Basically meeting the objectives for reform and development set for 1998,With the achievements not easily attained

In the face of the complicated and grim economic environment at home and abroad over the past year, the people of all nationalities in China worked hard together, achievements in carrying out the reform and opening-up policy and in the socialist modernization drive. The objectives for reform and development defined at the beginning of the year were basically attained.

The national economy continued to grow at a relatively rapid speed. The gross domestic product for 1998 increased by 7.8% was not easy given the impact of the Asian financial crisis and the catastrophic floods in China. To protect ourselves against the effects of the investment and boosting domestic demand at the beginning of last year. However, the crisis became broader and deeper than we had anticipated, exerting more of an impact on China than we had expected. In the first half of 1998, the economic growth rate slowed down because of the sharp decline in the growth rate of export volume and inadequate domestic demand to keep the economy growing. To address this problem, the central authorites resolutely made a decision to adopt a proactive fiscal policy. After the National People's Congress approved the necessary changes in the budget for 10998, the State Council issued an additional 100 billion yuan of government loans for investment in infrastructure development. As a result, the growth of fixed-asset investment in state-owned enterproses was much more rapid in the second half of the year, increasing by 19.5% for the year as a whole. National fixed-asset investment in all segments of the economy increased by 14.1%. This considerable increase in investment played a prominent role in fueling economic growth.

Flooding of a severity seldom seen before in the valleys of the yangtze, Nenjiang and Songhua rivers last year caused a direct economic loss of over 200 billion yuan. Many mines and industrial enterprises suspended operations and some sections of the Yangtze were closed to navigation for more than a month. All this greatly affected production, development and domestic and foreign trade. Under the strong leadership of the Party and the government, soldiers, who played and essential role, and civilians struggled together and won a great victory in the battle against the floods, thereby minimizing losses. The work of resuming production and rebuilding after the floods proceeded smmothly. Despite these major calamities, harvests were generally good. The great spirit displayed in the struggle against the floods has become a powerful force boosting the development of all our undertakings.

When many neighboring countries devalued their currencies by a large margin, we weighed the pros and cons and decided not to depreciate the Renminbi. In order to avoid serious fluctuations in the level of foreign trade and the utilization of foreign funds, we adopted various policies such as encouraging exports and attracting foreign funds and stepped up our efforts to crack down on smuggling and other illegal practices such as obtaining foreign currency under false pretenses, not turning over foreign currency owed to the government and illegal arbitrage. As a result, our foreign exchange reserves increased somewhat.

While working to expand our economy, we continued to carry out reforms. The reform of state-owned enterprises was deepened. Fresh progress was made in efforts to restructure and reorganize the textile, coal, petroleum and petrochemical, metallurgical and national defense industries. Some preliminary results were seen in the State Council's experiment to assign special inspectors to some key enterprises of the state. Greater efforts were made throughout the country to ensrue a minimun standard of living for laid-off workers and to re-employ them. Most of these workers registered with re-employment centers and received basic allowances. Over 6 million laid-off workers were re-employed in 1998. Retired employees from enterprises for the most part received their pensions on time and in full. The reform of the grain distribution system progressed steadily, and state-owned enterprises engaged in grain purchasing and storage basically stopped operating at a loss. Great strides were made in efforts to reform the financial system and guard against financial risks. The institutional reform of the State Council progressed smoothly and its objectives were attained. The central authorities decided that the army, the armed police and the procuratorial, judicial and public security institutions should no longer engage in business and that the Party and government institutions at the central level should cut all business ties with the economic entities set up by them and the enterprises under their jurisdiction. That policy decision has been carried out. Further achievements have been scored in efforts to strengthen and reform the Chinese People's Liberation Army, and the work of reducing our armed forces by 500,000 men is going smoothly. The programs for reforming the urban housing system and the system of medical insurance for urban workers are being impleminted. A system to ensure a minimum standard of living for city residents has been established in most cities. Advances in these reforms have contributed to establishing a socialist market economy and promoting economic and social development.

Development in the fields of science and technology, education and all other social undertakings continued. Efforts to build a socialist society with advanced culture and ethics and to improve democracy and the legal system were reinforced. Governments at all levels improved their abilities to perform their official duties in accordance wioth the law. We intensified our efforts to strengthen democracy at the grass-roots level in rural areas. There were positive results in efforts to improve all facets of public security, and social stability was maintained. Fresh progress was made in the effort to build clean and honest government and in the struggle against corruption.

These notable achievements of the past year can mainly be attributed to the following factors: A series of timely, resolute and correct decisions were made under the firm leadership of the CPC Central Committee with Comrade Jiang Zemin at its core. The achievements in carrying out the reform and opening-up policy and in the economic development of the past two decades provided the material basis and institutional conditions for surmounting tremendous hardships. All localities and departments conscientiously implemented the principles and policies of the central authorities and the people of all nationalities in the country worked hard together bringing into full play their initiative and creativeness.

