Continuing to expand domestic demand in 1999, implementing a pro-active fiscal policy and achieving an economic growth rate of around 7%

Based on a comprehensive analysis of the favorable conditions and restraining factors at home and abroad, the projected economic growth rate this year will be around 7%. Achieving this growth rate through optimizing economic structure and improving quality and economic performance will not be easy, but it is predicted that it can be achieved with diligent effort. This growth rate serves as a guide which applies to the country ads a whole, but due to different local conditions, the rates of growth for individual localities may be higher or lower.

To achieve faster economic growth this year, we must first of all expand domestic demand and continue to follow a pro-active fiscal policy. As shown by last year's experience, these are effective means to stimulate economic growth when overall demand is sluggish. It is imperative for the financial departments to continue selling long-term national bonds to commercial banks, mainly for expanding infrastructure development, as well as to use various means to expand financing channels and encourage and guide organizations, individuals and other segments of society to increase investment in order to further expand demand for investment. Aided by the expansion of the economy and the increases in tax revenues, we will be able to repay our debts and reduce the fiscal deficit.

Implementing a pro-active fiscal policy does not mean extravagance in spending. On the contrary, the people's hard-earned money should be used sparingly. We should strengthen budgetary management and strive to increase revenue and reduce expenditures. We should intensify tax collection and management, stop up loopholes and clear up and collect taxes in arrears to ensure that taxes are levied according to the law and that all due taxes are collected. We should advocate hard work and plain living and building our country through thrift and diligence, oppose extravagance and waste, cut all unnecessary administrative expenses, and ensure funding for priority areas. Financial and economic discipline should be strict and management of extra-budgetary funds should be standardized and tightened. We should continue to optimize the financial and taxation systems through reform, focusing on an overall review and standardization of the collection of charges and gradually" transforming administrative fees into taxes".

We must point out here that the decision to implemint a pro-active fiscal policy is one that was taken under special circumstances. In the medium and long term, we should still adhere to the principle of maintaining a basic balance between revenue and expenditures, follow a moderately tight financial policy, and strictly control and gradually reduce the deficit.

While expanding demand for investment, we will take effective measures to guide and expand consumer demand so that both investment and consumption stimulate economic growth.



Promoting all-round development of the rural economy, increasing the income of farmers, and reducing the rural poor population by over 10 million

In agriculture and rural work for 1999, we should fully follow the spirit of the Third Plenary Session of the 15th Party Central Committee and work to stabilize the Party's basic rural policies. We should consolidate and improve the two-tier system that combines unified and independent management based on household contracts and continue to increase in vestment in agriculture, promote all-round development of agriculture and the rural economy and work to increase farmers' incomes.

First, we should adjust and optimize the agricultural structure. In order to meet the needs of the new stage, we must shift the focus of our rural work to restructuring and optimization efforts and to the improvement of product quality and economic performance. While maintaining the overall level of grain production this year, we should encourage farmers to increase the production of high-quality and marketable grain varieties.

Second, we should strengthen capital construction in agriculture, focusing on water conservancy. Allocations for investment this year in water conservancy projects and projects to protect natural forests in the central budget will again be increased by a sizable amount; the allocations in the local budgets for this type of investment should also be increased. We must be fully prepared to prevent major flooding and combat heavy disasters. Before the flood season comes , we must repair the projects that were previously destroyed by floods, reinforce the dikes in key areas of the Yangtze River, the Yellow River and other big rivers and shore up reservoirs in poor condition in order to ensure safety in the high water season. While paying due attention to preventing floods, we should prevent and fight drought s well. We must put in practice a strict land management system and measures to protect forest and grasslands. Third, we should take concrete steps to promote reform of the grain distribution system and stimulate the distribution of agricultural products. We need to further reform the purchase and sales system for cotton to ensure that the price of cotton is governed by the market under the guidance of the government and diversify the channels of the trade in cotton business.

