Following is the full text of the Report on the Implementation of the 2014 Plan for National Economic and Social Development and on the 2015 Draft Plan for National Economic and Social Development, which was submitted on March 5, 2015 for review at the Third Session of the 12th National People’s Congress and was adopted on March 15.

REPORT ON THE IMPLEMENTATION OF THE 2014 PLAN FOR NATIONAL ECONOMIC AND SOCIAL DEVELOPMENT AND ON THE 2015 DRAFT PLAN FOR NATIONAL ECONOMIC AND SOCIAL DEVELOPMENT

Third Session of the Twelfth National People’s Congress March 5, 2015

National Development and Reform Commission

Fellow Deputies,

The National Development and Reform Commission has been entrusted by the State Council to submit this report on the implementation of the 2014 plan and on the 2015 draft plan for national economic and social development to the Third Session of the Twelfth National People’s Congress (NPC) for your deliberation and for comments from the members of the National Committee of the Chinese People’s Political Consultative Conference (CPPCC).

I. Implementation of the 2014 Plan for National Economic and Social Development

Last year, in the face of a complex and volatile environment abroad and arduous and formidable tasks involving reform, development, and stability at home, all regions and government departments, under the correct leadership of the Central Committee of the Communist Party of China (CPC) and the State Council, adhered to the general work guideline of making progress while ensuring stability; followed a general philosophy of keeping macro policies stable, making micro policies flexible, and meeting basic needs through social policies; and made coordinated efforts to ensure steady growth, advance reform, make structural adjustments, improve the standard of living, and guard against risks. We earnestly implemented the 2014 Plan for National Economic and Social Development approved at the Second Session of the Twelfth NPC, carried out our tasks in a sure and steadfast fashion, and achieved good results in all respects. Overall, we sustained steady economic and social development under a new normal and successfully implemented the plan for 2014.

1. We strengthened and improved macro-control and ensured steady economic performance.

We created new and improved ways of carrying out regulation at the macro level, took more targeted measures and enhanced structural adjustments on the basis of range-based regulation, and ensured that the economy performed within an appropriate range.

1) The economy grew steadily.

Fully leveraging the fundamental role of consumption in driving economic growth, we implemented a comprehensive range of policies aimed at boosting consumer spending. Total retail sales of consumer goods for the year rose by 12% and consumption in information, elderly care, health, and other service sectors grew rapidly. Making good use of the key role of investment, we launched major projects in ecological conservation and environmental protection, clean energy, agriculture, and water conservancy, and made innovations in the mechanisms for investment and financing in key areas. Total fixed-asset investment for the year rose by 15.3%, of which 64.1% came from nongovernmental sources (excluding rural households). Giving play to the supporting role of exports, we worked hard to stabilize exports while increasing imports. The total volume of US dollar-denominated imports and exports for the year rose by 3.4%, and our international market share continued to rise. Final consumption, capital formation, and net exports were responsible for 51.2%, 48.5%, and 0.3% of economic growth, respectively. The gross domestic product (GDP) reached 63.6 trillion yuan, an increase of 7.4% over the previous year.

2) The employment situation remained stable.

We continued to implement a more proactive employment policy, relying on reform, economic growth, and sound policy measures to create and secure jobs. A particular emphasis was placed on supporting university and college graduates in finding jobs or starting their own businesses, and on providing job seeking assistance for urban residents who are unemployed or having difficulty finding jobs. An additional 13.22 million urban jobs were created throughout the year. The registered urban unemployment rate stood at 4.09% at the end of 2014.

3) Price growth slowed.

The consumer price index (CPI) rose by 2% for the whole year. We tightened oversight over market prices and stepped up efforts to counter monopolistic pricing, dealing with 25,000 cases of pricing irregularities and imposing economic penalties of 4.47 billion yuan. We abolished a host of unreasonable charges and fees levied by banks and other financial institutions, saving enterprises more than 40 billion yuan.

4) Fiscal and financial risks remained at a controllable level.

We strengthened and standardized the management of local government debt, reviewed and screened outstanding debts, launched trials for local governments to issue their own bonds and repay their own debts, and strengthened risk assessment and early warning initiatives. Focusing on industries with overcapacity, local government debt, informal credit, and Internet banking, we intensified efforts to monitor, assess, and identify risks with a view to preventing regional and systemic financial risks. In response to fluctuations in the real estate market, we promptly adjusted and improved housing-related financial policies and improved related financial services.

2. We comprehensively deepened reform and opening up and greatly invigorated the market.

We continued to carry out a range of reforms related to government review and approval, fiscal and tax systems, banking, investment, and pricing. We also increased the pace of reform in education as well as medical and healthcare services. These initiatives enabled us to inject new vitality and impetus into economic and social development. P

1) The reform of the government review and approval system was continued.

Focusing on investment, production, and business operation, we canceled or delegated to lower-level governments the process of government review and approval for 246 items, achieving ahead of schedule the goal of cutting the number of items requiring government review and approval by one third. In addition, we pushed forward comprehensive reforms in the business system, and the number of newly registered market entities for the year totaled 12.93 million.

2) Fiscal, tax, and financial reforms were actively pushed forward.

We formulated and implemented an overall plan for deepening fiscal and tax structural reforms. We extended the trials of replacing business tax with VAT to the railway transportation, postal, and telecommunications services industries, and replaced the quantity-based resource tax on coal with a price-based one. We introduced new measures on the procurement of services by the government. We raised the upper limit on the floating range for deposit interest rates and reduced maturity brackets. We also widened the floating range of the RMB exchange rate, allowing it to float more freely. We methodically approached the lifting of restrictions on the establishment of financial institutions, and approved the establishment of five private banks. The trial-run of the Shanghai and Hong Kong Stock Connect was officially launched. The scale of RMB settlement in cross-border trade and investment increased.

3) Breakthroughs were made in the reform of the investment system.

Major steps were taken to reform the system for the review and approval of investment projects. Further revisions were made to the list of investment projects requiring government review and approval. The number of projects requiring approval at the ministerial level was cut by 76% over the past two years. The system of mandatory government review for all overseas-funded projects was replaced with a reporting-based system under which government review is only required in a limited number of cases. More than 95% of cases were only required to report to the government. With the exception of cases involving sensitive countries, regions, and industries, the requirement that overseas investment projects must be reviewed and approved by the government was replaced with new requirements under which projects only need to be reported online. The number of projects that required government review and approval accounted for less than 2% of the total. A work plan was introduced for reducing the number of items requiring government review and approval, regulating intermediary services for investment projects, and reviewing and approving enterprises’ investment projects online. Guidelines were formulated and implemented for revamping the systems of investment and financing in key sectors and encouraging nongovernmental investment. Positive headway was made in the reform of the investment and financing system for railways.

4) Pricing reform was intensified.

We lifted price controls over more than 700 low-priced medicines covered by medical insurance as well as 50 goods and services in other sectors, such as medical services provided by non-public medical institutions and telecommunications services. Railway freight transport prices were changed from being set by the government to being guided by the government and a ceiling was imposed. Unified national railway freight transport prices were raised once again. Benchmark passenger transport prices on domestic air lines were changed from being reviewed and approved by the government to being determined by airline companies in accordance with state pricing rules. We launched pilot projects of guaranteed base prices for cotton produced in Xinjiang and soybeans in northeast China and Inner Mongolia. We carried out trial reforms for the pricing of electricity transmission and distribution on power grids in Shenzhen and western Inner Mongolia. We introduced tiered pricing for residential water and gas consumption and adjusted the price of non-residential natural gas for use that was within 2013 levels.

5) Progress was made in the reform of State-Owned Enterprises (SOEs).

Guidelines for reforming the remuneration system for executives in central government enterprises were introduced. Pilot reforms were launched to reorganize central government enterprises as state-owned asset investment companies, develop a mixed-ownership economy, and standardize the boards of directors in central government enterprises. Further progress was made in the merging and reorganization of SOEs.

6) Social reforms proceeded in an orderly fashion.

Guidelines for comprehensive reform of the system for the use of official vehicles were formulated, and were implemented first in the bodies of the CPC Central Committee and central government. Plans for a system of public credit records were promulgated and implemented, and mechanisms to enable different departments to share credit information and take joint punitive actions against those who act in bad faith were improved. Significant progress was made in the establishment of a unified registration system for immovable property. The reform of the school examination and enrollment systems was vigorously promoted. The plan for old-age insurance reform in Party and government bodies and public institutions was promulgated as expected. The majority of China’s provincial-level administrative areas have established systems enabling residents to settle medical bills incurred in any locality within that jurisdiction via their medical insurance accounts. Trials for the comprehensive reform of county-level public hospitals have been extended to over 50% of counties or county-level cities throughout the country.

