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Full text of the government work report

(Xinhua)
Updated: 2004-03-16 14:37

Report on the Work of the Government

By Premier Wen Jiabao on March 5, 2004

Following is the full text of the Report on the Work of the Government
delivered by Premier Wen Jiabao at the Second Session of the Tenth
National People's Congress on March 5, 2004.

Fellow Deputies,

Premier Wen Jiabao delivers his government work report to the NPC.
[chinadaily.com.cn]
This government has now been in office for a year. I now submit a report
on its work on behalf of the State Council for your examination and
approval and also for comments from members of the National Committee of
the Chinese People's Political Consultative Conference. I. Review of the
Past Year's Work

Last year was a significant and unusual year in the course of China's
development. It was a year in which we made remarkable achievements in
reform and opening up and in the modernization drive. In the face of a
complex and volatile international situation, the unexpected outbreak of
the severe acute respiratory syndrome (SARS) and frequent natural
disasters, governments at all levels and the people of all our ethnic
groups put into practice the guiding principles of the Sixteenth National
Congress of the Communist Party of China (CPC) under the leadership of
the CPC and the guidance of Deng Xiaoping Theory and the important
thought of Three Represents. We braved difficulties and hardships in an
indomitable and innovative spirit and made important advances in building
a moderately prosperous society in all respects.

-- We won a great victory in the fight against SARS.

-- The economy grew rapidly. China's GDP increased by 9.1% over the
previous year and reached 11.67 trillion yuan. Per capita GDP passed the
important benchmark of US$ 1,000, calculated at the current exchange rate.

-- China's financial strength grew noticeably. Total government revenue
was 2.17 trillion yuan, 278.7 billion yuan more than the previous year.

-- Foreign trade expanded significantly. Total import and export volume
was $851.2 billion, 37.1% more than the previous year, raising China from
fifth to fourth place in the world.

-- We created more jobs than planned

-- 8.59 million urban residents became employed and 4.4 million laid-off
workers, reemployed.

-- People's incomes increased. Urban per capita disposable income grew by
9% in real terms, and rural per capita net income rose by 4.3% in real
terms.

-- China's first manned spaceflight was a complete success. These
achievements indicate that China's overall national strength has reached
new heights. They have boosted the confidence and courage of all our
people to continue forging ahead. The work we did over the past year was
mainly in the following six areas.

1. Taking resolute measures against SARS and concentrating our resources
on the campaign against it

China suffered from a disastrous SARS outbreak last spring. The Party
Central Committee and the State Council gave top priority to protecting
people's health and lives and promptly investigated SARS and took steps
to prevent and treat it. We enforced the Law of the People's Republic of
China on the Prevention and Treatment of Communicable Diseases,
formulated the Regulations on Public Health Emergency Response, and
classified SARS as a communicable disease. We reported the facts of the
SARS situation exactly as they were and mobilized the general public
throughout the country to control the outbreak. The State Council and
local governments established anti-SARS headquarters to coordinate human,
material and financial resources and to make full use of primary-level
organizations in both urban and rural areas, so as to ensure that
prevention and treatment work was done quickly and orderly. We organized
research on and made significant progress in diagnosing, treating and
preventing SARS. We took such measures as providing free treatment for
SARS patients among rural workers in urban areas to prevent the spread of
SARS to rural areas. During the difficult days of our anti-SARS campaign,
leading cadres at all levels took to the frontlines, the people
throughout the country united as one, all sectors of society pulled
together, large numbers of medical workers faced danger fearlessly, and
the Chinese nation withstood a severe test.

2. Exercising timely and appropriate control to promote stable and rapid
economic development

We adhered to the policy of expanding domestic demand and continued to
implement a proactive fiscal policy and a prudent monetary policy. We
took measures to exercise macro-control over new developments as soon as
they arose in the course of economic operation.

When the SARS outbreak hit, we worked unflaggingly to prevent and control
it, while at the same time unswervingly promoting economic development.
We concentrated on strengthening key areas, stimulating industrial
production and ensuring unimpeded flow of goods and materials. In
addition, we promptly adopted such supportive policies as reducing or
exempting taxes and administrative charges on industries that were worst
hit by SARS and granting soft loans to them. We also enacted measures for
increasing employment and rural incomes. All this helped minimize the
impact of the SARS outbreak on economic development.

We provided guidance and control for investment, mainly through a
combination of economic and legal means. We further rectified and
standardized the order of the land market and screened development zones
of all types to stop disorderly and unauthorized acquisition of farmland.
We increased the deposit-reserve ratio for financial institutions to an
appropriate level to bring the excessively rapid growth of credit under
control. In exercising control, we did an appropriate amount of
fine-tuning and dealt with problems individually.

We expanded support for agriculture, rural areas and farmers and made
plans in a timely fashion to ensure the continued enthusiasm of major
grain producing areas and grain producers. We strengthened coordination
of economic operation and took measures to increase supply and rationally
guide the growth of demand, thus alleviating transport difficulties and
shortages of coal, electricity, petroleum and important raw and processed
materials.

We stepped up the strategic restructuring of the economy and put greater
efforts into a number of key projects vital to economic growth and
economic restructuring. In particular, we sped up the launching and
construction of water control, energy and transport projects. The second
phase of the key water control project at the Three Gorges on the Yangtze
River was completed successfully and work on the third phase began. The
eastern section of the pipeline for transmitting natural gas from the
west to the east was completed. Laying of track proceeded smoothly on the
Qinghai-Tibet Railway trunk line. Transmission of electricity from the
west to the east was increased. Construction of the eastern and central
routes of the south-to-north water diversion project began. Large-scale
development of the western region continued. Implementation of the
strategy to revitalize northeast China and other old industrial bases was
begun.

3. Accelerating the development of social undertakings on the basis of an
overall consideration of all issues

The spread of SARS exposed problems arising from disparities between
economic and social development. We promptly made necessary adjustments
to the government's priorities and investment to stimulate the
development of social undertakings. The central government spent 85.5
billion yuan in 2003 on education, health, science and technology,
culture and sports, 12. 4% more than the previous year. Treasury bonds
worth 16.3 billion yuan were issued to support the development of social
undertakings, an increase of nearly 200%.

We improved the national public health system, focusing on epidemic
prevention and control and on rural areas. The National Plan for
Developing an Information System for Public Health Monitoring and the
National Plan for Developing a System for Medical Rescue and Treatment in
Public Health Emergencies were formulated and implemented. A system was
set up for early warning and response for public health emergencies.
Public health infrastructure was improved, with the focus on networks
spanning provincial, city (prefecture) and county levels for disease
prevention and control. The central government worked with local
governments to build more rural health and medical institutions. Pilot
projects for a new cooperative medical care system and medical assistance
system were initiated in rural areas.

The State Council issued the Decision on Further Strengthening Rural
Education. Increased financial support was extended to rural education
from the central budget and treasury bonds. Priority was given to
subsidizing rural teachers' salaries in the central and western regions,
renovating dangerous primary and secondary school buildings, carrying out
pilot projects in modern distance education and aiding needy students.
Many cities began to make schooling available for the children of migrant
rural workers, and the governments of those cities took over primary
administrative responsibility.

Great progress was made last year in basic research, strategically
important hi-tech research, and industrial application of new and high
technologies. The State Council began formulating a national medium- to
long-range program for scientific and technological development. It
organized many experts to participate in feasibility studies and a number
of important research results have already been obtained.

Reform of the cultural system and the development of cultural
undertakings were vigorously promoted. Efforts were intensified to
rectify the cultural products and services market. Fresh achievements
were made in amateur and competitive sports.

Population and family planning work was further strengthened. Fresh
progress was made in the areas of land and resources administration,
environmental protection, forestry development and ecological improvement.