Fourth, we should restructure the town and township enterprises and promote the development of small towns. These enterprises should be guided in adjusting their pattern of production and organizational structures in order to better meet market demand. We should combine the development of town and township enterprises with the promotion of industrial management of agriculture. In developing small towns, we must make scientific plans, aim for rational distribution, ensure the economical use of land and work to protect the ecological environment.

Fifth, we should lighten the burden on farmers and maintain rural stability. We should resolutely cancel all arbitrary charges the state has ordered to be banned. Farmers will still be subject to a fixed number of rational and limited charges and fees which will remain unchanged for three years. We should lose no time in formulating and implementing plans for changing these charges and fees in to taxes, protect the legitimate rights and interests of farmers and completely resolve the problem of the heavy burdens they bear. We should expand democracy at the grass-roots level in rural areas, promote the self-administration of villagers and ensure that village affairs are made known to villagers. We should step up our efforts to fight poverty. This year we should strive to decrease the number of poor people in rural areas by 10 million or more and ensure that those who have shaken off poverty will not become poor again.



Full of confidence in attaining the objective for the reform and development of state-owned enterprises

The year 1999 is a crucial year for achieving the objective for the reform of state-owned enterprises, so that we should energetically promote the reform. We are now clear about the general approach and the principles and policies for the reform of state-owed enterprises. A group of enterprises have developed and grown strong in the midst of market competition and some enterprises have extricated themselves from or are now getting out of difficulties, accumulating a great deal of useful experience along the way. So long as we work together and do solid work, we are confident that we can achieve our reform and development objectives for state-owned enterprises. The most important thing for us now is to continue working to unify our thinking and unswervingly carry out the principles and policies formulated by the Party Central Committee. This year the government should focus on the objectives listed below.

First, we must put a stop to redundant development and accelerate industrial restructuring and reorganization. We should continue to reduce excess production capacity in the textile, coal, metallurgical, petrochemical, building materials, machine-building, electronics and light industries,. We should resolutely eliminate small enterprises which are technologically backward. Waste resources, produce inferior products and cause serious pollution. In addition, following the principle of breaking up monopolies and encouraging competition, we should work to form technologically advanced, competitive enterprise groups through association, merger and reorganization. If we persist in this effort for a few years, we shall gradually form a mechanism for developing the superior and weeding out the inferior, thus creating a sound macro-environment and good market conditions for the development of enterprises.

Second, we should continue to guarantee the basic needs of workers laid off from state-owned enterprises and help them find new jobs. This is a major task in deepening the reform of enterprises and an important measure for maintaining social stability, Success in this endeavor hinges on funding . We should continue to finance this effort by splitting the cost evenly among the enterprises, society and government financial departments. We should particularly work to strengthen vocational training in various forms, open up new avenues of employment, help workers change their attitude toward employment and strive to assist as many laid-off workers are re-employed, they should sever labor relations with their original enterprises. The laid-off workers who fail to find new fobs after three years of unemployment should also sever labor relations with their original enterprises and apply to a social security institution to obtain unemployment insurance benefits. Urban laid-off workers who cannot find new jobs after receiving unemployment insurance for two years should go to a department of civil affairs obtain a minimum allowance. These "three guarantee measures" constitute an important part of the social security system with Chinese characteristics under current conditions.

Third, we should promote the separation of the functions of the government from those of the enterprises, improve the supervisory system and consolidate and improve the leadership of enterprises. The various departments of the State Council have ended the administrative relationships with the enterprises under their jurisdiction and no longer exercise direct management of them. This year local governments should also carry out corresponding reform according to the same principle. In addition, the state must tighten its supervision over the enterprises to protect the owners' rights and interests and the safety of state-owned assets. This year we should continue to send special inspectors to key state-owned enterprises.