7) A new phase of reform and opening up has been initiated.

The strategy of developing the Silk Road Economic Belt and 21st Century Maritime Silk Road entered the implementation phase, the construction of infrastructure was strengthened with a view to achieving better connectivity with neighboring countries, and the opening up of markets in border areas and inland areas was expanded. The operation of the China (Shanghai) Pilot Free Trade Zone yielded transferable experience that can be replicated in other reform projects. The utilization of foreign capital was enhanced in terms of both quality and structure. Non-financial foreign direct investment actually utilized in 2014 totaled US$119.6 billion, up 1.7% year on year. The proportion of foreign investment utilized in the service sector reached 55.4% of the total. Efforts were redoubled to promote international cooperation on production capacity and encourage Chinese equipment to “go global,” and good progress was made in initiatives to promote Chinese rail transit equipment, electricity generation, telecommunications, and energy on the international market. China’s non-financial outward direct investment reached US$102.9 billion for the year, up 14.1%. A pattern of synchronous growth in inward and outward investment began to take shape.

3. We accelerated industrial structural adjustment and vigorously promoted economic transformation and upgrading.

Through exerting market forces and enhancing policy guidance, we sped up the transformation of the economic growth model and gave new impetus to the improvement and upgrading of the industrial structure.

1) New breakthroughs were made in innovation.

Spending on R & D as a percentage of GDP reached 2.09% in 2014, with corporate R & D spending accounting for over 76% of the total. Cutting-edge innovations such as the Tianhe-2 supercomputer, super-hybrid rice, the Chang’e lunar lander, satellite applications, and the deep-sea manned submersible Jiaolong captured global attention. Breakthroughs were made in a number of key and core technologies and industrial applications, covering the fields of biology, intelligent manufacturing equipment, ocean engineering equipment, regional airliners, mobile Internet, and broadband network equipment. There was rapid development in strategic emerging industries, such as cloud computing, the Internet of Things, and big data. Micro-innovation, crowd innovation, and other innovative and entrepreneurial models showed robust growth. The value-added of the high-tech manufacturing sector rose by 12.3%, four percentage points higher than that of industrial enterprises with annual revenue of 20 million yuan or more from their main business operations.

2) Good headway was made in transforming and upgrading traditional industries.

The technological upgrading of enterprises in traditional industries was carried out vigorously. Initiatives to adjust the distribution of key industries and relocate industries gathered pace. Steady progress was made in the elimination of excess production capacity. Tasks set out at the beginning of last year to eliminate excess production capacity in 15 key industries were completed as planned, effectively curbing the blind expansion of production capacity. Important gains were made in turning the coal industry around.

3) The service sector sustained rapid growth.

New business types and models displayed robust development. Cultural and creative industries and design services were further integrated with related industries, and a mid-to-long-term development plan and three-year action plan were introduced for the logistics industry. The value-added of tertiary industry (the service sector) amounted to 30.7 trillion yuan, increasing by 8.1% over the previous year and accounting for 48.2% of the GDP, 5.6 percentage points higher than that of secondary industry.

4) Basic industries and infrastructure developed quickly.

The country’s comprehensive transportation system was further improved, with the total length of railway lines and expressways open to traffic both exceeding 110,000 kilometers. National internet backbone access points were built in seven more cities, and fiber optic broadband was made available to another 30 million households or so. The installed capacity of hydropower facilities nationwide exceeded 300 million kilowatts. Major progress was made in the exploration and exploitation of coal seam gas, shale gas, and deep-water oil and gas. Construction began on 57 of 172 major water conservancy projects that have been planned. The first phase of the central route of the South-to-North Water Diversion Project was put into operation, providing drinking water from the Yangtze River to 60 million residents in the Beijing-Tianjin-Hebei region.

4. We bolstered the foundations of agricultural and rural development and made advances toward balanced development between urban and rural areas and between regions.

Throughout the year we vigorously developed modern agriculture, steadily promoted a new type of people-centered urbanization, optimized the spatial planning of economic development, and took new steps in balancing development between urban and rural areas and between different regions.

1) Agriculture and rural areas showed good development momentum.

Investment related to agriculture, rural areas, and farmers was further increased, and the development of agricultural infrastructure was supported. We oversaw the orderly transfer of land operation rights, leading to the transfer of around 30% of contracted land-use rights in rural areas. We formulated an overall plan to control serious agricultural environmental pollution, guidelines on establishing demonstration zones for ecological conservation and improvement, a plan to reform state forestry farms, and guidelines on reforming state forestry areas. Total grain output grew for the 11th consecutive year, reaching 607 million metric tons. Production of agricultural and sideline products, including meat, eggs, milk, fruit, vegetables, and fish, remained stable. We guaranteed the provision of safe drinking water for over 66 million more rural residents, renovated dilapidated houses for 2.66 million rural households, and reduced the number of rural population living in poverty by 12.32 million.

2) A new type of urbanization was advanced in an active yet prudent way.

We issued and implemented a national plan on a new type of urbanization, and carried out supporting policies such as a plan to reform the household registration system and a scheme for fulfilling the three tasks, each concerning 100 million people: granting urban residency to around 100 million people who have moved to cities from rural areas, rebuilding run-down areas and “villages” inside cities where around 100 million people live, and guiding the process of urbanization of around 100 million rural residents in the central and western regions. Comprehensive trials for a new type of urbanization were launched in two provinces and 62 cities or towns. Standards for classifying cities based on their population were fine-tuned. The percentage of the population residing permanently in urban areas was 54.77%. The percentage of the population registered as permanent urban residents is estimated to have reached 36.7%.

3) Regional development became more balanced.

We accelerated the implementation of the “Three Major Strategies”: the Silk Road Economic Belt and 21st Century Maritime Silk Road (”One Belt and One Road” strategy); the coordinated development of the Beijing-Tianjin-Hebei region; and the development of the Yangtze River economic belt. We finalized plans for advancing the “One Belt and One Road” strategy, steadily launching pragmatic cooperation in a wide range of areas. We completed the functional zoning of the Beijing-Tianjin-Hebei region and established the plan for its coordinated development, and made initial breakthroughs in three key areas of integrated transportation, environmental protection, and industrial upgrading and relocating. We issued and implemented guidelines on stimulating the development of the Yangtze River economic belt, which revolve around making use of the Yangtze’s role as a golden waterway, and launched the plan to build an integrated multidimensional transportation corridor along the Yangtze River economic belt. A total of 33 key projects for the large-scale development of China’s western region were launched, representing a total investment of 835.3 billion yuan; and a list of industries encouraged for development in the western region was released and put into effect. Guidelines concerning a number of major policies and measures to support the revitalization of northeast China in the near future were issued, and progress was made in the transformation of cities once dependent on resources that are now depleted. Continued efforts were made to establish the central region as a national integrated transport hub and as a center for production of grain, energy, and raw materials, and the development of modern equipment manufacturing and high-tech industries. The regions’ developmental layout consisting of two east-west and two north-south economic belts was further improved. The economic transformation of the eastern region gained momentum, and continued to spur on the development of the Chinese economy. Increased economic support was provided for old revolutionary base areas, ethnic minority areas, border areas, poor areas, and especially contiguous areas with acute difficulties.

5. We stepped up efforts to conserve energy, reduce emissions, and protect ecosystems and the environment, making the most significant progress in this regard since the beginning of the Twelfth Five-Year Plan.

We continued to lay emphasis on energy conservation and emissions reduction as priority initiatives in changing the growth model and making structural adjustments. Our policies in this regard began to yield greater cumulative effects.

1) Remarkable results were achieved in energy conservation and emissions reduction.

We reduced energy intensity and controlled the increase in total energy consumption. The share of non-fossil fuels in primary energy consumption reached 11.2%, up 1.1 percentage points over the previous year; energy consumption and carbon dioxide emissions per unit of GDP dropped by 4.8% and 6.2% respectively; and emissions of sulfur dioxide, chemical oxygen demand, ammonia nitrogen, and nitrogen oxides declined by 3.4%, 2.47%, 2.9%, and 6.7%, respectively. Efforts to meet the energy conservation and emissions reduction targets of the Twelfth Five-Year Plan made progress on schedule.

2) Good progress was made in ecological and environmental protection.