4. Caring for people's well-being, creating more jobs and administering
social security work well

We consider it highly important to protect the vital interests of the
people and help them, especially the needy, in solving problems in their
work and daily lives. Governments at all levels conscientiously
implemented a series of measures drawn up by the Party Central Committee
and the State Council for increasing employment and reemployment and
increased their efforts, capital spending and policy support in this
regard. The central government allocated an additional 4.7 billion yuan
of subsidies for job creation. We increased our employment guidance and
services for last year's college graduates, who were the first to be
enrolled under the college expansion plan of 1999. By the end of last
year, 83% of last year's graduates from regular institutions of higher
learning had found jobs, 600,000 more than the previous year.

To continue ensuring the "two guarantees" (guaranteeing that the living
allowances for workers laid off from state-owned enterprises and that the
pensions of retirees are paid on time and in full) and the "three-stage
guarantee" for laid-off workers, the central government spent 70 billion
yuan in 2003, 19.9% more than the previous year; of this sum, subsidies
for subsistence allowances for the urban poor increased from 4.6 billion
yuan in 2002 to 9.2 billion yuan in 2003. This allowed 22.35 million
urban residents throughout the country to receive such benefits. In 2003,
the central government began making annual allocations of special funds
to help local governments assist ex-servicemen who are working in
enterprises to solve their financial difficulties. Benefits were again
raised for disabled revolutionary servicemen and other people who are
entitled to special care by the government.

We further intensified efforts to alleviate rural poverty through
development and we invested more to improve working and living conditions
in underdeveloped areas. We made all-out efforts to fight disasters and
ensure adequate disaster relief. Central budget funds totaling 8.03
billion yuan were spent on relief for people affected by floods,
droughts, earthquakes or other disasters, up 63.9% over the previous
year, and 2.79 billion yuan was invested in post-disaster reconstruction.
As a result, proper living arrangements were made for people in
disaster-afflicted areas, production resumed and reconstruction proceeded
in an orderly way. Governments at all levels took the problem of wage
arrears for migrant rural workers very seriously, worked harder to
resolve it and achieved initial results.

5. Pressing forward with institutional innovation and making significant
progress in reform and opening up Institutional restructuring of the
State Council was accomplished smoothly on the basis of the plan approved
at the First Session of the Tenth National People's Congress and the
adjusted and newly set up bodies are now operating normally. Significant
progress was made in establishing a macro-control mechanism,
restructuring the management of state assets and establishing a mechanism
for oversight and management of the banking sector. We unified the
mechanisms for administering domestic and foreign trade and improved
monitoring systems for food and workplace safety. Institutional
restructuring of provincial governments has been basically completed. The
reform of the administrative examination and approval system was deepened.

Fresh progress was made in transforming state-owned enterprises into
stock companies. Reforms of the electricity, telecommunications and civil
aviation industries were accelerated. The economic returns of state-owned
industrial enterprises and enterprises whose controlling stake was owned
by the state increased substantially; they generated a total of 378.4
billion yuan in profits, 45.2% more than the previous year. The reforms
of the banking, securities and insurance industries progressed steadily.
We formulated and implemented a pilot plan to transform state-owned
commercial banks into stock entities. The system for examining and
verifying the issuance of securities was reformed. Remarkable progress
was made in transforming state-owned insurance companies into stock
companies. After several years of deliberation, we began a pilot project
for reforming rural credit cooperatives in eight provinces and
municipalities directly under the central government. The experimental
reform of rural taxes and administrative charges was extended to cover
the whole country. Policies and measures for promoting the development of
the non- public sectors of the economy were further implemented. We
deepened the rectification and standardization of the market order and
cracked down on manufacturing and marketing of counterfeit and
substandard goods, smuggling and other illegal and criminal activities.
This improved the market climate and helped protect the legitimate rights
and interests of both consumers and producers.

We worked conscientiously to fulfill the commitments we made for
accession to the World Trade Organization (WTO). We continued to lower
tariff rates and opened the service sector wider to the outside world. We
further relaxed control over who could engage in foreign trade. We
formulated and put into effect a plan for reforming the mechanism for
export tax rebates; this will gradually bring about a rational settlement
of the longstanding problem of overdue export tax rebates. We intensified
our work dealing with anti-dumping investigations made against China and
settling trade disputes. The import and export mix was further improved.
China utilized $53.5 billion in foreign direct investment in 2003. State
foreign exchange reserves reached $403.3 billion at the end of the year,
$116.8 billion more than at the beginning. The exchange rate for the
Renminbi remained stable. Last year, we signed the Closer Economic
Partnership Arrangement with both Hong Kong and Macao, thereby
strengthening economic ties between the mainland and the two regions.

6. Improving the legal system and maintaining social stability

We put great effort into improving government legislation. The State
Council submitted five bills in 2003, including a draft law on oversight
and management of the banking sector and a draft amendment to the Foreign
Trade Law, and enacted 28 administrative regulations, including the
Provisional Regulations Concerning the Oversight and Management of
State-owned Assets in Enterprises. To solve problems in our handling of
indigent migrants, we formulated and implemented the Measures for
Assisting Vagrants and Beggars with No Means of Support in Cities
together with supporting measures. The implementation of the Legal
Assistance Regulations helped solve the difficulties people in financial
straits faced in filing lawsuits.

We increased our efforts to maintain law and order by taking
comprehensive measures, focusing on high-crime areas. We further improved
public order by cracking down more severely on violent and other serious
crimes. We steadfastly enforced laws in the interests of the people and
maintained strict police discipline, and we concentrated on the problems
of detention beyond the legally prescribed time limits and illegal use of
coercive measures to protect the lawful rights and interests of citizens.
We improved the overall quality of procurators and judicial and public
security officers and made full use of the important role of public
security organs and armed police units in safeguarding social stability.

In accordance with the Party Central Committee's instructions,
governments at all levels last year encouraged a groundswell of study and
practice of the important thought of Three Represents and the guiding
principles of the Sixteenth National Congress of the CPC. Socialist
political civilization and spiritual civilization were strengthened. New
achievements were made in building a clean government and fighting
corruption and in our work concerning ethnic, religious and overseas
Chinese affairs. New steps were taken to modernize national defense and
the armed forces. Our diplomatic work entered a new phase.

None of these notable achievements of the past year came easily. We
attribute them to the Party Central Committee's broad vision and correct
leadership and to the concerted efforts of the people of all ethnic
groups. On behalf of the State Council, I would like to express our
sincere gratitude to all our workers, farmers, intellectuals and cadres;
to all those who work for the cause of socialism; and to the members of
the People's Liberation Army, the armed police and the public security
police. I would like to extend our heartfelt thanks to the people of all
ethnic groups, to all democratic parties and mass organizations and to
people from all walks of life for their trust in and support for the work
of the government. I would also like to express our sincere thanks to all
our compatriots in the Hong Kong Special Administrative Region, the Macao
Special Administrative Region and Taiwan as well as overseas Chinese who
care about and support the development and reunification of our
motherland, and to all our friends in other countries who care about and
support China's modernization drive.

In reviewing our work of the past year, we are clearly aware that many
difficulties and problems remain on our way ahead, that there are still
quite a few shortcomings in the government's work, that there remain
areas our people are not satisfied with, and that it will take a long
time to fundamentally eradicate longstanding and deep-seated problems.
Rural incomes have grown too slowly; the task of increasing employment
and improving social security is arduous; development in different
regions of the country is not balanced; the income gap is too wide among
some members of society; and pressure on resources and the environment is
mounting. As economic growth has accelerated, a number of new problems
have emerged. These include, among others, the excessively broad scale of
investment, the serious problem of haphazard investment and low-level,
redundant construction in some industries and regions, the strain between
supply and demand in energy, transport and some raw and processed
materials, the marked decrease in grain production, and the widespread
illegal appropriation of farmland. The development of social undertakings
lags behind, and people have strong complaints about the cost and
availability of schooling and medical treatment. Many low-income
residents in both town and country lead relatively difficult lives.
Serious crimes have occurred in some places. Frequent serious accidents
that inflict heavy loss of life and property have taught us a sobering
lesson. We are also clearly aware that some government officials have a
subjective, formalistic and bureaucratic style of work, and they are
wasteful, extravagant and fraudulent, and sometimes even corrupt. It will
be an arduous task for the government to rectify itself and fight
corruption.

