(Delivered at the Second Session of the Tenth National People's Congress on March 5, 2004)

Wen Jiabao

Premier of the State Council　

Notes:

1. News dispatches are embargoed until the conclusion of today's meeting.

2. The official version of this speech in Chinese will be released by the Xinhua News Agency.

Fellow Deputies,

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.