We made new strides in preventing and controlling air, water, and soil pollution. We vigorously carried out a series of major projects aimed at controlling pollution in key drainage basins, demonstrating the application of denitrification technologies in facilities other than power plants, and controlling air pollution in the Beijing-Tianjin-Hebei region and adjacent areas; and further improved mechanisms for regional coordination of pollution prevention and control. We accelerated the comprehensive prevention and control of pollution from motor vehicles. The percentages of urban sewage treated and household waste safely disposed reached 90.15% and 90.3% respectively. Water consumption per 10,000 yuan of value-added by industry totaled 63.5 cubic meters, dropping by 5.6%. We made enhanced efforts to protect and restore major ecosystems such as wetlands, forests, grasslands, and areas of biological diversity and richness; and continued to carry out ecological projects to convert marginal farmland back to forest, turn grazing land back into grassland, protect virgin forests, and build key forest shelterbelts. A total of 6.027 million hectares of land were afforested.

3) Further progress was made in responding to climate change.

We promulgated the National Plan for Responding to Climate Change (2014-2020), and issued the China-U.S. Joint Announcement on Climate Change, stating that China aims to achieve the peaking of carbon dioxide emissions around 2030 and to increase the share of non-fossil fuels in primary energy consumption to around 20% by 2030. We intensively carried out pilot projects to encourage low-carbon growth in provinces, regions, cities, and industrial parks; and made steady progress in developing a market for the trading of carbon emission rights.

6. We safeguarded and improved people’s wellbeing and ensured social harmony and stability.

We focused our energies on meeting basic needs, helping those in the greatest difficulty, and improving institutional building related to people’s wellbeing. We remained committed to doing everything in our power to increase funding for areas related to people’s wellbeing, despite facing serious budgetary constraints.

1) Incomes continued to rise.

We deepened the reform of the income distribution system; promoted the growth of rural incomes through multiple channels; raised basic pension benefits for enterprise retirees for the tenth consecutive year; and built up synergy between measures to boost incomes and employment policies, to the benefit of the general public. Nationwide per capita disposable income increased by 8% in real terms. Rural per capita disposable income rose by 9.2% and urban per capita disposable income by 6.8%, both in real terms. The ratio of urban disposable income to rural net income per capita dropped to less than 3:1 for the first time in 13 years.

2) The social safety net continued to branch out.

Social security coverage was comprehensively expanded. A total of 366 million urban residents have been brought under the coverage of the basic old-age insurance; and 477 million rural residents have been covered by the new type of rural old-age insurance. We implemented a unified basic old-age insurance system for rural and nonworking urban residents, and raised the level of basic pension benefits provided under the system, benefiting 143 million elderly people. The rates of participation in the basic medical insurance systems for working and nonworking urban residents and the new rural cooperative medical care system all stood above 95%. We did our utmost to provide post-disaster relief and assistance to Ludian and Jinggu, which both were hit by earthquakes, and to other areas hit by major natural disasters. Post-disaster recovery and reconstruction efforts progressed in an orderly fashion.

3) Solid progress was made in the construction of government-subsidized housing.

Making use of central government expenditure, corporate debt financing, and credit funds, we provided additional support to government-subsidized housing projects such as the rebuilding of run-down areas. Construction on 5.11 million government-subsidized housing units was essentially completed, and construction on an additional 7.4 million units commenced.

4) Progress in social programs was registered across the board.

We continued to improve the basic conditions of badly built and poorly operated schools providing compulsory education in poor areas. Projections put the retention rate of nine-year compulsory education at 92.6% and the gross enrollment ratio for senior secondary education at 86.5%. The proportion of rural students admitted to key colleges and universities continued to increase. We further improved the public health system and began to install a standardized training system for resident physicians. A policy of allowing couples to have two children if either parent is an only child was implemented throughout the country. We accelerated the development of public cultural services and basically completed the initiative to extend radio and television coverage to every village in the country. The total number of domestic tourist trips made last year reached 3.61 billion, up 10.7% over the previous year. Outbound trips exceeded 100 million for the very first time. We launched major projects in fitness and elderly care, and increased the number of nursing home beds to 26 per 1,000 elderly people. The sports industry and sports consumption developed at an accelerated rate, with 67,000 new sports venues being built. We continued to improve recovery and care services for the disabled. The number of service facilities for the disabled is estimated to have reached 3,867.

In view of the performance of the targets projected in the plan, overall targets for the national economy, such as the economic growth rate, the consumer price index, the balance of payments, and employment levels, remained within the proper range; some targets that reflect economic structure and quality were further improved; targets concerning social development and people’s wellbeing kept a positive momentum; and targets concerning resource conservation and environmental protection were implemented satisfactorily. Overall, the planned targets were well met.

The 17 obligatory targets have all been achieved as planned. Among them, the target for rural land newly designated for construction and the target for land newly designated for construction as a whole are estimated to exceed the figures set at the beginning of the year. The main reasons for this are twofold:

First, during the post-earthquake efforts of recovery and reconstruction in Ludian, Yunnan, a portion of the land newly designated for construction was utilized in advance in accordance with the law, so the proper procedures for this land use will be made up for in accordance with regulations.

Second, in projects to link the amount of urban and rural land designated for construction to that of land returned to cultivation and in the efforts to reclaim land from deserted industrial and mining areas, part of the quota for land newly designated for construction was used to build housing for displaced rural residents. After reclamation of the abovementioned deserted areas is completed, that land will be used to offset the part of land newly designated for construction that was requisitioned for rural residents.

The overall performance of the 40 anticipatory targets was in line with or better than expectations, but some of them fell short of the planned figures. It should be noted that anticipatory targets are not predicted figures; they are development objectives that the country hopes to achieve and are a reflection of its policy orientation. The actual performance of these targets may be higher or lower than projected figures. There are many cases of discrepancies between the performance of targets and the figures projected.

First, some targets themselves are ceilings, so it is normal that actual performance of such targets may be lower than the targeted figures. An example of this is the target for the CPI.

Second, some targets are set a little higher than estimated figures in order to reflect the orientation of macro-control policies, with the growth rate of retail sales of consumer goods being one such target. The actual performance of these targets might vary a certain amount from targeted figures.

Third, some targets being lower than expected is due to unique factors. For instance, because the size of China’s economy increased after the third national economic census, the target for R & D spending as a percentage of GDP was slightly lower than projected figure.

Fourth, uncontrollable factors such as changes in the domestic or international economic environment may cause the actual figures of some targets to be lower than projected. An example of this is how the sharp drop in the prices of major commodities in the international market has caused the growth rate in the total volume of US dollar-denominated imports and exports to be slower than expected.

In short, in the face of complex international political and economic situations and an increasing number of new problems and new challenges in China’s development, the achievements that China has made thus far in economic and social development have not come easily. They are the result of the correct leadership of the Party Central Committee and the State Council, as well as the concerted efforts of all regions, all departments, and the people of all our ethnic groups, and should all the more be fully recognized and cherished.

At the same time, we should also be keenly aware that world politics, the economy, and geopolitics are closely intertwined; the global economy is still under profound adjustment following the international financial crisis, and overall, it continues to recover slowly.

Domestically, the long-standing problems of unbalanced, uncoordinated, and unsustainable development remain unresolved; in its current stage of development, China has to simultaneously deal with the slowdown in economic growth, make difficult structural adjustments, and absorb the effects of previous economic stimulus policies; and there are many difficulties and challenges facing the economy.

First, downward pressure on economic growth is building up. Growth in investment, which plays a key role in ensuring economic growth, has continued to slow back down; consumer demand is having a difficult time making significant increases; foreign demand is unlikely to change for the better; and new growth areas in consumer spending have not yet been able to fill the gaps left by old ones.

Second, some enterprises are having difficulties in production and operations. The output producer price index (PPI) has continued to fall; the expectation of deflation is getting stronger; the cost of factors of production such as capital and labor is increasing; there are still problems in the flow of credit funds to the real economy; the problem of small and micro businesses obtaining financing only at great effort and high cost has not been fundamentally alleviated; and enterprise profits have dropped markedly, affecting their confidence in the near-future market and producing a non-trivial ripple effect on employment and people’s income.

Third, there is overcapacity in traditional industries and a lack of effective supply in emerging industries. Resolving the problem of overcapacity is an arduous task that will increase pressure on society. There are too many restrictions upon entering into emerging industries and modern services, and there is a clear lack of effective supply of some goods or services for which there is a huge demand in the domestic market.

Fourth, it is becoming more difficult to remove hidden barriers and break vested interests when tackling the hard problems in reform. As China’s reform is at a critical stage and in a deep-water zone, deepening reform will involve more complicated conflicts and affect more deep-rooted interests. Some reform plans need further improvement, and the implementation of some reform measures is far from satisfactory.