Ruling the country in accordance with law and building an honest, diligent, pragmatic and efficient government

Rule the country of law- that is the Party's basic principle for leading the people in administering the country. The government should strengthen administrative legislation, improve the supervision of law enforcement and carry out its official duties in accordance with the law. This year we will be concentrating on the following three tasks.

Rectifying the economic order in accordance with the law and severely cracking down on economic crimes.
Improving all facets of public security to ensure social stability.
Keeping the government strictly in line, and building an honest, diligent, pragmatic and efficient government.
All government functionaries should firmly keep in mind the fact that they are public servants, and work diligently and wholeheartedly for the people. Further efforts should be made to perfect the public servant system, exercise strict management and strengthen the training of public servants to improve their political integrity and professional skills.

Greater efforts should be made to build a clean and honest government and punish corruption. The responsibility system for building a clean and honest government should be conscientiously implemented and the fight against corruption should be intensified. We should deepen reform, improve the system and work to perfect the supervision and restraint mechanisms, and prevent and control corruption in terms of sources, mechanisms and systems.



Fully displaying the role of the people's congress in supervising the government

The people's congress system constitutes China's fundamental political system and governments at all levels must be conscientiously subject to the supervision of people's congresses and their standing committees at corresponding levels. Governments at all levels should take the initiative to strengthen contacts with the committees of the Chinese People' s political Consultative Conference at all levels, earnestly listen to the opinion of the democratic parties, federations of industry and commerce, personages without party affiliation and mass organizations. They should fully promote democracy and constantly work to improve the mechanism for promptly reporting social conditions and popular sentiment so as to truly embody the people's wishes in government work.

We shall work to further improve the democratic policy-making system. When deciding on important policies, especially those involving the interests of the broad masses of the people, we must be prudent and adopt a proper method of soliciting a wide range of opinions. We must spare no effort in promoting democracy at the grass-roots level and bring into play the role of the workers' conferences of enterprises, urban neighborhood committees and rural villagers' committees. We should make government affairs public and strengthen democratic administration and supervision by society so that the people can fully supervise the government.

Implementing the principle of "one country, two systems" in an all-round way

Since the return of Hong Kong to the embrace of the motherland, the principle of "one country, two systems" has been comprehensively implemented. The central government has acted in strict accordance with the Basic Law of the Hong Kong Special Administrative Region (HKSAR) without interfering in affairs that would fall within the stipulated range of autonomy of the HKSAR government and ensured the implementation of the principle of "Hong Kong people administering Hong Kong " with a high degree of autonomy, winning wide acclaim in this regard.

Since the outbreak of the Asian financial crisis, the HKSAR government has calmly coped with the situation and withstood this severe test by adopting a series of effective measures, thereby demonstrating its ability to run Hong Kong society and deal with complicated situations. We will continue to give it full support in its administration of Hong Kong in accordance with the Basic Law and work together with our compatriots in Hong Kong to promote cooperation between Hong Kong and the mainland in economic, trade, scientific and technological and cultural fields to help bring about an early recovery of Hong Kong's economy and maintain its long-term prosperity and stability.

Macau will return to the embrace of the motherland on December 20 this year. The preparatory work of the Macau Special Administrative Region (MSAR) has now entered a crucial stage. The preparations for the establishment of the Selection Committee for the first MSAR government are now under way. In the middle of this year, the Committee will elect the first chief executive of the MSAR to be appointed by the Central People's Government. The first government of the MSAR will be organized by the chief executive in accordance with the stipulations of the Basic Law of the MSAR. We believe that with the experience of Hong Kong's successful return, the participation of vast numbers of our compatriots in Macau and the cooperation and efforts of the Chinese and Portuguese sides, Macau's transition and transfer of government will certainly go smoothly.

Achieving the complete reunification of the motherland conforms to the fundamental interests of the entire Chinese people

In this new year we will continue to adhere to the basic principles of peaceful reunification "and "one country, two systems" and to the eight-point proposal put forward by President Jiang Zemin and will work conscientiously in handling all work related to Taiwan. More importantly, we will be placing our hopes on the people of Taiwan, uniting with them, listening to their voices and supporting their reasonable propositions which are in the interest of the reunification of the motherland. We will redouble our efforts to promote mutual visits of people from both sides, expand exchange and cooperation in areas such as the economy and culture between the two sides of the Taiwan Straits, encourage our compatriots in Taiwan to invest in the mainland and develop cross-straits trade, and protect the legitimate rights and interests of our Taiwan compatriots. We will push for the early establishment of direct links for postal , air and shipping services and trade between the two sides. It is in the fundamental interest of all the Chinese people to achieve the complete reunification of the motherland. Our state sovereignty and territorial integrity cannot tolerate being carved into pieces. We firmly oppose the "independence of Taiwan" and the attempt to create "two chinas" or "one China, One Taiwan" in whatever form. We call on the Taiwan authorities to see the current situation clearly, enter into political negotiations with us at an early date and make practical efforts to officially end the state of hostility between the two sides in accordance with the principle that there is only one China in order to further improve cross-straits relations.