We should continue to relax control over and invigorate small state-owned enterprises in various ways. It should not be the main way of reform to sell off these enterprises. We must resolutely stop erroneous practices such as selling them off for a nominal price while in fact simply giving them away, half selling them off and half giving them away, evading bank debts and state taxes and not taking responsibility for making proper arrangements for laid-off workers.

While promoting the reform of state-owned enterprises, we should adopt policies and measures to encourage, support and guide the sound development of collective, individually owned and private enterprises.



Successfully carrying out financial work and preventing and reducing financial risks

China's finance has been operating smoothly and made substantial progress in reform. Under the circumstances that the impact of the Asian financial crisis is aggravating, the worldwide financial market is in turmoil and deep-seated problems in our own country's economic activities have gradually emerged, improvement in the performance of China's financial sector is of vital importance to the overall interests of reform, development and stability.

We should implement a prudent monetary policy, increase the money supply appropriately, take appropriate financial control measures and maintain the stability of the Renminbi.
While adhering to the principles for commercial credit to ensure loan quality and reduce financial risks to a minimum, the banks should work hard to improve their financial services, provide more services and use the lever of bank credit to promote expansion of domestic demand and increase exports to support economic growth.

We should do a better job in implementing the guiding principles and plans formulated at the National Conference on Financial Work held by the CPC Central Committee in 1997 and continue to deepen the financial reform, rectify the financial order and prevent financial risks. First of all, we should earnestly work to improve the system separating the operation and administration of the banking, securities, insurance and trust sectors, and implement the responsibility system for financial supervision and control to intensify the supervision and control of all types of financial institutions. Second, we should accelerate the reform of state-owned commercial banks, ensure autonomy in operation of the banks, continue to make progress in efforts to establish bank branches and sub-branches based on economic divisions and workloads, streamline institutions, cut the size of their staffs and tighten internal control. We should practice the five-category assets classification for bank loans and gradually set up financial assets management companies to handle the non-performing loans now held by banks. We should implement a strict responsibility system for the quality of new bank loans. Third, we should do a good job of operating non-commercial banks, carry out the state industrial policies and raise the efficiency of the utilization of funds. Fourth, we should standardize and safeguard the financial order in accordance with the law. We should inspect and rectify non-bank and local financial institutions, reduce the risks of financial institutions and maintain financial stability. We should promote the steady development of other commercial banks and credit cooperatives in both urban and rural areas in the process of reform. We should earnestly implement the Securities Law to standardize and develop the securities market. In addition, we should also rectify and standardize the insurance market to promote the sound development of the insurance industry. We must deal severely with actions of financial institutions in violation of regulations or codes of conduct and relentlessly punish financial criminal activities in accordance with the law.



Striving to expand exports and utilizing foreign funds effectively

We should continue to carry out the basic state policy of opening to the outside world, work to open up more markets abroad and strive to expand foreign trade and make more use of foreign funds. This is of vital importance to achieving sustained economic growth this year, maintaining equilibrium in our balance of payments and keeping the exchange rates for the Renminbi stable.

We should do our utmost to expand exports. We should stick to the strategy of success through quality and diversification of market outlets and adopt internationally accepted policy measures such as granting export credits and tax refunds to promote exports to earn more foreign exchange. We should concentrate on increasing the export volume of electromechanical products, products with high added value and high-quality and famous-brand products as part of our efforts to restructure exports and open op new markets. Great efforts should be made to promote general trade and to improve and strengthen the management of processing trade. We should allow more producers to engage in export on their own too encourage them to increase export volumes. Through funding, technology and personnel training, we should help and encourage qualified enterprises to develop processing trade overseas in places with potential markets, with a view to promoting exports. We should improve the criteria and methods for assessment of foreign trade enterprises engaged in export. Foreign trade enterprises should press forward in spite of difficulties, deepen reform, improve management, improve economic performance and strengthen competitiveness. We should also increase necessary imports, improve the trade balance and integrate importing with the adjustment and upgrading of domestic industries and technology imports. We should develop international tourism and increase foreign exchange earnings through non-trade channels.