Fifth, potential risks in some areas need our close attention. Adjustments to the real estate market face major uncertainties; different trends have emerged in the market; credit defaults have appeared in some enterprises; the amount of bad debt reported by banks has increased; and economic risks are emerging.

In addition, new problems have also cropped up in agriculture, foreign trade, social work, people’s wellbeing, ecological progress, environmental protection, and workplace safety.

Faced with these issues, we must keep a clear head and become more aware of any possible crisis and the bottom line, then work hard to respond to and resolve them. II. General Requirements and Major Targets and Policies for Economic and Social Development in 2015

2015 is a crucial year for comprehensively deepening reform, the first year for comprehensively advancing the law-based governance of the country, and the final year for completing the tasks set out in the Twelfth Five-Year Plan. In carrying out our economic work in 2015, we must comprehensively implement the guidelines of the 18th National Party Congress and the third and fourth plenary sessions of the 18th CPC Central Committee; take as our guide Deng Xiaoping Theory, the important thought of Three Represents, and the Scientific Outlook on Development; and fully implement the guiding principles from General Secretary Xi Jinping’s major speeches. We must adhere to the general principle of making progress while ensuring stability; stay centered on improving the quality and performance of economic development; proactively adapt to the new normal in China’s economic growth; keep the economy performing within an appropriate range; and give high priority to transforming the growth model and making structural adjustments. We must also tackle hard problems in reform; highlight the importance of innovation as a force to drive development; strengthen risk prevention and control; work harder to ensure people’s wellbeing; and strive for sound and steady economic development as well as social harmony and stability.

We will adhere to the general principle of making progress while ensuring stability. The focus of our efforts to ensure stability will be placed on keeping economic performance stable, making sure that there are no major fluctuations in growth, employment, and prices, and precluding the emergence of regional and systemic financial risks. The focus of our efforts in making progress will be put on making economic structural adjustments and deepening reform and opening up to ensure that achievements are made in transforming the growth model and promoting innovation-driven development.

To meet these requirements, and in keeping with the goals set out in the Twelfth Five-Year Plan, we have set forth the main targets for economic and social development in 2015 as follows:

— Ensuring that the economy grows steadily

GDP is projected to grow by approximately 7%. In setting this objective, we have mainly taken the following into account: This growth rate accommodates the new normal in economic development, reflects China’s current potential for economic growth, is in line with market expectations, and can be achieved with hard work. At the same time, the recent few years’ correlation between economic growth and structural changes on the one hand and increases in employment on the other hand shows that an economic growth of around 7% would help create more than 10 million urban jobs. We can do better than this if we promote reform and structural adjustments through practical work.

-Maintaining the basic stability of overall prices

The CPI is expected to increase by around 3%. In setting this objective, we have mainly taken the following into account: The prices of major commodities in the international market may continue to remain low, there is an ample supply of main commodities at home, some manufacturing industries are suffering from a combination of overcapacity and sluggish demand, and there will be continuing weakness in the overall level of prices. In addition, we have also set this target to leave space for price reform.

— Improving the quality and performance of the economy

The systems and mechanisms for promoting innovation will be gradually improved, and R & D spending will be steadily increased. The contribution of the value-added of strategic emerging industries and the service sector to GDP will continue to increase, and the transformation and upgrading of traditional industries will be accelerated. The new type of urbanization will be carried out vigorously, and development between different regions will be better coordinated. Both energy consumption and carbon dioxide emissions per unit of GDP will be cut by at least 3.1%. Chemical oxygen demand will be reduced by around 2%, ammonia nitrogen emissions by around 2%, sulfur dioxide emissions by around 3%, and nitrogen oxide emissions by around 5%.

- Continuing to improve the standard of living

More than 10 million urban jobs will be created, and the registered urban unemployment rate will be kept within 4.5%. Personal income will increase in step with economic development, and the rural population living in poverty will be cut by at least 10 million. The social security system will be improved, the coverage of old-age, medical, and other social security services will continue to expand, and the level of social security benefits will increase gradually. We will strive to make continued progress in making access to education, healthcare, cultural services, and other basic public services more equitable. The natural population growth rate will be kept under 6.5 per thousand.

— Keeping the equilibrium in the balance of payments

Total imports and exports will increase by around 6%, general trade and trade in services will account for more of foreign trade, foreign investment utilized will remain stable overall, and outward foreign direct investment will continue to grow rapidly.

To achieve these targets and make our economic work for 2015 a success, we must ensure that the macro policies are stable, micro policies are flexible, and social policies meet people’s basic needs. We must make coordinated efforts to ensure steady growth, advance reform, make structural adjustments, improve the standard of living, and guard against risks. We must also continue to make innovations in and improve the way we exercise regulation at the macro level, ensure the continuity and stability of policies, and make sure that macro policies are further coordinated and work together to create synergy.

We will increase the vigor and effectiveness of our proactive fiscal policies. The government budget deficit for 2015 is projected to be 1.62 trillion yuan, which is an increase of 270 billion yuan compared to last year, resulting in a deficit to GDP ratio of around 2.3%. Of this amount, the central government deficit is 1.12 trillion yuan, and the remaining 500 billion yuan is from local government deficit. In addition, we will allow local governments to issue an appropriate amount of special bonds. Our fiscal policies will be focused on the following areas:

First, we will continue to make structural tax reductions and cut fees across the board. We will extend the trials of replacing business tax with VAT to the construction, real estate, financial, and consumer service industries. We will also make sure that the tax reduction and exemption policies for small and micro enterprises are well implemented.

Second, we will improve the structure of expenditures. This will be done by giving high priority to agriculture, rural areas, and farmers; people’s wellbeing; environmental protection; old revolutionary base areas, ethnic minority areas, border areas, and poor areas; and key eco-functional zones, and by increasing support for financing guarantee for agriculture, rural areas, farmers, and small and micro businesses. We will continue to be economical and strictly control regular expenditures.

Third, we will utilize government funds more efficiently. We will make innovations in the way we use government funds, increase the intensity of treasury cash management, and put treasury funds on hand to good use.

We will implement a prudent monetary policy that is neither too loose nor too tight. This year, the money supply M2 is forecasted to grow by around 12%, but may be adjusted to a higher level to meet practical needs. We will carry out fine-tuning at an appropriate time and to an appropriate degree; strengthen targeted regulation, coordinated supervision, and management of expectations; and maintain reasonably ample liquidity. Our monetary policy priorities will be as follows:

First, we will effectively lower financing costs in the real economy. We will apply a combination of quantitative and price-based regulatory tools to guide financial institutions toward lowering their interest rates on loans, so that interest rates in the market move toward an appropriate level.

Second, we will support economic restructuring, transformation, and upgrading. We will use a combination of monetary policy tools to guide financial institutions in increasing their credit support for small and micro businesses, agriculture, rural areas, and farmers, the central and western regions, and SOE mergers and reorganizations. We will give stronger support to enterprise debt restructuring by applying policies tailored to their specific situations and types of debt.

Third, we will effectively prevent, control, and defuse financial risks. We will tighten oversight over the real estate market, local government debt, shadow banking, mutual guarantee and guarantee chains, and cross-market financial products, and ensure that no systemic or regional financial risks occur.

Fourth, we will steadily liberalize interest rates and improve the mechanisms for determining RMB exchange rate. We will allow the pricing of more debt products of financial institutions to be market-based and improve the central bank’s framework of adjusting interest rates. We will allow the RMB exchange rate to float more freely, while keeping it basically stable at an appropriate, balanced level.

We will ensure our policies are well coordinated and function together to create synergy. We will manage supply and demand with equal importance, link together industrial and competition policies, fully allow fiscal and monetary policies to play their role as major tools for economic adjustment, and better coordinate policies for consumer spending, investment, industries, pricing, regions, land, and environmental protection.

First, we will carry out all the policies and measures for expanding consumer spending and getting it to fully play the fundamental role in driving economic growth, stimulate reasonable increases in personal income, nurture and expand growth areas in consumer spending, and improve the environment for consumer spending.

Second, we will improve the system of government public investment, optimize where and how government investment is used, enhance coordination and cooperation between budgetary investment on the one hand and developmental and policy-backed finance, bonds, funds, and insurance on the other, and use government investment to attract and guide nongovernmental investment.

Third, in order to raise the core competitiveness of our industries, we will attach greater importance to giving inclusive incentives, removing obstacles, and strengthening regulation; improve industrial distribution and strengthen guidance through plans; improve quality, standards, and brand-building; establish a sound mechanism for assessment and exit of production capacity; and improve our institutions and mechanisms to be conducive to the development of a modern industrial system.

