of 2005.

-- Continued progress was made in social programs. Science and technology, education, culture, health, sports and other undertakings developed in an all-round way. The success of the Shenzhou VI manned space flight shows that China has reached world-class levels in some key areas of science and technology.

-- People's lives continued to improve. A total of 9.7 million urban residents entered the workforce for the first time last year. Urban per capita disposable income rose to 10,493 yuan, an increase of 9.6 percent after adjusting for inflation, and rural per capita net income grew to 3,255 yuan, an increase of 6.2 percent after adjusting for inflation.

China took another substantial step forward on the road of building a moderately prosperous society in all respects.

We adopted a scientific outlook on development to guide China's overall economic and social development last year. We mainly undertook the following tasks.

1. Solving the major problems affecting economic performance. We continued to exercise effective macroeconomic regulation in accordance with the principle of taking different approaches to different situations and encouraging the growth of some sectors while discouraging the expansion of others. We used a combination of fiscal, tax, monetary and land policies to curb overheated growth in fixed asset and real estate investment and ballooning housing prices. In addition, we increased investment in weak links such as agriculture, energy, transport, and social programs to promote balanced development and provide momentum for future development. We improved economic regulation and reduced the pressure on tight supplies of coal, electricity, and petroleum and on the overloaded transportation system, thus ensuring fast yet steady growth of China's economy.

2. Promoting economic restructuring and change of the pattern of economic growth. Work related to agriculture, rural areas and farmers was further intensified. The agricultural tax was rescinded in 28 provinces, autonomous regions and municipalities directly under the central government, and the livestock tax was rescinded nationwide. We increased subsidies to grain producers and transfer payments to major grain-producing counties and financially strapped counties, set floor prices for the purchase of key grain varieties in some major grain-producing areas, and increased rural incomes through a variety of channels. Last year, 297.5 billion yuan from the central government budget was spent on agriculture, rural areas and farmers, a year-on-year increase of 34.9 billion yuan. Having risen considerably the previous year, total grain output rose again by 14.54 million tons to 484.01 million tons. The increased overall agricultural capacity, stable increase in grain production and steady increase in rural incomes provide the foundation for ensuring fast yet steady economic development and social stability.

In industrial restructuring, we formulated and implemented development programs and industrial policies for energy, important raw material production, equipment manufacturing and other sectors, and adopted policy measures to encourage development of the wholesale and retail industry. We guided and supported major industries to ensure their sound development and closed down a number of production facilities that had backward equipment, wasted energy, created serious pollution and were unsafe.

We paid particular attention to energy and resource conservation and environmental protection and laid out tasks, policies and measures for building a resource-conserving society and developing a circular economy in order to change the pattern of economic growth. We launched 178 major projects that save energy and water and comprehensively utilize resources. Management of mineral exploration and exploitation, land use, and urban and rural planning was enhanced. Last year, 15.2 billion yuan from the sale of treasury bonds was used to finance key ecological projects undertaken to prevent and control pollution in the basins of the Huai River, Tai Lake and other major rivers and lakes, protect virgin forests, return farmland to forests or grassland, and prevent and control desertification. We launched special projects to address serious environmental problems that were endangering people's health.

3. Deepening economic restructuring and opening China further to the outside world. Trials of comprehensive rural reform were carried forward. Significant progress was made in introducing a shareholding system in state-owned commercial banks and in reforming rural credit cooperatives. Reform of the shareholder structure of listed companies made steady progress. Reform of the mechanism for setting the Renminbi exchange rate was implemented smoothly. Introduction of a modern corporate structure in state-owned enterprises was accelerated. A total of 21.9 billion yuan was allocated by the central government to subsidize the policy-based closure and bankruptcy of 116 state-owned enterprises. The work of relieving enterprises of their obligation to operate social programs continued. Reform in the areas of public finance, tax, investment and pricing was deepened. Reform of the postal service system was initiated. Further progress was made in the reform of the railway and civil aviation systems. Policy measures were adopted to encourage, support and guide the growth of the non-public sector of the economy. Breakthroughs were made in reforms in some major areas.

We actively addressed new issues arising in the course of opening China to the outside world. The structure of foreign trade was improved by adjusting policies concerning export rebates, tariffs and processing trade. The export rebate mechanism was improved. Steady progress was made in opening the service sector to foreign competition. Overall arrangements were made for work after the transition period following China's entry into the WTO.

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