We must not evade these difficulties and problems but instead face them
squarely; we must work hard to resolve them and not let them grow. The
government will shoulder heavy responsibilities for years to come. We
must remain sober-minded, become more aware of potential problems and
enhance our sense of historical responsibility. We must make up our minds
to forge ahead in spite of difficulties and to work in a pioneering and
creative spirit and in a down-to-earth manner. We must take on new tests
with a fresh mental outlook and a new style of work, and we absolutely
must not fail to live up to the expectations of the people.

II. Principal Domestic Tasks for 2004

The year 2004 is a crucial year for China's reform and development. The
main ideas and principal tasks for the work of the government are: to
take Deng Xiaoping Theory and the important thought of Three Represents
as our guide; to comprehensively put into practice the guidelines of the
Party's Sixteenth National Congress and the Third Plenary Session of its
Sixteenth Central Committee; to make the most of the present important
strategic opportunities while they last; to make development our top
priority and adhere to the scientific viewpoint of development; to pay
more attention to exercising macro-control, balancing the interests of
all parties, putting people first, and promoting reform and innovation in
accordance with the "five balanced aspects" (balancing urban and rural
development, balancing development among regions, balancing economic and
social development, balancing development of man and nature, and
balancing domestic development and opening wider to the outside world);
to concentrate on resolving prominent conflicts in economic and social
development and acute problems concerning the vital interests of the
people and properly balancing reform, development and stability; to
promote all-round, balanced and sustainable development of the economy
and society; and to coordinate the progress of socialist material,
political and spiritual civilizations.

1. Strengthening and improving macro-control and maintaining stable and
rapid economic growth

The basic focus of this year's economic work is to safeguard, guide and
utilize the enthusiasm of all sides for accelerating development in order
to achieve stable and rapid economic growth without drastic fluctuations.
In setting a target for this year's economic growth of around 7%, the
central government has taken into consideration both the need for
continuity in macro-control and the relationship between the pace of
economic growth and the conditions for its attainment, including supply
and demand in energy, important raw and processed materials, and
transport capacity, also taking into account the need to alleviate the
pressure on resources and the environment. This target also encourages
all sides to focus on deepening reform, adjusting the economic structure
and improving the quality and efficiency of economic growth and to devote
more financial and material resources to promoting social development and
strengthening weak links.

To ensure effective macro-control, we need to maintain consistency and
stability in our macroeconomic policies while adjusting the intensity and
focus of policy implementation at the proper time and to an appropriate
degree in response to developments and changes in the economic situation.
By "at the proper time," we mean seizing the opportune moment for
introducing control measures by observing small clues that may indicate
what is coming in order to forestall any possible trouble. By "to an
appropriate degree," we mean that macro-control should neither be too
loose nor too tight and that we must not apply the brakes too hard or
apply control measures too rigidly.

We must adhere to the policy of expanding domestic demand and continue to
implement a proactive fiscal policy and a prudent monetary policy. The
issuance of construction treasury bonds is an interim policy adopted
during a period of insufficient demand. Their scale should be reduced
gradually as the increase in nongovernmental investment accelerates. We
plan to issue 110 billion yuan in construction treasury bonds this year,
30 billion yuan less than last year. As the issuance of treasury bonds is
to be reduced year by year, it will be necessary to appropriately
increase the investment from the central budget for regular construction
annually in order to develop a regular government investment mechanism
and stabilize the sources of funding. To begin with, we plan an increase
of 5 billion yuan this year. The general idea is to appropriately
increase investment from the central budget for regular construction each
year for several years while systematically decreasing the issuance of
treasury bonds, and at the same time ensuring that the size of the
deficit remains at the current level. We will adjust the way funds from
construction treasury bonds are used, concentrating them on promoting
economic restructuring and ensuring all-round social development. This
year, funds from the sale of treasury bonds will be directed toward rural
areas, social undertakings, the western region, northeast China and other
old industrial bases, ecological improvement, environmental protection,
and ongoing bond-financed projects. We need to manage and use treasury
bonds well and ensure the quality of the projects they finance and the
efficient use of investment capital. We must continue to do our fiscal
and taxation work well by working hard to increase revenue and reduce
expenditure, collecting taxes in strict accordance with the law and
guaranteeing funding for key items. We should make full use of the role
of monetary policy, appropriately control the size of credit and optimize
the credit structure to support economic growth while fending off
inflation and financial risks. We will work to basically balance
international payments and keep the exchange rate for the Renminbi
basically stable at a proper and balanced level.

One important task for macro-control this year is to appropriately
control the scale of investment in fixed assets and firmly halt haphazard
investment and low-level, redundant construction in some industries and
regions. Guided by market forces, we will use a comprehensive range of
measures, mainly economic and legal means supplemented by any necessary
administrative measures, to strengthen guidance and control. First,
industrial policies and planning should be improved and the information
release system for industries should be improved to correctly guide
nongovernmental investment. Second, we must quickly formulate and revise
standards for admittance into industries and enforce market admittance
strictly. Projects that do not meet standards for environmental
protection, safety, energy consumption, level of technology or quality
and have not yet been started should be blocked and those already under
construction should resolve such problems, while those already completed
should be upgraded within a specified time. Third, land-use management
must be improved in accordance with the law. No land should be approved
for projects that fail to meet the requirements of the state's industrial
policies and standards for admittance into industries. We should continue
clearing up problems relating to development zones and rectifying and
standardizing the land market. Fourth, auditing and oversight of credit
transactions must be strengthened. Financial institutions should not make
any loans to new projects or rebuilding and expansion projects that do
not meet the requirements for market access. Fifth, the taxation system
must be tightened and the practice of introducing unauthorized tax
privileges must be stopped and rectified. On the basis of these measures
we will strive to optimize the investment structure, keep the overall
investment volume at a reasonable level and improve returns on
investment. In order to take a new road to industrialization, we must
base the national economy and society on IT and upgrade the industrial
structure. We will energetically promote the development of new and high
technology industries capable of spurring economic growth and with
proprietary intellectual property rights. We will accelerate the revival
of the equipment manufacturing industry. We will energetically develop
modern distribution, tourism, intermediary services and other aspects of
tertiary industry, and gradually raise their proportion in the national
economy.

To ensure stable and rapid economic development, we must alleviate the
current disparities between supply and demand in energy, important raw
and processed materials and transport capacity. On the one hand, we must
increase the production of coal, electricity and processed oil while at
the same time strengthen the regulation of economic activity to balance
supply and demand in coal, electricity, oil, transport capacity and
important raw and processed materials while meeting the needs of the
people, important industries and key enterprises. We must speed up the
development of large coal mines, important power generating facilities
and power grids, the exploration and exploitation of petroleum and other
important resources, and the construction of major transport trunk lines
and hubs. On the other hand, we must increase production and practice
economy, with the emphasis on economizing. This is not only urgently
needed to alleviate the current disparities between supply and demand,
but is also a long- term strategy to alleviate the pressure on resources
and the environment. The way the economy grows must change, and all
industries must eliminate waste, reduce consumption of energy and raw and
processed materials, and use resources more efficiently, to develop
production and consumption patterns that conserve resources and build a
conservation-minded society.