Fourth, we will accelerate price reform, significantly narrow the scope of government-set pricing, and get prices to fully play a leveraging role. We will explore ways to improve the pricing mechanism for agricultural products by carrying out the trial reform of guaranteed base prices, and we will implement policies of differentiated and tiered pricing. We will strengthen price supervision and intensify law enforcement efforts to counter monopolistic pricing in order to ensure fair competition between market players.

Fifth, we will improve our system of regional policies and arrange policies on a smaller geographical scale so that they are more precise and more tailored to specific local situations. We will strengthen interaction between regions, improve the system of providing assistance to less developed regions by pairing them with more developed regions, ensure basic public services are more equitably available between regions, and make development between regions more balanced.

Sixth, we will strengthen planning and management of land utilization, make innovations in policies and institutions, make good use of the existing land designated for construction, and continue implementing still stricter systems for protecting arable land and ensuring more economical and intensive use of land.

Seventh, we will set unified standards for market access in terms of energy, land, and water conservation, environmental impact, technology, and safety; strengthen evaluations of energy efficiency and environmental impact; offer more financial and policy support to areas of energy conservation and environmental protection; and keep improving the quality of the ecosystem and environment. III. Major Tasks for Economic and Social Development in 2015

This year we will carry out work on the following eight areas:

1. Promoting domestic demand to give a stronger impetus to economic growth

We will rev up new engines for driving economic development, promote the fundamental role of consumer spending and the key role of investment in stimulating growth, and make sure that fluctuations in the growth rate do not weaken the good momentum of China’s economic development and that the quality of our growth increases with the size of our economy.

1) We will promote consumer spending and upgrade its structure through multi-point support. Total retail sales of consumer goods are expected to increase by 13% in 2015.

First, we will promote increases in personal income through various channels. We will issue and implement supporting measures for deepening reform of the income distribution system. Basic pension benefits for enterprise retirees will be raised by another 10%. We will reform the old-age insurance system for employees of Party and government offices and public institutions, while at the same time improving their pay systems. We will utilize the mechanism for increasing social assistance and social security benefits in line with rises in consumer prices to ensure basic living conditions for those in need.

Second, we will accelerate our efforts to nurture new growth areas in consumer spending. We will vigorously promote consumer spending in areas such as elderly care, domestic services, health, information, tourism, recreation, green products, housing, education, culture, and sports, encourage non-government parties to establish and operate institutions that provide services such as elderly care, fitness services, health care, and medical care, and accelerate the pace of implementing the National Broadband Internet Agenda and projects to expand broadband technology in townships and villages.

Third, we will improve the environment for consumer spending. We will speed up the establishment of a national unified system of codes for rating credit and a platform for sharing and communicating information on credit, and make concerted efforts to increase credit-related punishment. We will establish sound systems for monitoring and regulating the quality of products, for tracking product production details, and for recalling products, and intensify monitoring and regulation over the quality and safety of on-line goods. We will improve the system for food and drug oversight and our capacity for carrying out oversight, and resolutely crack down on the manufacture and sale of counterfeit and shoddy goods. We will conduct special inspections to monitor charges concerning education, medical care, and tourism, give full play to the role of the 12358 hotline and website in handling price-related complaints and managing information on pricing, and investigate and deal with cases of monopolistic pricing and practices of price fraud in accordance with the law.

2) We will work hard to sustain steady growth in investment. Total fixed-asset investment is projected to increase by 15% in 2015.

First, we will expand effective investment by adopting a full range of measures. We will coordinate all kinds of government investment and encourage and guide nongovernmental investment to make sure that major projects as specified in the Twelfth Five-Year Plan are completed and a number of new important projects are launched. These new projects include major transportation projects to build railways and highways in the central and western regions and develop inland waterways; major projects involving information, electricity, oil, and gas networks; clean energy projects and projects to ensure supplies of oil, gas, and mineral resources; agricultural projects to improve water conservancy and develop high-yield cropland; projects related to scientific and technological innovation and structural upgrading; projects concerning people’s wellbeing, such as those to rebuild run-down areas, renovate dilapidated houses, and build urban pipeline networks; and projects aimed at energy conservation, environmental protection, and ecological improvement. With the focus on shoring up our weak spots, adjusting the economic structure, and increasing the supply of public goods and services, these projects are of overall, fundamental, and strategic importance to China’s development, and will generate both short-term and long-term benefits.

Second, we will make innovations in mechanisms to stimulate nongovernmental investment. We will improve the role of treasury funds in supporting investment. For industries in competitive areas, we will change our way of providing support from making direct investments in specific projects to establishing investment funds in order to attract nongovernmental investment. We will actively encourage nongovernmental capital to initiate and set up industrial investment funds and equity funds. We will be more creative in using government investment, encouraging nongovernmental investment into major projects by subsidizing investment, injecting capital, and other measures.

Third, we will give full play to the leading role of budgetary investment. Appropriation for investment in the central government budget this year is planned to be 477.6 billion yuan. More of this investment will be directed toward agriculture, water conservancy, railways in the central and western regions, government-subsidized housing, major infrastructure, ecological improvement, people’s wellbeing, and old revolutionary base areas, ethnic minority areas, border areas, and poor areas. We will reduce central government subsidies toward extensive local endeavors consisting of large numbers of minor projects, and make no more investment to general projects in competitive areas. Meanwhile, we will strengthen supervision and management of government funds.

2. Accelerating economic structural reform

We will strive to refine and implement existing reform plans and increase coordination and cooperation during their implementation in order to ensure that all reform measures are put into effect. We will correctly balance the relationship between the government and the market, move faster to establish a sound, unified, and open nationwide market system that ensures orderly competition, put forward more reform measures to invigorate the market, and turn the new benefits of reform into a new driving force for development.

1) We will fully advance the law-based exercise of administrative power.

We will press ahead with formulating and improving laws and regulations regarding plans for development, investment management, land management, energy and mineral resources, economic security, and other aspects, thus promptly consolidating our achievements in reform through the means of legislation. We will improve the mechanism for soliciting opinions from the public, conducting expert evaluations, risk assessments, and legality reviews, and carrying out collective discussions before making major policy decisions. We will establish a system of baselines for administrative discretionary powers regarding the review and approval of items and the imposing of administrative penalties. We will work hard to promote transparency in government operations. We will strengthen constraints on and oversight over the exercise of power.

2) We will deepen reform of government review and approval.

We will cancel or delegate to lower-level governments the process of government review and approval for an additional number of items and fully sort out the items requiring non-administrative review and approval. We will greatly streamline preliminary review and approval procedures, review and regulate intermediary services, and deepen reform of the business system. Stronger oversight will be exercised over items and projects during and after handling. We will draw up a negative list for market access, and ensure provincial-level governments release their lists of powers and responsibilities. We will put more emphasis on cooperation between the central and local authorities and coordination between relevant departments when carrying out our reform measures.

3) We will press ahead with the reforms of SOEs and the development of the non-public sector.

We will formulate guidelines on deepening reform of SOEs and carry out the reform by their type. We will move faster to relieve enterprises of their obligation to operate social programs and solve their longstanding problems in this regard. We will reform and improve the incentive and restraint mechanisms for SOE executives. We will develop mixed-ownership structures within SOEs in an orderly fashion, and encourage and set rules for non-state capital in holding shares of the investment projects of SOEs. We will continue to tighten oversight over state assets with the focus on state capital, and accelerate trials of forming corporations to invest and manage state capital. We will deepen structural reforms of electricity, petroleum, and natural gas industries. We will continue to optimize the institutional environment for developing the non-public sector, and further open up market access to encourage and guide more nongovernmental capital into areas such as basic industries, municipal public utilities, social programs, and financial services in order to give expression to the vitality and creativity of the non-public sector.

4) We will press ahead with reform of the fiscal and tax systems.

Except for those dealing with classified matters, we will make public the budgets and final accounts of all central and local departments. We will reform the system of transfer payments from the central government to local governments. We will review and standardize preferential policies such as preferential tax policies. We will levy price-based resource tax on more resource products, speed up legislation to introduce environmental protection tax, and push forward revisions to the Law on Tax Collection and Administration. We will deepen reform of the system of compensation for the exploitation of national mineral resources. We will strengthen local government debt management.

5) We will ensure better financial services for the real economy.

