-At the Third Session of the Ninth NPC, Zeng Peiyan, Minister in Charge of the State Development Planning Commission, delivered a report on the implementation of the 1999 plan for national economic and social development and on the draft 2000 plan for national economic and social development. At a press conference during the NPC session, he answered questions on China's current economic situation and the implementation of the strategy of the development of the western region.

In his report, Zeng said on the whole, the 1999 plan was carried out satisfactorily and the major regulatory targets for national economic and social development were basically attained.

--The national economy continued to show good momentum of development. There were improvements in the quality of growth and performance of the economy. In 1999 China's GDP hit 8,205.4 billion yuan, representing an increase of 7.1 percent over the previous year. The production conditions for agriculture continued to see improvement, and important advances were made in restructuring efforts. The capacity to fight against natural calamities was further strengthened. The composite economic performance index for industrial enterprises was 99.3, an increase of 8.4 percentage points. Total profits from State-owned and State holding industrial enterprises reached 96.7 billion yuan, an increase of 77. 7 percent after losses were set off.

--The investment pattern continued to improve and there was better quality in construction projects. Total fixed asset investment for 1999 reached 2,987.6 billion yuan, an increase of 5.2 percent over the previous year. A total of 101 billion yuan worth of treasury bonds were issued in 1999, providing an impetus for the expansion of investment by localities, departments and enterprises, as well as an increase in bank loans. These funds plus the increase in investment were used to complete a number of key projects and to get big jobs done which had been on the agenda awaiting action for years. Efforts were made to reinforce banks and dikes on major rivers and lakes to improve their flood control capacity. In the middle and lower reaches of the Yangtze River, farmland was returned to lakes, new towns were built for nearly 1 million displaced people, and the flood diversion and detention area was increased by over 1,500 square km. Some 24,000 km of highways were under construction in 1999, including 10,000 km of expressways. A total of 1,005 km of newly laid railway tracks and 547 km of double-track lines were opened to traffic. More than 60 percent of the capital from treasury bonds issue was invested in the central and western regions.

--National revenue and expenditures grew rapidly and the financial situation remained stable. We effectively promoted rapid growth of revenue by strengthening tax collection and management, putting more effort into resolving tax arrears and severely cracking down on smuggling. National revenue for 1999 (excluding revenue generated through debt) totaled 1,137. 7 billion yuan, an increase of 15.2 percent over the previous year. Expenditures for the country (excluding debt repayment) totaled 1,313.6 billion yuan, up 21.7 percent. Expenditures exceeded revenue by 175.9 billion yuan, with a deficit of 179.7 billion yuan for the central budget and a surplus of 3.8 billion yuan in local budgets. Outstanding loans of all financial institutions totaled 9.4 trillion yuan at the end of 1999 and increased by 1.08 trillion yuan in the year. By the end of 1999, China's foreign exchange reserves had totaled US$154. 7 billion,an increase of US$9.7 billion.

--Significant progress was made in reforming State-owned enterprises (SOEs) and turning around the operation of loss-making enterprises, and other major reforms continued to deepen. Losses of State-owned and State holding enterprises decreased by 15.9 percent over the previous year. The textile, building materials, nonferrous metals and railway industries took their operations out of the red and into the black. Over 4.9 million SOE laid-off workers found new jobs, while 93 percent of those who did not find new jobs registered with re-employment service centers, with 97 percent of them having received basic living allowances. Basically, all retired people of enterprises received their pensions on time and in full. Reform of the system of medical insurance for urban employees began to undertake in an overall way.

Price relationships were further rationalized.

Continued progress was registered in the reform of the grain and cotton distribution system.

--Imports and exports grew fairly rapidly and there was continued improvement in the utilization of foreign funds. Last year the total volume of China' s imports and exports reached US$360.7 billion, an increase of 11.3 percent over the previous year. Exports accounted for US$194.9 billion, a rise of 6.1 percent, while imports amounted to US$165.8 billion, up 18.2 percent. Some US$56.3 billion of foreign capital was used, a decrease of 3.9 percent from the previous year. Foreign investment totaled US$45.4 billion, including US$40.4 billion of direct foreign investment, which ranked China first among all developing countries. There was a marked increase in the number of capital- and technology-intensive projects encouraged by the State, with an increase in the size of individual projects. More multinational corporations invested and established production facilities in China.

--Development of science, technology and education was speeded up and all social undertakings made comprehensive progress. Some 80 percent of the 242 scientific research institutes affiliated to 10 State administrations were restructured and incorporated into enterprises. Progress was made in major special industrial projects such as the development of digital high definition TV, application of rare-earth minerals and biotechnology. The success of the test mission of the Shenzhou spacecraft marked a breakthrough in China' s research on manned space flight.