Balancing investment and consumption is an important aspect of this
year's work for macro-control. Consumption occupies too small a
proportion of China's GDP. This is not conducive to ensuring a stable
increase in domestic demand, sustaining rapid economic growth and
establishing a beneficial economic cycle. We must work hard to increase
the incomes of both urban and rural residents and raise their purchasing
power. Regulation of income distribution will be intensified to enable
low- and middle-income people to consume more. Consumption on credit must
be expanded, consumption policies must be optimized and the consumption
climate must be improved. To adapt to changes in consumption patterns, we
need to expand the consumption of services and improve the production and
supply structure. The reform measures we take should enhance consumer
confidence, so as to create positive consumer expectations and increase
immediate consumption. We should gradually reduce the rate of investment
in relation to the rate of consumption.

2. Consolidating and strengthening the position of agriculture as the
foundation of the national economy and increasing rural incomes and
agricultural production

Solving problems facing agriculture, rural areas and farmers is a top
priority in all our work. Once again, China's agriculture is in a crucial
period of its development. This year we must take more direct and
effective policies and measures to strengthen, support and protect
agriculture and increase rural incomes in line with the need to balance
urban and rural development.

First, the overall grain production capability must be maintained and
increased. The strictest possible system for protecting farmland will be
implemented and control over the use of farmland will be strengthened in
accordance with the law. We will resolutely put an end to illegal
acquisition and use of farmland and rectify unauthorized changes in the
use of primary farmland. Reform of the system for land expropriation and
requisition will be accelerated, and the expropriation and requisition
procedures and mechanisms for compensation will be improved to ensure
that the compensation for expropriated or requisitioned land is
appropriate. The acreage sown in grain crops will be expanded, and the
yield per unit area increased. Support will be focused on increasing
production in major grain producing areas. Projects to industrialize
production of high-quality grains will be undertaken. We will make
primary farmland capable of producing stable, high yields. Second, we
will promote strategic restructuring of agriculture and the rural
economy. Great efforts will be made to develop high- quality, high-yield,
cost-effective, eco-friendly and safe agriculture, to improve the quality
of agricultural products and enhance their competitiveness. We will carry
forward the development of industrial belts for producing competitive
agricultural products and promote the industrialization of agriculture.
We will energetically develop animal husbandry and prevent and control
the spread of the highly pathogenic bird flu and other animal epidemics.
We will encourage the development of industries that process agricultural
products and other non- agricultural industries in rural areas and expand
intra-county economies. We will steadily carry out the process of
urbanization. We will improve the employment environment for rural
workers in cities, provide them with more and better training and create
more jobs for them in various ways.

Third, we will press ahead with the reform of rural taxes and
administrative charges. All taxes on special agricultural products will
be repealed except for tobacco, thus reducing the financial burden on
farmers by 4.8 billion yuan annually. Beginning this year, the
agricultural tax rate will be reduced by more than 1 percentage point per
year on average, and agricultural taxes will be rescinded in five years.
The agricultural tax burden on farmers will be reduced by 7 billion yuan
this year. The central government will appropriate 39.6 billion yuan this
year from its budget for transfer payments to support the reform of rural
taxes and administrative charges. We will accelerate reforms of county
and township government institutions.

Fourth, we will deepen the reform of the grain distribution system. All
controls over grain purchase and sales markets will be lifted. The reform
of state-owned grain enterprises will be accelerated. Control and
regulation of grain markets will be strengthened, and subsidies will be
given directly to grain producers. The state will appropriate 10 billion
yuan this year from its grain risk fund to directly subsidize these
producers in order to stimulate their enthusiasm for grain production.
The prices of the means of agricultural production will be better
monitored and controlled to protect farmers' interests.

Fifth, we will increase investment in agriculture and rural areas.
Governments at all levels must invest more in agriculture, rural areas
and farmers. This year, the central government will appropriate over 30
billion yuan for this purpose, at least 20% more than last year. Treasury
bond funds should be invested mainly in the construction of six
categories of small projects for rural areas (water-efficient irrigation,
potable water supplies, roads, methane production facilities,
hydroelectric plants and pasture enclosure) and in construction of water
control projects, in order to improve the living and production
conditions of farmers. We will continue to aid the rural poor through
development by increasing funding for poverty alleviation in various ways
and giving people work in place of relief subsidies. Rural financial
services will be improved. To assist rural residents expand production,
rural credit cooperatives will extend more micro- credit loans to
individual families and groups in rural areas.

Sixth, progress in agro-science will be accelerated. We will tackle
agro-science problems with greater intensity and increase our ability to
make advances in agro-science and hold them in reserve and find
applications for them. We will strengthen the system for spreading the
application of science and technology in rural areas. We will
energetically promote wider application of advanced applied technology
that can help increase production and improve productivity. We will
expand both the size and scope of subsidies for developing seeds of
high-quality crop varieties.

3. Coordinating economic development in different regions and promoting
the development of the western region and the revitalization of northeast
China and other old industrial bases

Promoting the coordinated development of all regions is of strategic
importance to China's modernization drive. We need to steadfastly push
forward with the development of the western region, revitalize northeast
China and other old industrial bases, promote the development of the
central region and encourage faster development in the eastern region so
that the eastern, central and western regions can better interact,
complement and support each other, and develop together.

We will continue to implement the strategy of developing the western
region. On the basis of a conscientious review of our experience, we will
improve our policies and carry out relevant measures to ensure positive
and orderly progress. We will work in a down-to-earth manner to ensure
successful implementation of such key ecological conservation projects as
returning farmland to forests and animal breeding grounds to pastures,
protecting natural forests, bringing sources of sandstorms under
effective control and preventing karst areas from becoming stony deserts.
We will strengthen infrastructure development efforts, emphasizing major
projects of key importance to the overall economy to increase the
potential for economic development. At the same time, we will continue to
pay adequate attention to the construction of smaller projects that will
improve the living and production conditions of farmers and herdsmen.
Social undertakings will be promoted, with priority given to compulsory
education, public health and primary-level cultural undertakings. We will
encourage the development of economies with local characteristics and
competitive industries and promote the development of key regions.

We will conscientiously implement the strategy for revitalizing northeast
China and other old industrial bases, working to get off to a good start
this year. We must carry out all the policies and measures of the central
authorities, emphasizing innovation in institutions and mechanisms and
opening wider both domestically and internationally. We need to
accelerate economic restructuring and technological progress, especially
for key industries and enterprises, transform the resource-based
economies of certain cities, and solve the problem of sinking land and
cave-ins above exhausted mines in coalmining areas. We must uphold the
principles of self-reliance and hard work and let cadres and the general
public give full expression to their initiative and creativeness.

Accelerating the development of the central region is an important aspect
of our endeavor to ensure well-balanced development of regional
economies. The state is encouraging the central region to exploit its
geographical and economic advantages to quicken the pace of its reform,
opening up and development, modernize its agriculture, and build key
areas for commercial grain production, strengthen its infrastructure
development, expand its competitive manufacturing and new and high
technology industries, and raise its levels of industrialization and
urbanization.

Accelerating development of the eastern region will strengthen the
country financially, materially, scientifically and technologically,
thereby providing more support for the development of the central and
western regions. The eastern region should continue making the most of
its advantages, speed up efforts to upgrade its industrial structure and
make its economy more oriented to the global market; areas where
conditions are most favorable should take the lead in becoming basically
modern. The eastern, central and western regions should increase
cooperation in various ways and gradually achieve common prosperity
through balanced development. The government will continue to take
measures to help old revolutionary base areas develop more quickly.