We will improve the system of multilevel capital markets and vigorously develop inclusive finance. We will step up efforts to develop small and medium-sized financial institutions committed to serving small and micro businesses as well as agriculture, rural areas, and farmers; energetically push forward the establishment of private banks; deepen reform of rural credit cooperatives; and advance the reform of government-sponsored development financial institutions and policy-backed financial institutions. We will establish the deposit insurance system. We will carry out the reform of stock issuance registration, launch trials of equity-based crowd-funding, and increase the proportion of direct financing. We will explore how to set up outbound RMB cooperative funds. We will encourage Internet banking to develop in an innovative and standardized way. We will research and roll out new types of insurance such as major disaster insurance and credit insurance, and support agricultural insurance in favoring various new agricultural entities.

6) We will deepen reform of the investment and financing system.

We will vigorously promote reform of the project review and approval system; build an online platform for reviewing, approving, and monitoring investment projects, ensuring that by the end of 2015, project review and approval procedures can be handled online nationwide; and establish a mechanism for coordinating oversight over investment projects. We will improve the relevant measures and detailed rules for their implementation for making innovations in the mechanisms for investment and financing in key areas and encouraging nongovernmental investment; further open up market access for nongovernmental capital; formulate measures for managing the franchising of infrastructure and public utilities; and actively promote application of the Public-Private Partnership (PPP) model. We will issue the Regulations on Government Investment.

7) We will accelerate price reform.

We will revise the government pricing catalogue; stop setting prices for most medicines; lift the control of purchasing prices for tobacco leaves, a portion of rail fares and freight rates, rates and fees for some postal services, and charges for professional services; and delegate to lower levels of government the power to set prices for some basic public services. We will extend to more areas the trial price reform of electricity transmission and distribution. For non-residential consumption of natural gas, we will unify the price of gas consumption within 2014 levels with the price of gas consumption exceeding 2014 levels, and gradually lift control of the price for non-residential gas consumption. We will refine environmental protection price policies. We will implement tiered pricing for electricity, water, and natural gas used for household purposes throughout the country. We will make guidelines on reviewing and canceling all kinds of regulations and practices impeding the national unified market and fair competition, and work hard to get rid of various types of market segmentation and regional barriers.

8) We will steadily move ahead with reforms of the rural and land system.

We will prudently carry out trial reforms concerning rural land requisition, the marketization of rural collective land designated for business-related construction, the system of land used for rural housing, and the rural collective property rights system. We will launch trials of allowing rural land-use rights to be used as collateral to borrow money, guide farmers in becoming shareholders of cooperatives and leading enterprises by contributing their land-use rights, and develop appropriately scaled, diversified farm operations. We will improve the system of unified registration of immovable property, carry out the trial of determining and registering water rights, and advance price reform of water used for agricultural purposes. We will fully deepen the comprehensive reform of supply and marketing cooperatives, and move faster to reform state forestry farms and areas, state farms built on reclaimed land, and the seed industry.

In addition, we also need to move ahead with institutional reforms in education, science, technology, culture, medical and health care, social management, and ecological progress.

3. Thoroughly implementing the strategy of opening up

We will act more quickly to make Chinese businesses more competitive in the international market, allow exports to effectively drive economic growth, and expand the scope and depth of opening up.

1) We will give impetus to the steady growth in foreign trade.

We will improve the system for joint payment of export rebates by the central and local governments. We will help cultivate brand names for export and overseas marketing networks. We will improve cross-border e-commerce, market purchases, integrated services for foreign trade, and other new trade models. We will give preferential credit to buyers of Chinese exports in order to stimulate the export of Chinese equipment, technology, and standards. We will improve policies that promote the trade in services, expand the export of services, and increase support for efforts to undertake services outsourced by other countries. We will adopt a more proactive import policy, expanding the import of advanced technology, key equipment, and important parts and components.

2) We will raise the utilization of foreign capital to a new level.

We will revise the Catalogue for the Guidance of Industries for Foreign Investment. We will encourage other parts of the country to make use of the experience gained in the China (Shanghai) Pilot Free Trade Zone, and move steadily forward with the building of pilot free trade zones in Guangdong, Tianjin, and Fujian. We will focus on opening the service sector and the general manufacturing sector wider to the outside world, carrying out trials to open up our financial sector, and revamping the model of managing foreign debt. We will explore the management model of pre-establishment national treatment (PENT) plus a negative list, and improve the system for security reviews of foreign investments. In 2015, foreign direct investment in China’s non-financial sectors is projected to reach US$120 billion, which is similar to last year.

3) We will raise the efficiency and quality of China’s outward investment.

We will move faster to build a system for providing financial services to outward investment, expand the channel for using foreign exchange reserves, and provide better financial services, information services, legal services, and consulate protection for Chinese enterprises investing overseas. With the focus on the construction of key and iconic projects, we will continue to encourage the building of overseas railways, ports, highways, and nuclear power projects; deepen cooperation on energy and resources with other countries; expand cooperation on equipment manufacturing, emerging industries, ecological conservation, and environmental protection; and increase the pace of China’s production capacity and equipment in “going global”. In 2015, China’s non-financial outward direct investment is estimated to come to US$113 billion, which is an increase of about 10%.

4) We will increase multilateral, bilateral, and regional economic cooperation.

We will put into practice the strategy of developing the Silk Road Economic Belt and the 21st Century Maritime Silk Road, and build the China-Pakistan Economic Corridor and the Bangladesh-China-India-Myanmar Economic Corridor. We will speed up infrastructure connectivity with our neighbors. We will upgrade the China-ASEAN Free Trade Zone, strive to complete the talks on regional comprehensive economic partnership agreements, build the Free Trade Area of the Asia-Pacific, and carry on negotiations of investment agreements with the United States and the European Union.

4. Accelerating the transformation of agricultural development

In our efforts to develop agriculture, four bottlenecks have already emerged that we will have to face within the near future: the prices of domestic agricultural products already far exceed international prices, the costs associated with agriculture production are ever increasing, direct subsidies to agriculture which fall into the WTO’s “amber box” are close to the limit that China agreed to when it joined the WTO, and the impact of agriculture on resources and the environment has set off a red warning light. We must accelerate the transformation of agricultural development, and embark on a path of modern agricultural development which ensures high yield and safe agricultural produce, conserves resources, and is environmentally friendly. In 2015, we will keep total grain output stable at 550 million metric tons or above.

1) We will innovate and improve policies that support agriculture.

We will ensure that the proportion of the central government’s budgetary investments to agriculture, rural areas, and farmers is at least kept at the same level as last year, increase efforts to carry out integrated planning for these funds, and make their use more efficient. We will improve mechanisms that provide compensation for cropland protection and subsidize major grain growing areas, and conduct trials of granting subsidies to large-scale grain growers, family farms, and other emerging agribusinesses. We will continue to implement the minimum purchase price policy on rice and wheat, move ahead with the pilot reform of guaranteed base prices for cotton and soybeans, and improve the temporary purchase and stockpiling policy on major agricultural products and the management of their import and export. We will establish a sound system by which provincial governors are accountable for their provinces’ food security. We will make local governments strengthen their grain reserves systems.

2) We will strengthen agricultural and rural infrastructure development.

We will carry out work to demarcate permanent basic farmland throughout the country. We will accelerate implementation of the national master plan for building high-grade farmland and the plan for increasing China’s grain production capacity by 50 million metric tons. We will construct a number of new major projects to divert water, protect key water sources, and harness rivers and lakes. We will more quickly build auxiliary facilities and update water-saving devices in medium- to large-scale irrigation areas, and advance the construction of small-scale irrigation infrastructure and water conservancy infrastructure. We will comprehensively implement the project to purchase and stockpile grain to ensure its supply and security, and support the building of grain silos with capacities of 50 million metric tons. We will intensify efforts to address serious problems in the agricultural environment, and comprehensively improve the rural living environment, to build a more beautiful and livable countryside. Safe drinking water will be made available to another 60 million rural residents. All-out efforts will be made to deliver electricity to all households without power supply. We will make great efforts to build rural roads in the western region and in contiguous poor areas. We will rebuild run-down houses for 3.66 million rural households, and make coordinated efforts to renovate rural houses to make them more earthquake-resistant.

3) We will accelerate agricultural structural adjustment.

We will improve the industrial organization of agriculture and the mechanisms for balancing the interests of farmers and enterprises, and integrate the development of primary, secondary, and tertiary industries in rural areas. We will work harder to promote innovation in agricultural science and technology and spread the use of new agricultural techniques, machinery, and tools. We will coordinate the construction of grain, cotton, oilseed, sugar crop, and vegetable production centers, and encourage standardized, large-scale, and intensive livestock, poultry, and aquaculture farming. We will encourage the local conversion and processing of grain in major grain-producing areas. We will support the construction of national seed cultivation and production centers. We will also strengthen the fishery administration.