We should take full advantage of China's social and political stability and sound macroeconomic conditions to try to absorb as much foreign investment as possible, particularly investment from famous transnational corporations, and improve the way foreign funds are used. We should properly guide the orientation of foreign investment and optimize the utilization of foreign funds in terms of their structure and geographical distribution. We should continue to improve the environment for foreign investment, gradually open more fields to foreign investment and improve our management of foreign-funded enterprises in accordance with the law. We should strengthen overall management of foreign debts, working to control their scale, optimize their structure, tighten supervision, improve early warning methods and strengthen our ability to repay foreign debts.

We should continue to keep the exchange rates for the Renminbi stable. We should strengthen management of foreign exchange revenue and spending, maintain equilibrium in our balance of payments and keep foreign exchange reserves stable. We should strengthen the system of exchange settlement and sales, ban illegal foreign exchange transactions and severely deal with all cases of obtaining foreign exchange under false pretenses, not turning over foreign currency owed to the government and illegal arbitrage of foreign exchange. We should strengthen the forces engaged in the fight against smuggling and extensively and persistently combat smuggling.



Invigorating the country through science and education- a major measure for fulfilling the modernization drive

Implementing the strategy of relying on science and education to invigorate the country is a major measure for ensuring vitality in the economy and for modernizing the country and also represents and extremely important task fror the government of this term.

The most important things for us now are to vigorously promote reform, accelerate establishment of a state innovation system, integrate science and technology with the economy and speed up the translation of scientific and technological advances into practical productive forces and widely apply them. First, enterprises should be encouraged to engage in technological progress to enhance their technological development and innovation abilities. Second, guided by the market, we should promote the integration of production, teaching and research. Third, we should lose no time in formulating an implementing industrial and technical policies for the new situation. Fourth, we should try to strengthen basic research.

The strategy of developing the country by relying on science and education is based on education. We should continue to make education a strategic priority. We will strive to make nine-year compulsory education available in more areas this year so that more than 80% of the total population is covered and we will reduce the number of illiterate young and middle-aged people by about 3million. We should actively work to develop vocational and adult education in various forms. We will also work hard to improve the overall quality of students, help them develop a spirit of innovation and practical abilities and ensure that they improve in terms of their moral, intellectual fitness level as well as in their appreciation of aesthetics. The government will increase investment in education on accordance with the law, make good use of educational resources and raise the overall efficiency of schools. To improve education we need to do a number of things. First, we should intensify reform. We should continue to modify our concepts of education, reform the management system of education and make changes to course contents and teaching methods. Second, more attention should be paid to the quality of education. We should work hard to Improve the quality of education in all kinds of schools at all levels, especially in primary and secondary education. Third, we should pay more attention to ideological, political and moral education to improve the overall quality of the new generation.



Further implementing the strategy of sustainable development

We should continue to make progress in implementing the sustainable development strategy. We should always bear in mind our responsibility to the people and our future generations and protect our natural resources and the ecological environment.

We should improve the planning for resources and their management, avoid waste of resources for short-term gains in development, protect resources and make comprehensive use of resources. We should enhance our awareness of the importance of environmental protection, continue to increase investment in environmental protection and intensify our efforts to control and treat pollution in major cities, regions, valleys and sea areas. We should encourage clean production and enterprises that discharge pollutants that exceed the stipulated standards should remedy the situation within a specified time. Those that fail to do so must be closed down. The control of air pollution in Beijing, the capital, is a major task being tackled this year by local government authorities and concerned departments of the State Council should strongly support this effort. We should do a better job of formulating urban and rural development plans and strictly implement them, punishing those who violate stipulations of the plans. We should continue to control population growth and improve the quality of the population. Further efforts should be made to improve the responsibility system for attaining population and birth control targets. In our efforts to control population growth, we should focus con rural areas and floating population.