4. Continuing to implement the strategy of invigorating China through
science and education and staying on the road of sustainable development

In the course of development, we will steadfastly give priority to
education and devote more energy and financial resources to accelerating
its development. We will adopt a fresh round of measures to implement the
Action Plan for Reinvigorating Education, with the focus on compulsory
education, particularly in rural areas. This year we will begin to
implement the plan to make nine- year compulsory education basically
available throughout the western region and basically eliminate
illiteracy among the adults there by 2007. The central government will
spend 10 billion yuan on this work. The system for managing compulsory
education in rural areas must be improved by shifting the main
responsibility to county governments and increasing transfer payments
from central, provincial and city (prefectural) governments for
compulsory education in poverty-stricken counties. The central government
will contribute 6 billion yuan to carrying out the second phase of the
plan for renovating dangerous primary and secondary school buildings in
rural areas. Both central and local governments will increase their
investment to develop modern distance education in rural primary and
secondary schools. We will work to optimize the education structure, take
energetic and steady steps to develop higher education, and put more
effort into developing vocational education and continuing education.
Schools of all kinds and at all levels should fully implement the Party's
education policy, emphasize competence-oriented education, deepen the
reform of education and improve its quality. We will standardize and
develop non-government funded education. Unauthorized collection of fees
by educational institutions must be resolutely stopped to reduce the
financial burden on students' families.

This year, we will continue to concentrate on formulating a medium- and
long-range state plan for developing science and technology in order to
define the strategy, objectives, tasks and policies in this field for the
coming 15 years. Institutional reform and innovation in the field of
science and technology should be continued. We will accelerate the
establishment of a national innovation system and construction of the
science and technology infrastructure, and effectively strengthen basic
research. We will carry out a number of projects of major importance for
overall economic and social development, promote the integration of
science and technology with industry and encourage the application of new
and high technologies in industrial production. We consider social and
natural sciences equally important and will make full use of the
important role of philosophy and social sciences in economic and social
development.

We should conscientiously implement the strategy of reinvigorating China
through human resource development. Training, recruiting and properly
using talented people in all fields should provide substantial personnel
and intellectual support for the modernization drive.

We will vigorously implement the strategy of sustainable development and
successfully carry out all work related to population, natural resources
and the environment in line with the need to balance development of man
and nature. We will keep the birthrate low and improve the health of
newborns. We will improve the infrastructure and service system for
family planning at the primary level and strengthen the management of
family planning among the floating population. Work related to senior
citizens should be carefully conducted. We will implement the national
plans for ecological and environmental protection and conservation
conscientiously and implement a strategy for developing forestry focused
on ecological conservation. We will intensify law enforcement to
strengthen ecological and environmental control and monitoring. We will
strictly control the discharge of major pollutants and work hard to
eliminate environmental pollution that seriously threatens people's
health and safety. We will energetically promote the recycling industry
and clean production. We will protect our land and resources in
accordance with the law and utilize them rationally. We will pay close
attention to the development and protection of marine resources. We will
better conserve our water resources and use them more economically. We
will do a good job of disaster prevention and reduction.

5. Accelerating the development of health, culture and sports and
promoting spiritual civilization

We have three priorities in the area of health this year. The first is to
strengthen the public health system. We will try to establish within
three years a fully functioning system for disease prevention and control
and for emergency medical aid that covers both urban and rural areas in
order to increase our ability to deal with serious epidemic diseases and
other public health emergencies. We need to maintain a high degree of
vigilance and take firm and effective measures to control SARS, AIDS,
schistosomiasis and other serious communicable diseases. The second
priority is to improve medical and sanitation conditions in rural areas
and carry out pilot projects on a new type of rural cooperative medical
care system. We need to focus our medical and health efforts on rural
areas, upgrade the medical and sanitation infrastructure and train more
medical and sanitation personnel there to gradually alleviate the
shortage of medical services and medicines there. We will press ahead
steadily with the pilot projects for a new type of system for rural
cooperative medical care and health services based on the actual
conditions in different regions. Our objective is to establish a rural
medical care system organized and guided by the government, based on
mutual assistance of the participants, and with voluntary participation
of local people and diverse sources of funding from individuals,
collectives and the government, one which takes treatment of serious
diseases as its main responsibility and ensures that the rural population
benefits from it. The third priority is to vigorously promote the trial
reform of the urban medical care and health service system. We will
continue to reform the basic medical insurance system for urban working
people, the medical care and health service system and the pharmaceutical
production and distribution system. Medical institutions should be
managed according to their type in order to ensure rational distribution
and efficient utilization of the available health care resources.
Community-based health care should be developed and medical and health
services should be improved. At the same time, an extensive patriotic
sanitation campaign should be carried out in both urban and rural areas.

The people's intellectual and cultural needs are constantly increasing
along with the economic development and social progress in China, so we
must attach greater importance to cultural development. It is necessary
to energetically develop an advanced socialist culture. We will
vigorously promote national spirit centered on patriotism and intensify
the ideological and moral education of young people in particular. We
must encourage the general public to participate in activities designed
to promote spiritual civilization. We will strengthen basic-level
cultural development in rural areas, urban communities and enterprises.
We will spread scientific knowledge and promote a scientific spirit, a
scientific and healthy lifestyle and good manners. We must further
develop literature, art, the press, publishing, radio, film and
television. We will follow a strategy of product excellence to provide
more healthful, inspiring cultural works that people can enjoy. We will
press ahead with formulating an overall plan f or cultural restructuring
and a program for cultural development. We should promote the reform of
the system and innovation of the mechanisms of the cultural industry,
give more support to non-profit cultural undertakings and improve our
policy for the cultural industry to give a greater role to the market and
ensure the simultaneous development of cultural undertakings and the
cultural industry. We should do more to protect our cultural relics and
archives as well as our natural and cultural heritage. We will continue
to strengthen the development and management of the market for cultural
products and the Internet, fight unremittingly against pornographic and
illegal publications and actively conduct cultural exchanges with other
countries. We will carry out extensive mass fitness programs and strive
to raise the standards of our competitive sports. We will continue to
work hard to prepare for the 2008 Olympic Games in Beijing and the 2010
World Exposition in Shanghai.

6. Seizing the opportune moment and deepening economic restructuring

We will systematically carry forward reforms this year, focusing on
certain areas in accordance with the decision adopted at the Third
Plenary Session of the Sixteenth CPC Central Committee and strive to make
fresh progress in some important areas.

We will deepen the reforms of the state asset management system and
state-owned enterprises. We need to promptly improve legislation
pertaining to oversight and management of state assets and methods for
its implementation, conduct research to establish a budgetary system for
state capital management and a performance evaluation mechanism for
enterprises, and make sure that the responsibilities for state asset
management are truly met. We should energetically work to transform
state-owned enterprises into standard stock companies, optimize the
structure of property ownership, improve corporate governance and
encourage enterprises to change how they operate. We will vigorously
develop a mixed ownership economy and gradually make the shareholding
system the principal form of public ownership. We will press ahead with
the reform and reorganization of the telecommunications, electricity and
civil aviation industries, make steady progress in the reform of the
postal service and railway transport, and encourage the commercialization
of urban public utilities. A number of large, competitive companies or
conglomerates that own proprietary intellectual property rights and name
brands should emerge through reform and development. We will continue to
reform collectively owned enterprises and develop diverse forms of the
collective economy.

We will vigorously promote the development of the non-public sector of
the economy and actively guide it. Governments at all levels must
promptly eliminate or revise regulations and policies that restrict the
development of this sector and implement measures that relax market
access. We will conduct further studies and formulate specific methods to
encourage non-public enterprises to participate in the reorganization of
state-owned enterprises and expand into infrastructure development,
public utilities and other industries and domains. We will take measures
to ensure that non-public enterprises receive the same treatment as other
enterprises in investment, financing, taxation, land use and foreign
trade. We will protect their legitimate rights and interests and improve
government service to and oversight over them, so as to support and
encourage qualified non-public enterprises in their efforts to grow
stronger and larger. We will speed up the establishment of a modern
system of ownership.