5. Promoting transformation and upgrading of the industrial structure through innovation

We will rely on innovation, develop new products, models, forms of business, and industries, raise the core competitiveness of our industries, and advance the push toward mid- and high-end industries.

1) We will fully implement the strategy of innovation-driven development.

We project spending on R & D as a percentage of GDP will come to 2.2% in 2015. We will optimize and integrate science and technology programs (special projects and funds) financed by the central government. We will launch regional trial reforms to promote all-around innovation. We will improve policies on equity-based incentives for making innovation, and accelerate the reform for managing the use and commoditization of and the distribution of profit from scientific and technological advances of public institutions. We will establish more national innovation demonstration zones, and fully implement preferential policies such as extra deductions for R & D expenses. We will scale up state seed funds for encouraging the application of scientific and technological advances. We will move faster in carrying out key national scientific and technological programs and plan a number of major science and technology projects, major programs, and national innovation platforms.

2) We will boost the scale and strength of strategic emerging industries.

We will vigorously develop the information economy, and promote full integration of the information industry with traditional industries. We will formulate an “Internet Plus” action plan, support the integrated development of cloud computing with the Internet of Things and the mobile Internet, and foster the artificial intelligence industry. We will implement major innovation projects in biomedicines, civil space infrastructure, big data, high-end equipment, next-generation information networks, new energy, new materials, new-energy vehicles, aircraft engines, and gas turbines. We will advance the development of national defense-related science, technology, and industries by integrating the military and civilian sectors. We will set up state seed funds for investment in emerging industries.

3) We will accelerate the transformation and upgrading of traditional industries.

We will implement the “Made in China 2025” strategy. We will introduce a three-year action plan for enhancing the core competitiveness of our manufacturing industries. We will focus on making breakthroughs in core technologies in key areas, such as industrial robots, rail transit equipment, high-end vessels and ocean engineering equipment, new-energy vehicles, modern agricultural machinery, and high-end medical appliances and medicines, and promote the industrial application of these technologies. We will coordinate the implementation of major projects on nuclear power, hydropower, and large coal and coal-power bases. We will accelerate the adjustment and optimization of industries with overcapacity, work harder to phase out outdated production capacity, and encourage enterprise mergers and reorganizations. We will encourage businesses to engage in technological upgrading. We will continue working to turn the coal industry around.

4) We will make the service sector better able to support economic growth.

We will fully implement pricing, fiscal, tax, and land policies to aid the development of the service sector, ensure that paid vacations are enforced, deepen the comprehensive trial reforms in this sector, introduce a statistical categorization of producer services, and formulate policies and guidelines for the development of consumer services. We will energetically develop producer services such as industrial design and finance lease, vigorously foster and develop high-tech services such as R & D, systems integration, intellectual property rights, and inspection and testing, and promote the integrated development of services with manufacturing industries. We will improve mobile payment infrastructure and trusted transaction services, and advance the development of e-commerce, logistics, and express delivery services. We will move faster in building a backbone network for the circulation of agricultural products nationwide. We will implement the mid-to-long-term plan and the three-year action plan for the development of the logistics industry, designate pilot cities for innovatively developing modern logistics, build national demonstration logistics parks, and support building a shared logistics information platform.

5) We will enhance the effective supply capacity of infrastructure and basic industries.

We will move faster to build railways, especially in the central and western regions, and promote the systematic development of intercity rail lines and urban rail transit. We will work to ensure that there are no national expressways left hanging unfinished, and rebuild bottlenecked sections of ordinary national and provincial trunk highways so that they are capable of accommodating more traffic. We will improve the development of high-grade inland waterways. We will advance the construction of civil aviation infrastructure such as the new airport in Beijing. We will accelerate the development of facilities for coal transportation and electricity transmission and pipelines for oil and gas transmission, actively develop hydropower, safely develop nuclear power, vigorously develop wind power, solar energy, and biomass energy, improve the development and utilization of natural gas, and increase the proportion of clean energy and renewable energy resources in total energy consumption.

6. Improving the pattern of economic development between different regions

We will give full play to the comparative strengths of different regions, foster and expand new growth poles and new economic support zones, and comprehensively promote coordinated and balanced development between different regions.

1) We will effectively carry out the three key strategies: the strategy of developing the Silk Road Economic Belt and the 21st Century Maritime Silk Road, the strategy of promoting coordinated development of the Beijing-Tianjin-Hebei region, and the strategy to build an economic development belt along the Yangtze River.

We will ensure the completion of tasks and projects prioritized in 2015 in implementing the strategy of developing the Silk Road Economic Belt and the 21st Century Maritime Silk Road. We will roll out guidelines for the coordinated development of the Beijing-Tianjin-Hebei region, and provide support for the region to make substantial breakthroughs first in integrated transportation, environmental protection, and industrial upgrading and relocating. In addition, we will intensify institutional reform, strengthen innovation-driven development, carry out trials and demonstrations in districts and fields meeting certain conditions, and relocate functions non-essential to Beijing’s role as the capital away from the city in a proactive yet prudent way. We will formulate the guidelines on building the economic development belt along the Yangtze River; accelerate the development of an integrated multidimensional transportation corridor and a green, ecological corridor all along the belt; start construction of major projects in an orderly fashion, including upgrading the major waterways and building docks and quays along the Yangtze River; establish demonstration zones for accepting relocated industries; and set up jointly-built industrial parks.

2) We will fully carry out the master strategy for regional development and the strategy for functional zoning.

We will refine and firm up the policies and measures concerning large-scale development of the western region which are appropriate under the new conditions, and further open up border areas and inland areas to the outside world. We will roll out the guidelines on all-around revitalization of northeast China and other old industrial bases, and fully implement major near-term policies and measures for revitalizing northeast China. We will formulate a new ten-year plan on boosting the rise of the central region, and build comprehensive transport networks and hubs in the region at a faster pace. We will support the eastern region in leading the way in institutional innovation aimed at economic transformation and upgrading. We will promote orderly development of new districts in urbanization. We will continue to carry out national trials and demonstrations for developing function zones, improve the policy framework for integrated, complete reforms, and establish sound mechanisms for monitoring and giving early warnings on the carrying capacity of resources and the environment. We will also energetically develop the marine economy.

3) We will continue to support the development of regions with unique features at a faster pace.

We will support the economic and social development of Xinjiang, Tibet, and the Tibetan ethnic areas in Sichuan, Yunnan, Gansu, and Qinghai provinces, and provide effective one-to-one assistance to designated areas. We will accelerate the upgrading of cities once dependent on resources that are now depleted, and push forward with the relocating and rebuilding of old industrial areas within cities and independent industrial and mining areas. We will formulate guidelines and planning for supporting the development of old revolutionary base areas. We will continue to promote development in contiguous poor areas as a whole in order to help alleviate poverty.

4) We will actively advance the new type of urbanization.

We will carry out the plan on urbanization with the focus on three tasks, each concerning 100 million people: granting urban residency to around 100 million people who have moved to cities from rural areas, rebuilding run-down areas and “villages” inside cities where around 100 million people live, and guiding the process of urbanization for around 100 million rural residents in the central and western regions. We will coordinate efforts in carrying out comprehensive pilot projects for advancing the new type of urbanization nationwide and in launching trials for comprehensive reform in small and medium-sized cities, and we will explore the establishment of mechanisms for sharing the costs associated with helping people from rural areas who have moved to cities become urban citizens, of well-regulated, diversified, and sustainable mechanisms for investment and financing to ensure funding for urban development, and of new models of administrative management that encourage innovations and reduce costs. We will improve the overall distribution of areas that are undergoing urbanization, formulate planning for cross-provincial city clusters, and promote the coordinated development of city clusters in key regions. We will move faster to construct multi-purpose networks for underground pipelines and facilities for flood prevention and rainwater control in cities. We will ensure the effective governance of urban maladies such as pollution and traffic congestion. We will carry out pilot projects in more cities and counties to replace multiple plans for local development with one master plan. By the end of 2015, 55.77% of China’s population is expected to be comprised of permanent urban residents, and 37.9% is expected to be comprised of registered urban residents.

7. Making unremitting efforts in energy conservation, emissions reduction, low-carbon development, and ecological and environmental protection

In addressing problems concerning the environment, we will continue to treat root causes, conduct monitoring and regulation over the whole process of production, and enforce severe punishments for violations or damage to the environment. We will attach greater importance to green, circular, and low-carbon development so as to improve the ecosystem and environment of China and build a beautify country.

1) We will improve the systems for promoting ecological progress.