In 1999, colleges and universities enrolled 1.6 million students, an increase of 47.4 percent over the previous year. Some 80 percent of the country's populated areas have basically universalized the nine-year compulsory education and eliminated illiteracy among young and middle-aged residents. The project to extend radio and TV coverage to every village went into full swing, enabling about 40 million rural residents to enjoy radio and TV broadcasts in their homes for the first time. The natural population growth rate was 0.877 percent.

--Market sales began to pick up and the people's living standards continued to improve. Retail sales of consumer goods for the country totaled 3,113.5 billion yuan in 1999, an increase of 6.8 percent over the previous year, or an increase of 10.1 percent in real terms after allowing for price decreases. The per-capita disposable income of urban residents was 5,854 yuan, an increase of 9.3 percent in real terms over the previous year. The per-capita floor space for urban residents was 9.6 square meters, an increase of 0.6 square meters. The registered urban unemployment rate was 3.1 percent. The per-capita net income for rural residents was 2,210 yuan, an increase of 3.8 percent in real terms. Another 8 million poverty-stricken people became adequately fed and clothed.

Zeng pointed out that we are fully aware that there are still quite a few conflicts and problems in economic and social development. First, effective demand is feeble. The pace of increase in fixed asset investment has slowed. Certain factors held back the growth of consumer spending and restricted the expansion of consumption fields. Second, unemployment pressure has grown. As of the end of 1999, there were 6.5 million SOE laid-off workers still unemployed. Less people are employed in township and village enterprises. There is a great amount of rural surplus labor that needs to be absorbed elsewhere. Third, the growth of the farmers' incomes has slowed. The per-capita net income of rural residents increased by only 48 yuan in 1999. Fourth, anomalies in the economic structure remain outstanding. The problem of excess production capacity for ordinary products is still serious. Some enterprises are unable to adapt to changes in market demand and have weak development and innovation capacity. They are unable to replace, older generation of products with new ones fast enough and are hardly competitive. Fifth, the environment continues to deteriorate in some regions and pollution is serious in some cities. Zeng pledged that the Government would take effective measures and work hard to solve these problems.

In his report, Zeng also announced the targets and major tasks for this year's economic and social development.

The major targets for national economic and social development in 2000 are as follows:

--Economic growth rate of around 7 percent;

--Increase in total fixed asset investment of around 10 percent;

--Consumer price level and overall retail price level equal to or slightly higher than those of 1999;

--Total import and export volume up by 3 percent, and a basic equilibrium of balance of payments;

--Central government deficit of 229.9 billion yuan;

-- Total volume of currency issued around 150 billion yuan;

--Registered urban unemployment rate controlled around 3.5 percent; and

--Natural population growth rate of 0.92 percent.

The major tasks for national economic and social development in 2000 are as follows.

First, continuing to expand investment scale and optimize the investment pattern. The difficult part of efforts to attain the targets for economic growth in the year 2000 will be in ensuring a rapid rise in investment. Second, promoting strategic restructuring of agriculture and the rural economy and improving the overall quality and performance of the rural economy. Third, intensifying industrial restructuring efforts to improve the quality and performance of industrial growth. Fourth, striving to create a good external environment and promoting reform and development of State-owned enterprises. Fifth, strengthening implementation of a proactive fiscal policy and making greater use of monetary policy. Sixth, carrying out the strategy of the large-scale development of the western region to promote coordinated development of regional economies. Seventh, continuing to raise the level of opening up and making better use of both domestic and international markets and resources. Eighth, adhering to the strategy of sustainable development and successfully protecting and improving the environment. Ninth, stepping up efforts to develop the nation through science, technology and education and comprehensively develop all social undertakings.

On the development of the western region, Zeng noted that substantial steps should be made in implementing the strategy. Expediting infrastructure construction will provide the basis for the large-scale development of the western region. Efforts will be made to accelerate the construction of water conservancy, transportation, telecommunications, radio and television broadcasting and other infrastructure facilities in the region to promote the transfer of the regional resources advantages into economic advantages.

Intensifying ecological conservation and environmental protection is a major task for the large-scale development of the western region, said Zeng. Comprehensive measures will be taken, such as returning farmland to forests and pastures, conducting mountain closure to rehabilitate the vegetation of forests, launching the grain-relief program and contracting related projects to individuals. Taking the current good opportunity of fairly sufficient grain supply, ecologically weak areas on the upper reaches of Yangtze and Yellow rivers must pool efforts to treat farmland on steep mountain slopes. On the basis of experiments, steps will be taken in a planned way to steadily advance the program of returning farmland to forests and pastures, planting trees on barren hills and wasteland, and rehabilitating the vegetation of forests and pastures, in an effort to fundamentally reverse the ecological deterioration in the western region.