We will carry forward the reform of the financial system. We need to
accelerate the reform of the wholly state-owned commercial banks,
focusing on a pilot project to transform the Bank of China and China
Construction Bank into stock enterprises. Other commercial and policy
banks must also deepen their reform. We will press ahead with the trial
reform of rural credit cooperatives and, on the basis of a review of that
experience, gradually expand the reform to a wider area. We will continue
to reform and open up the capital market and develop it steadily. We will
allow the amount of bonds issued by enterprises to increase and the
proportion of direct financing by enterprises to rise gradually. We will
continue reforming the insurance industry and expand the insurance
market. We need to improve the regulatory systems for banking, securities
and insurance, coordinate these systems better, and tighten financial
control to ensure sound operation of the financial sector.

We will carry forward the reform of the fiscal and taxation systems. We
will focus on gradually shifting from a "production VAT" to a
"consumption VAT" by reclassifying equipment investment as VAT-deductible
to facilitate the technological upgrading of enterprises and enhance
their capability for self-development. These reform measures will be
tried out first in some industries in northeast China this year.
Supporting measures must be formulated quickly so that we can carry out
the plan for reforming the export tax rebate system in earnest.

We will carry forward the reform of the investment system. Our main
objectives are to reform the system of government oversight of enterprise
investment and allow enterprises greater independence in making
investment decisions in line with the principle that "the investor makes
the investment decisions, reaps the profits and bears the risks." Another
objective is to rationally define the government's investment functions,
improve the management of government investment and establish an
accountability mechanism for government investment. Finally, we want to
establish a macro-control mechanism for investment and improve control
methods and measures. These efforts will result in a new investment
system under which investment is guided by the market, enterprises make
their own investment decisions, banks examine credit worthiness
independently, various forms of financing coexist, intermediary services
are standardized and macro-control is efficient.

We need to quickly establish a system to ensure credibility in society.
We need to make intensive efforts to put in place a system for collecting
information on the credibility of enterprises and individuals, a system
for overseeing the credit market, and a mechanism for penalizing those
who lose their credibility. We should intensify our efforts to rectify
and standardize the market order, giving priority to cleaning up markets
that have a direct bearing on people's health and lives such as those for
food and medicine. Producing and marketing counterfeit and shoddy goods,
pyramid schemes and commercial fraud must be severely punished.
Intellectual property rights must be protected more effectively and
piracy and patent infringement must be punished in accordance with the
law. We must severely crack down on tax evasion, tax fraud, money
laundering, smuggling and other illegal and criminal activities.

7. Adapting to the new situation and opening still wider to the outside
world

We must coordinate domestic development with opening up, fully exploit
domestic and foreign markets and resources, and expand development into
new areas. We will do all our work pertaining to opening up energetically
and improve our ability to participate in international cooperation and
competition.

We will strive to keep foreign trade growing at an appropriate rate. We
should continue to follow the strategy of market diversification,
emphasize the export of technology , compete on quality, optimize our
export mix, and promote the transformation and upgrading of the
processing trade. We should improve coordination among foreign trade
entities, strive to overcome trade barriers and minimize trade friction
to create a fair trade environment for our enterprises. The
foreign-related economic system must be further reformed. We will carry
out the policy of allowing enterprises under all types of ownership to
independently engage in importing and exporting. We should import more
badly needed raw and processed materials, key technologies and important
equipment and diversify our sources of important imports. More rational
and appropriate use of foreign capital is necessary to raise the
performance of foreign investment. We will continue to enforce policies
and measures that encourage foreign investment and further improve our
investment environment. We should speed up the implementation of the
strategy of "going global" and better coordinate and guide Chinese
investment abroad. Enterprises under all forms of ownership are
encouraged to invest in overseas operations in various forms and expand
their international market shares. We should energetically carry out
bilateral, multilateral and regional economic cooperation. We will
continue to conscientiously fulfill all our commitments for China's
accession to the WTO.

8. Intensifying job creation and social security work to further improve
people's lives

Doing everything possible to create more jobs is one of the major
responsibilities of the government. Our targets for 2004 are to create 9
million jobs for urban residents and get 5 million laid-off workers
reemployed. We will continue to follow an energetic employment policy,
focusing on effectively implementing the policies of fiscal and credit
support and tax cuts and exemptions. The central government will allocate
8.3 billion yuan in this year's budget to subsidize reemployment, 3.6
billion yuan more than last year. We will expand the avenues for
employment and emphasize the development of labor-intensive industries,
small and medium-sized enterprises and the non-public sector of the
economy, promote flexible and diverse types of employment and encourage
people to find jobs on their own or become self-employed. We need to
develop a fully functioning reemployment assistance mechanism, giving
people with difficulties in finding jobs on their own hiring preference
in non-profit undertakings funded by the government. We will support
efforts of large and medium-sized state-owned enterprises to separate
their secondary lines of business from their core business, turn their
secondary lines into independent companies, and reassign their redundant
personnel to these new companies. We will focus our support on
reemployment of laid-off workers in old industrial bases, cities and
industrial and mining areas whose locally available natural resources
have been exhausted, and the defense industry and the coal and logging
industries. We will improve our system of employment services to provide
better job training and guidance and assist people to find job
opportunities. This year is another peak year for college graduates
entering the job market and ex-servicemen being transferred to civilian
jobs, so we need to work hard to provide them with effective employment
guidance and services.

We need to build a social security network suited to China's conditions
and the level of our economic development. This is an important yet
demanding task. We will continue to ensure the "two guarantees" and
better integrate the "three-stage guarantee." We will steadily integrate
the subsistence allowances for these workers into the unemployment
insurance system. The existing system of basic old-age pensions for
workers will be improved by combining contributions from enterprises and
institutions with personal accounts. We will expand the coverage of
social security in accordance with the law. We will intensify efforts to
collect social security contributions from all types of participating
enterprises. Governments at all levels must put greater effort into law
enforcement and inspection in this regard. We will do a better job in
providing subsistence allowances for needy urban residents and establish
standards and criteria for eligibility. We will continue to raise social
security funds through a variety of channels and manage them properly. On
the basis of a review of our efforts to improve the urban social security
system in Liaoning Province, we will extend them to Heilongjiang and
Jilin provinces. The central government will allocate 77.9 billion yuan
this year in subsidies for the "two guarantees" and subsistence
allowances for needy urban residents, up 11.3% over last year. Local
governments will also spend more in this area.

We will take better care of urban and rural residents with special
difficulties. We will continue to improve the system of social relief and
assistance and help those families that cannot afford medical treatment,
tuition for their children, housing or heating in winter. We will improve
the "five guarantee" relief program for childless and infirm people in
rural areas and ensure funding for it. We will reduce and exempt taxes in
disaster-afflicted rural areas and provide relief to the affected people
who have difficulties in their production and daily lives. We will show
our concern for the disabled and support programs that benefit them.

We must promptly solve problems arising from the demolition of urban
residential buildings and the expropriation of farmland. When demolishing
urban buildings and relocating their occupants, we must ensure that
overall urban development plans and short-term construction plans are
strictly followed, that the area to be demolished is defined reasonably,
and that the examination and approval procedures are properly applied.
Furthermore, we must improve the policy for compensating and relocating
displaced inhabitants, and intensify oversight and inspection. When
expropriating farmland, we must strictly limit the area expropriated and
follow the plan and proper procedures in accordance with the law. We must
promptly give affected farmers reasonable compensation to ensure that
their legitimate rights and interests are protected.

Measures must be taken to ensure that rural workers in cities are paid on
time and in full. We must pay very close attention to solving the problem
of their wages being docked or not paid on time. The State Council has
decided to basically solve the problems of default on construction costs
and wage arrears for migrant rural workers in the construction industry
within three years. Clearing up such back payments should begin with
government- invested projects, but different types of enterprises should
also be urged to pay off their arrears as soon as possible. Enterprises
and managers that refuse to pay back wages to migrant rural workers must
be held accountable in accordance with the law. We need to develop a
mechanism to ensure the timely payment of migrant rural workers' wages,
thereby eliminating the root cause of wage arrears. All enterprises must
pay wages on time and strictly obey the minimum wage regulations. We must
ensure that all state organs and institutions pay salaries and retirees'
pensions on time and in full. New arrears will not be allowed anywhere.
Accounts for paying salaries must be placed under stringent oversight,
and budgetary funds should be used to pay wages and salaries first.