We will issue and implement guidelines on accelerating ecological advancement, and on the basis of research, formulate a plan for implementing the structural reform for promoting ecological progress and a system for setting targets for ecological improvement. We will establish demonstration zones for enforcing compensation for ecological damage and for promoting ecological progress. Compensation for ecological damage will be levied on a trial basis at key water sources, in major drainage basins, and across drainage basins. We will launch pilot projects to promote a cap-and-trade system for emissions. We will strengthen the protection of mudflats and improve the management of their development. We will carry out trials of allowing enterprises to commission a third party to treat their pollution, and provide special financing for encouraging energy efficiency and provide green loans for environmentally responsible businesses. We will explore the introduction of compulsory environmental pollution liability insurance.

2) We will strictly control both energy intensity and total energy consumption.

We will continue to implement the early-warning and regulatory system for energy conservation and emissions reduction, tighten control over energy intensity, improve management of total energy consumption, and strictly evaluate the performance of energy conservation targets and correspondingly pursue accountability. For areas affected by severe smog, regions where conserving energy is difficult, and industries with overcapacity, we will strictly control the number of energy-intensive projects and put into effect policies for coal use reduction and for replacing some coal use with alternative energy sources. We will continue to launch key energy-conservation projects and pilot and demonstration projects that aim to establish a circular economy, and vigorously promote the recovery of resources from industrial and household waste.

3) We will strengthen pollution control and ecological protection.

We will fully implement the ten measures on controlling air pollution as stipulated in the Air Pollution Prevention and Control Action Plan, implement the action plan for preventing and controlling water and soil pollution, and strengthen efforts to prevent and control air pollution in key areas and water pollution in key drainage basins and sea areas. We will upgrade coal-burning power plants to achieve ultra-low emissions. We will promote clean and efficient use of coal. We will accelerate efforts to increase the quality of refined oil products. We will remove more high-emission vehicles from roads. We will redouble efforts to control the factors causing sandstorms, treat soil erosion, prevent the spread of stony deserts, improve the geological environment in mining areas, and protect ecosystems on grasslands and farmlands. We will launch a new group of projects to return marginal cultivated land to forests or grasslands and return grazing land to grasslands and major projects to develop forests for ecological conservation. In 2015, we will return an additional 667 thousand hectares of cultivated land to forests or grasslands, and afforest six million hectares of land. We will vigorously develop energy conservation and environmental protection industries. We will advance desalination and comprehensive utilization of seawater.

4) We will actively address climate change.

We will implement the Interim Measures for the Management of Carbon Emission Rights Trading, and continue the pilot programs and demonstrations of low-carbon development. We will intensify South-South cooperation on climate change, and play a constructive part in the 2015 United Nations Climate Change Conference in Paris.

8. Working harder to ensure and improve people’s wellbeing

We will integrate our efforts to improve people’s wellbeing and invigorate social and economic development, and increase the investment in and effective supply of public goods and services.

1) We will take well-targeted steps to ensure employment.

We will implement and improve policies to increase employment and entrepreneurship, and encourage individuals to start their own businesses and make innovations. We will fully carry out the program for promoting the employment of college and university graduates and guiding college and university students in starting up businesses, and provide vocational skills training to rural migrant workers. We will increase our assistance to groups who have difficulty in finding a job; properly solve the issue of resettling and providing employment to workers laid off due to SOE mergers and reorganizations, the phasing-out of excess production capacity, or the shutdown of outdated production facilities; and implement and improve the policy on using unemployment insurance funds to support enterprises in ensuring job opportunities.

2) We will improve the social security system.

We will formulate an overall plan for deepening reform of the old-age insurance system and, at the appropriate time, launch trials of commercial pension schemes that allow for deferred payment of individual income tax. We will raise government subsidies for the new rural cooperative medical care system and the basic medical insurance for nonworking urban residents from 320 yuan to 380 yuan per person per year and also increase the annual individual contribution from 90 yuan to 120 yuan per person. We will introduce major disease insurance for rural and nonworking urban residents and the system of emergency assistance and temporary assistance for disease treatment across the country, and intensify efforts to provide medical assistance for treatment of major and critical diseases. We will improve the subsistence allowance system for both urban and rural residents and the social security policy for farmers whose land has been expropriated. We will raise subsidies and living allowances for entitled groups. We will establish a sound mechanism for supporting recovery and reconstruction efforts in areas hit by catastrophic natural disasters.

3) We will become better able to provide public services.

We will create new ways for providing public services, and expand government procurement of public services from nongovernmental sectors. We will continue to develop community-level facilities for employment and social security services. We will continue to improve the basic conditions of badly built and poorly operated schools in poor areas, accelerate the development of education in ethnic minority areas, improve the system for providing aid to students from poor families, ensure that the children of rural migrant workers in cities have the same access to compulsory education as local urban children, advance reform of the school examination and enrollment systems, and speed up the integration of vocational education with industry. We will strengthen special needs education, preschool education, continuing education, and all types of education in areas with concentrations of ethnic minorities. We will encourage nongovernmental sectors to run schools. In 2015, regular institutions of higher learning are planned to enroll seven million undergraduate students and 797,000 graduate students. We will carry out comprehensive reform of county-level public hospitals nationwide, expand comprehensive trial reforms of public hospitals in cities, improve policies and measures that encourage nongovernmental investment in the running of medical institutions, and continue to develop the system of medical services covering both urban and rural areas. We will vigorously develop traditional Chinese medicine and the traditional medicine of ethnic minorities. We will raise annual per capita government subsidies to basic public health services from 35 yuan to 40 yuan, with the entire additional sum in rural areas to be used for paying the basic public health services from rural doctors. We will accelerate development of the system of modern public cultural services, better preserve valuable cultural and natural heritage, and quicken reform and development of the culture industry as well as public cultural initiatives through the press and publishing; radio, film, and television; and literature and art. We will promote the flourishing of philosophy and the social sciences. We will steadily carry out trials for a system of national parks. We will strengthen infrastructure for tourism, and support the development of new models of tourism. We will intensify development of the system for elderly services. We will quickly establish a national database for basic population information. We will build more recovery and care facilities for people with disabilities and facilities for children’s welfare. We will redouble efforts to develop the public service system for promoting national fitness.

4) We will make institutional innovations to strengthen construction of government-subsidized housing.

We will promote the use of direct monetary housing subsidies to people displaced by the rebuilding of run-down areas, and encourage municipal governments to utilize multiple means to increase the supply of public rental housing so that more people in urgent need of housing can find new homes as soon as possible. We will basically complete the renovation of run-down areas in state forestry areas and of dilapidated housing on state forestry farms. In urban areas, work on 4.8 million government-subsidized housing units will be basically completed and construction will begin on an additional 7.4 million units, including 5.8 million units to be rebuilt in run-down areas. We will give targeted guidance and adapt measures tailored to specific local conditions in order to vigorously support the people’s demand for first homes or second homes if their first homes are inadequate, and spur the steady and sound development of the real estate market.

We will strengthen exchange and cooperation with Hong Kong and Macao in areas such as the economy and trade, and basically realize the liberalization of trade in services with the two regions by the end of 2015. We will support Hong Kong in elevating its position as an international financial, shipping, and trade center, and promote the long-term prosperity and stability of its economic and social development as well as the steady improvement of its people’s wellbeing. We will support Macao in becoming a world tourism and leisure center and in building a platform for facilitating business and trade cooperation between China and Portuguese language countries, and will support appropriately diversifying its economy and promoting its sustainable development. We will expand and deepen exchange and cooperation in all fields between the mainland and Taiwan, quickly complete the follow-up talks on the cross-Straits Economic Cooperation Framework Agreement, and promote economic integration for the mutual benefit of all.

This year we have an additional important task to perform: on the basis of soliciting a wide range of opinions and drawing on the wisdom of the people, we must formulate the Thirteenth Five-Year Plan for National Economic and Social Development and complete the preparatory work for submitting it to the Fourth Session of the Twelfth NPC for deliberation.

Fellow Deputies,

Accomplishing all the work for economic and social development in 2015 is an onerous but important task. We will unite even closer around the CPC Central Committee with Comrade Xi Jinping as General Secretary, hold high the great banner of socialism with Chinese characteristics, take Deng Xiaoping Theory, the important thought of Three Represents, and the Scientific Outlook on Development as our guide, implement the guiding principles from General Secretary Xi Jinping’s major speeches, willingly accept the oversight of the NPC, and seek comments and suggestions from the CPPCC National Committee with an open mind. We will pool together our hearts and our energy in striving to achieve all the targets set out in the Twelfth Five-Year Plan and promote sustainable and sound economic and social development.