Zeng pointed out that the large-scale development of the western region should not follow the old system and the traditional mode of development. Instead, it should meet the requirements for the establishment of a socialist market economic structure and the transformation of the mode of economic growth. New ideas, new methods and new mechanisms should be actively introduced. Zeng called on efforts to emancipate the mind, seek truth from facts, and make brave innovations and active explorations. Various localities should develop special economies and advantageous industries with market prospects in line with their respective resources characteristics and advantages. Energetic efforts should be made to develop special, water-conservation and ecological agriculture, tourism and other promising industries in the west.

At the press conference during the NPC session, Zeng answered questions on China' s current economic situation, the implementation of the strategy on the large-scale development of the western region and other issues.

On this year's economic situation, Zeng said last year China's economy maintained sustained, rapid and sound development, and this momentum of growth will be kept this year. The target of a 7-percent growth can surely be attained this year. At present, the global economic environment is turning for the better, and China is witnessing improvement in such areas as investment, consumption and import and export trade. With regard to investment, this year China will continue to issue long-term treasury bonds, increase financial input and adopt measures to promote the growth of social investment. For consumption, last year, a series of measures were advanced to stimulate consumption, resulting in a 10.1-percent increase in retail sales. This year, these measures will continue to play their roles, and some new policies to encourage consumption will be put forth. Meanwhile, the State will use such economic levers as pricing, tax rate and interest rate to further expand domestic demand and guide the national economy to continue to advance along a good path.

The strategy on the large-scale development of the western region has drawn extensive domestic and overseas concern. On the question of investment returns in the west, Zeng said the western region, with abundant land and mineral resources and low-cost labor, has many economic advantages. However, the infrastructure facilities there are fairly backward. The State will increase investment in transportation, telecom-munications, water conservancy and other sectors to help the region improve its investment environment. During the course of development, resources should be distributed in accordance with market demand, and the role of market mechanism will be brought into full play. Zeng declared that this year substantial steps would be taken in the large-scale development of the western region. Currently, the lOth Five-Year Plan for Economic and Social Development (2001-2005) and the program for the large-scale development of the western region are being drafted.

Of this year' s total fixed asset investment, 70 percent of the capital from treasury bonds, fiscal appropriation and preferential loans provided by foreign governments and international financial organizations will be used in central and western regions. A batch of large projects will be launched in the west this year . Meanwhile, the preparatory work for a number of major projects, such as the west-east gas pipeline, the west-east power transmission project and the railway construction in Tibet, will be accelerated. Currently, 78 large and medium-sized projects are under construction in the west, and more than 30 billion yuan will be put into them this year to quicken their progress.

Zeng noted that the large-scale development of the west is a long-term arduous task and a grand systematic project that calls for the efforts of several generations. The key for the implementation of the strategy on the large-scale development of the western region lies in talented people. On the one hand, the region should speed up the cultivation of local talents. On the other, it should extensively attract professionals from the eastern area and from overseas. Some key construction projects will be launched in the west, which will be very attractive to domestic and overseas talented people. To fully play the role of these talents, necessary living and work conditions should be created for them. New ideas should be explored and new methods introduced in the development of the western region. The west should rely on the masses of local cadres and people, display the spirit of self-reliance and hard struggle, and make concerted efforts with the people throughout the nation to build a new region featuring economic prosperity and beautiful landscapes.

On the question of deflation, Zeng said currently China does have seen the emergence of the trend of deflation, but a serious situation of deflation is nonexistent. Despite a negative growth of the consumer price level and the retail price index for 22 months and 28 months in succession respectively, the money supply and the scale of loans provided by financial institutions have kept normal growth, and the economic development has kept a fairly rapid speed. The reasons for continuous negative growth of commodity prices are many faceted. The oversupply of commodities as a result of redundant construction and the continuous price decline of farm produce owing to periodical overproduction in the wake of consecutive years of bumper harvests have exerted fairly great impacts on the decline of the overall commodity price level. The slow growth in the income of urban and rural residents and the lack of transparency of some reform measures have affected the expenditure prospect of residents. In addition, the excessive commodity price rise in the previous years has created some room for price decline. Zeng predicted that with the implementation of the policies to stimulate domestic demand, the overall price level would pick up gradually this year. The price index for January was higher than last year' s same period, with the rise of the prices of a considerable amount of capital goods. Some 12 provinces, autonomous regions and municipalities directly under the Central Government saw positive increases in their price index. China expects to ease the trend of deflation this year and register further improvement in the economic situation by the end of this year.