9. Strengthening democracy and the legal system and safeguarding national
security and social stability

Concrete and prudent efforts will be made to promote political
restructuring, develop socialist democracy and improve the socialist
legal system. We will further expand democracy at the lowest levels of
government, improve self-governance by villagers and urban residents, and
respect the democratic rights of the government authorities and people at
the lowest levels of government. We will uphold and improve the system of
workers' conferences and other systems of democratic management practiced
in government institutions and enterprises and protect the legitimate
rights and interests of workers.

We will continue to carefully carry out work related to ethnic
minorities, religious groups and overseas Chinese. We must fully
implement the Party's ethnic policy and consolidate and develop socialist
ethnic relations based on equality, solidarity and mutual assistance. In
order to promote common prosperity and progress for all our ethnic
groups, we will increase support for economic and social development in
ethnic minority areas and intensify training of ethnic minorities in all
fields of work. We will fully implement the Party's policy on freedom of
religious belief, handle religious affairs in accordance with the law,
help religious organizations adhere to the principle of independence and
self-governance, and actively guide religions to adapt to socialist
society. We will improve our work concerning overseas Chinese, their
relatives in China and returned overseas Chinese, and fully utilize their
unique role in promoting the reunification of the motherland and the
rejuvenation of the Chinese nation.

The legislative work of the government will be strengthened. We will
place greater emphasis on legislation concerning social management and
public service. Priority should be given to legislation for dealing with
emergencies, protecting farmers' rights and interests, safeguarding
employment and social security and developing social undertakings. We
will work hard to improve the quality of government legislation. We must
solicit opinions from all sectors of society when drafting important laws
and administrative regulations that affect the vital interests of the
people. We will work to improve legal and notary services and carefully
carry out legal assistance work. The legitimate rights and interests of
women, minors and the handicapped shall be protected as prescribed by
law. We will increase publicity and education concerning the law in order
to create a good social environment in which the people study the law,
understand the legal system and abide by the law.

The government is duty-bound to ensure peace and security for the people.
We will further implement all measures to improve all facets of public
security and press ahead with efforts to build a crime prevention and
control system. We will severely crack down on crimes committed by
Mafia-like gangs, violent crimes, frequent property-related crimes, and
drug-related crimes. We will increase our efforts to deal with serious
crimes and areas with serious security problems. The funding mechanism
for procuratorial, judicial and public security organs will be improved
in order to ensure their smooth operation. We take terrorism seriously
and will intensify our battle against it. We will expand and deepen our
battle against cults. To ensure public order and social stability, it is
imperative that we correctly handle internal contradictions among the
people as they crop up under changing circumstances, improve the
mechanism for forestalling and resolving conflicts and disputes, and
properly handle letters and complaints from the people.

Our strong sense of responsibility for the state and the people compels
us to effectively improve our work with regard to safety. We must
strengthen oversight and administration to ensure production safety,
carry out more special programs to address safety problems, implement
preventive safety measures, and improve the system of responsibility for
production safety. We will tenaciously investigate all kinds of accidents
and prosecute those responsible for them in accordance with the law to
uphold the sanctity of the law and disciplinary regulations.

Stepping up efforts to modernize our national defense and armed forces is
an important guarantee for safeguarding national security and building a
moderately prosperous society in all respects. We will strengthen the
building of our armed forces in keeping with the general requirements of
"being qualified politically and competent militarily and having an
excellent style of work, strict discipline and adequate logistic
support." We will energetically carry forward military reforms with
Chinese characteristics and work hard to take efforts to modernize our
national defense and armed forces to a higher stage of development. As
part of our strategy of using science and technology to build strong
armed forces, we will focus on developing new and high technology
weaponry and equipment, foster a new type of highly competent military
personnel, and promote modernization of our armed forces with IT
application as the main content and mechanization as the basis in order
to enhance our overall defense capability under hi-tech conditions. We
will adhere to the principle of running the army in accordance with the
law and increase its standardization. We will continue to balance efforts
to strengthen national defense and economic development and raise the
overall effectiveness of efforts to strengthen defense. We will adhere to
the principle of combining civilian and military production and letting
military production reside in civilian production and vigorously promote
the reform, adjustment and development of defense-related science,
technology and industry to enhance our capability for independent
innovation. We will work painstakingly to adjust and realign our military
strength to ensure that the armed forces are reduced by 200,000 troops
and that related tasks are completed by 2005. We will intensify our
efforts to build and reform our military logistics apparatus and enhance
our logistic support capability. We will make the People's Armed Police
more proficient and more capable of responding to emergencies. Education
in national defense among the people will be intensified to raise their
awareness of its importance. We will vigorously support the strengthening
of national defense and the armed forces and we will build up the reserve
forces and the militia to develop a fully functioning national defense
mobilization system that is highly effective and can respond rapidly. We
will intensify activities to promote mutual support between the military
and civilian sectors and their cultural and ethical programs to forge
solidarity between the military and the government and between the
military and civilians.

III. Government Self-improvement

The government bears heavy and demanding responsibilities in the effort
to build a moderately prosperous society in all respects. Governments and
leading cadres at all levels need to adapt to new situations and tasks
and continually raise their administrative and management ability. In
conformity with the principle of government for the people and in order
to build a law- based government, we placed special emphasis over the
past year on the three basic principles of scientific and democratic
policy- making, law-based administration and better administrative
oversight. These principles were implemented conscientiously. This year,
we will focus on the following aspects of our work.

First, we will further transform government functions. Governments at all
levels must fulfill all of their responsibilities. While working to
better regulate the economy and oversee the market, the government must
pay more attention to social administration and public service work. In
particular, we need to speed up the establishment of emergency response
mechanisms and improve the government's ability to deal with public
crises. We must accelerate the separation of government functions from
enterprise operations, turn over responsibility for more activities the
government should not be engaged in to enterprises, nongovernmental
organizations and intermediary agencies, and give greater scope to the
basic role of the market in resource allocation. At the same time, we
need to strengthen regulation and oversight of intermediary agencies. The
government must perform all its functions well, and adapt methods and
style of management to changing circumstances to improve the results of
its administration and work.

Second, we will adhere to scientific and democratic policy- making. We
need to improve the policy-making process by integrating public
participation, expert evaluation and government decision-making to ensure
that our policies are scientific and correct. We need to speed up the
formation and improvement of systems for making collective decisions on
major issues, for soliciting opinions from experts, for keeping the
public informed and holding public hearings, and for accountability in
policy- making. All major policies must be decided collectively on the
basis of in-depth research, widely solicited opinions, and full
evaluation by experts. These procedures must be closely followed as one
of the long-term basic systems for government work.

Third, we will perform all our duties in accordance with the law.
Governments at all levels must exercise their power and perform their
duties within the scope of their authority defined by law and in
accordance with legal procedures. All government employees must learn to
deal with economic and social issues by legal means. The system of
administrative law enforcement needs to be reformed so that the
administrative right to grant licenses and impose penalties will be
relatively concentrated. Experiments should be conducted on integrated
law enforcement to solve problems of duplicate law enforcement and
arbitrary imposition of fines. We need to increase oversight of
administrative law enforcement to make it stricter, fairer and more
courteous. We should institute an accountability system for law
enforcement and a mechanism for investigating and prosecuting law
enforcement improprieties, and improve and strictly implement a system of
administrative compensation that holds those who exercise power
accountable, places them under supervision and compensates those whose
rights have been compromised. The Administrative Permission Law of the
People's Republic of China will come into force officially on July 1,
2004. This is an important law for regulating government acts, and
governments at all levels must strictly abide by it.

Fourth, we will consciously accept the oversight of the general public.
All power of the government is bestowed by the people, so the government
must be accountable to the people, act in their interests and accept
their oversight. Only the people's oversight can prevent the government
from being lax in its duties. Governments at all levels should
consciously accept the oversight of the people's congresses and their
standing committees at the corresponding levels and the democratic
oversight of the committees of the People's Political Consultative
Conference, and conscientiously listen to the opinions of the democratic
parties, federations of industry and commerce, persons without party
affiliations and mass organizations. At the same time, they should accept
the oversight of the mass media and the general public. They must take
seriously the people's oversight of government organs and employees
through reconsideration of administrative decisions, administrative
lawsuits and other legal channels. We should strengthen internal
supervision by supporting supervision departments and audit offices in
the conduct of their independent oversight in accordance with the law. To
keep the people informed so they can oversee government work, we will
introduce a system of public information concerning government work and
increase the transparency of government work.

Fifth, we will improve the government's style of work and improve the
overall quality of public servants. An important aspect of efforts to
improve the government's style of work is for government employees to
adopt a realistic and pragmatic approach, a scientific outlook on
development and a correct attitude toward their own performance.
Governments at all levels need to bear in mind China's current national
conditions when acting and making decisions. We must always be realistic
and act in accordance with objective laws. We need to work in an
enterprising manner while working within our capabilities and stop the
practice of blindly competing to outdo each other. We must persist in
doing down-to- earth work, seek practical results, conserve manpower and
refrain from building "vanity projects" that waste both money and
manpower. We must determine the true state of affairs and tell the truth;
we should not falsify reports or exaggerate achievements. We must make
overall plans that balance the interest s of different sectors and stay
rooted in the present while having a long-term perspective, instead of
blindly seeking quick success and instant benefits. We must continue to
improve our work style, reduce the number of meetings and documents, and
put more time and energy into going down to the primary level to do
investigations and research. Everything we do must stand the tests of
actual practice, people's acceptance and history.

The quality of public servants determines how well the government is
managed and how efficient it is. It is imperative to build a contingent
of public servants who are politically reliable, professionally competent
and clean and honest and have a good work style. They should emancipate
their minds, seek truth from facts and keep pace with the times. They
should bear in mind that public servants work for the interests of the
people, maintain close ties with the people, and serve them
wholeheartedly. They should abide by the Constitution and the law and
have the ability to administer the government in accordance with the law.
They should be dedicated, hard working and eager to learn. They should
observe disciplinary regulations and professional ethics. They should be
honest, clean, upright, impartial and devoted. Governments at all levels
should be strict in enforcing disciplinary regulations and be fair in
meting out rewards and punishments. Training public servants and
evaluating their work is very important, and we must intensify our work
in this area.

We will work harder to build a clean government and fight more vigorously
against corruption. We will develop a mechanism that combines education,
institutional measures and oversight to prevent and punish corruption. We
will resolutely deal with all breaches of the law or disciplinary
regulations and punish those guilty of corruption. We are determined to
rectify unhealthy conduct that affects the interests of the people. All
government employees, particularly leading officials at all levels, must
remain modest and prudent, guard against an arrogant and rash work style,
and continue to live plainly and work hard.

Fellow Deputies,

It is our unshakable goal to maintain the long-term stability and
prosperity of Hong Kong and Macao. We will continue to uphold the
principle of "one country, two systems," according to which " Hong Kong
people administer Hong Kong" and "Macao people administer Macao" with a
high degree of autonomy, and we will act in strict accordance with the
basic laws of the Hong Kong and Macao special administrative regions. We
will give our full support to the chief executives and governments of the
two regions in their administration in accordance with the law. We will
unite as broadly as possible people from all walks of life in Hong Kong
and Macao and effectively implement the Closer Economic Partnership
Arrangement between the mainland and Hong Kong and the mainland and
Macao. We have full confidence in the future of Hong Kong and Macao.

We will adhere to the basic principle of "peaceful reunification and one
country, two systems" and, during this current stage, to the eight-point
proposal for developing relations across the Taiwan Straits and promoting
the peaceful reunification of the motherland. We will vigorously expand
visits of individuals across the Straits and economic and cultural
exchanges and energetically promote establishment of the "three direct
links" between the two sides. We will protect the legitimate rights and
interests of our Taiwan compatriots on the mainland in accordance with
the law and continue to pursue the resumption of dialogue and
negotiations between the two sides on the basis of the one-China
principle. With the utmost sincerity, we will do everything possible to
bring about the peaceful reunification of the motherland. We stand firmly
opposed to any form of separatist activities aimed at "Taiwan
independence" and will never allow anyone to split Taiwan from China by
any means. We are convinced that with the unremitting efforts of all the
sons and daughters of the Chinese nation, including our Taiwan
compatriots, we will realize our common aspiration, the complete
reunification of the motherland, as soon as possible. Fellow Deputies,

The international situation is continuing to undergo complex and profound
changes. Peace and development remain the themes of our times. World
multipolarization and economic globalization are making tortuous
progress. Seeking peace and development and promoting cooperation and
progress have become an irreversible historical trend. However, the
tendency toward unilateralism is reemerging, local conflicts continue,
international terrorist activity is rampant, the North-South gap is
widening, and traditional and non-traditional security issues are
intertwined. All these problems pose serious challenges to the people of
all nations.

During this past year we followed an independent foreign policy of peace.
We seized opportunities, responded to challenges, took the initiative,
and made noticeable achievements in foreign affairs. We have won more
understanding, trust, respect and support from the international
community, and we enjoy higher status and greater influence in the
international arena than ever before.

This year we will continue to hold high the banner of peace, development
and cooperation, unswervingly pursue an independent foreign policy of
peace, adhere to the Five Principles of Peaceful Coexistence, increase
friendly exchanges and cooperation with other countries, and strive to
further improve international and neighboring environments.

We will continue to promote world multipolarization, advocate democracy
in international relations and diversity in development models, and
encourage the progress of economic globalization in a direction that
benefits the common prosperity of all nations. We will adhere to a new
concept of security based on mutual trust, mutual benefit, equality and
cooperation, and we will oppose hegemonism, power politics, and terrorism
in all its manifestations. We will continue to work for a new
international political and economic order that is fair and equitable.

We will deepen our friendly cooperation with developing countries,
explore new avenues and forms of cooperation, and support the efforts of
developing countries to become stronger through unity.

We will continue our policy of friendship and partnership with our
neighboring countries, deepen good-neighborly and friendly cooperation
with all our neighbors and safeguard regional peace and stability. We
will constantly strengthen our relations with developed countries, strive
to seek out and expand areas of common interest, gradually settle
existing differences through dialogue and consultation on an equal
footing, and facilitate the steady development of our relations with
developed countries.

We will actively engage in multilateral diplomacy and play a constructive
role in the United Nations and other international and regional
organizations.

The Chinese government and people will, as always, support the cause of
justice for the whole human race and work tirelessly with the people of
all other nations to safeguard world peace and promote common
development. Fellow Deputies,

The government is faced with arduous tasks this year, and we are keenly
aware of the heavy yet lofty responsibilities we bear. The trust and
support that the whole nation gives to the government is for us an
inexhaustible source of strength and confidence. We firmly believe that,
under the leadership of the Party Central Committee with Comrade Hu
Jintao as General Secretary, by holding high the great banners of Deng
Xiaoping Theory and the important thought of Three Represents, and by
relying closely on the people of all our ethnic groups, we will surely
overcome all difficulties and obstacles and make continuous progress in
reform and opening up and in the socialist modernization drive!

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