Following is the full text of the Report on the Implementation of the 2015 Plan for National Economic and Social Development and on the 2016 Draft Plan for National Economic and Social Development, which was submitted on March 5, 2016 for review at the Fourth Session of the 12th National People’s Congress and was adopted on March 16.

REPORT ON THE IMPLEMENTATION OF THE 2015 PLAN FOR NATIONAL ECONOMIC AND SOCIAL DEVELOPMENT AND ON THE 2016 DRAFT PLAN FOR NATIONAL ECONOMIC AND SOCIAL DEVELOPMENT

Delivered at the Fourth Session of the Twelfth National People’s Congress on March 5, 2016

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 2015 plan and on the 2016 draft plan for national economic and social development to the Fourth Session of the Twelfth National People’ s Congress (NPC) for your deliberation and also for comments from the members of the National Committee of the Chinese People’ s Political Consultative Conference (CPPCC).

I. Implementation of the 2015 Plan for National Economic and Social Development

Last year, China faced a complex international economic environment, mounting downward pressure on its economy, and a marked increase in the number of risks and challenges; despite this, we ensured that the overall implementation of the 2015 Plan for National Economic and Social Development was successful. This was as a result of the efforts of all regions and departments which, under the correct leadership of the Central Committee of the Communist Party of China (CPC) and the State Council, followed the general principle of making progress while keeping performance stable, worked to adapt to the new normal in economic development, earnestly implemented the 2015 plan approved at the Third Session of the Twelfth NPC, acted in line with the review of the plan by the NPC’ s Financial and Economic Affairs Committee, and worked steadfastly to achieve good results in all respects. Overall, we managed to sustain steady economic development while also ensuring progress and improvement. Major targets and tasks set forth for 2015 were accomplished, marking a successful conclusion to the 12th Five-Year Plan, and helping China’s development move to the next level.

1. We continued to improve our macroeconomic policy and maintained a medium-high rate of growth. We developed new ideas and methods for macro regulation, and on the basis of range-based regulation, we strengthened both targeted and well-timed regulation. Domestic demand became a stronger economic driver, and the international market share of China’s exports continued to increase. China’s gross domestic product (GDP) reached 67.67 trillion yuan, an increase of 6.9%, meaning the target set at the beginning of the year has been achieved.

1) Investment played the key role in driving economic growth. Strengthening points of weakness and adjusting the economic structure were our primary focus when increasing the level of effective investment. To utilize the construction of major projects to stimulate investment growth, we improved the structure of investment from the central government budget, established and earmarked capital for special development funds, and adopted a wide range of measures to encourage and attract nongovernmental investment. As a result, considerable progress was achieved in the construction of major projects in 11 categories. Total fixed-asset investment for the year rose by 9.8%, of which 64.2% came from nongovernmental sources (excluding rural households).

2) Consumption potential was further exploited. Steady progress was achieved in six major projects aimed at stimulating consumption, and the three trillion yuan investment in these six projects contributed to consumption worth 2.8 trillion yuan. Tourism, online shopping, new-energy vehicles, and other new growth areas in consumer spending continued to grow, and total retail sales of consumer goods for the year rose by 10.7%.

Box 1: 11 Categories of Major Projects for Investment

Box 2: Six Major Projects to Stimulate Consumption

3) The economic structure was further improved. In terms of the contribution to economic growth, consumption far outweighed investment, making a 66.4% contribution, while the tertiary industry accounted for far more than the secondary industry. The value-added of the tertiary industry accounted for over half of GDP for the first time, reaching 50.5%. Development between urban and rural areas and between regions became more balanced and coordinated. The New Urbanization saw positive progress, with permanent urban residents now accounting for 56.1% of the population.

4) The overall employment situation remained stable. New measures to increase employment and business start-ups were introduced, and entrepreneurship and innovation began to make a bigger contribution to increasing employment. An additional 13.12 million urban jobs were created throughout the year. The registered urban unemployment rate stood at 4.05% at the end of 2015.

5) Overall prices rose moderately. The consumer price index (CPI) rose by 1.4%. We intensified oversight in relation to prices and charges and increased law enforcement to combat monopolistic pricing. In total, we investigated and dealt with 34,200 cases of pricing violations and imposed economic penalties totaling 10.477 billion yuan in accordance with the law. Our work in this area also helped reduce the burden on enterprises by about 8.9 billion yuan.

2. We deepened reform and opening up and stimulated market vitality and social creativity. We continued to streamline administration, delegate more powers, improving regulation, and provide better services. Progress was made in reforms in key areas, and the building of new systems for an open economy was accelerated.

1) The reform of the government review and approval system continued. We cancelled the requirement for or delegated the power of government review on 311 items, cancelled all non-administrative review, exempted 214 items from review and approval conducted by local governments on behalf of the central government, and cancelled the requirement for approval and verification of 123 vocational qualifications. Seventy percent of the intermediary services involved in the review and approval practices of State Council bodies were cancelled. The requirement for pre-registration government review and approval on 18 items was cancelled, and these items are now listed as preliminaries that can be prepared by enterprises themselves. For the purpose of streamlining administration and delegating powers, initial steps were taken to establish the three lists and four platforms. Comprehensive steps were taken nationwide to replace the separate business license, organization code certificate, and taxation registration certificate with a unified business license with a unified social credit code. A total of 4.439 million enterprises were registered in 2015, an increase of 21.6%. The provisional regulations on the registration of immovable property were officially implemented.

Box 3: Lists and Platforms for Streamlining Administration and Delegating Powers

2) Fiscal, tax, and financial reforms were steadily pushed forward. We made further improvements to the system of transfer payments to local governments, launched reform of the administration system for tax collection, extended the price-based resource tax to cover more types of resources, and registered steady progress in replacing business tax with VAT. Policies promoting the development of inclusive finance, Internet finance, and private banks were published and implemented, floating limits on interest rates on deposits were abolished, and most controls over interest rates were lifted. The deposit insurance system was officially implemented. The mechanism for determining the central parity of RMB exchange rate was improved, and the RMB was included in the International Monetary Fund’ s special drawing rights (SDR) basket. Fresh progress was made in the reform of policy-backed financial institutions and developmental financial institutions. Effective measures were taken to prevent the occurrence of systemic financial risks.

3) The investment and financing systems continued to undergo innovation. We used the public-private partnership (PPP) model and other measures such as granting franchise and subsidizing investment to encourage and guide the involvement of nongovernmental capital in the construction and operation of infrastructure and public utilities. We adjusted and improved the capital contribution requirements for fixed-asset investment projects. We properly adjusted and relaxed corporate bond issuance requirements, and issued new bonds such as project revenue bonds and bonds for eco-friendly initiatives, as well as six special bonds to finance the construction of urban parking lots and underground utility tunnels, the development of strategic emerging industries, the improvement of elderly care services, the building of incubators for entrepreneurship and innovation, and the construction and upgrading of power distribution grids.

4) Price reform was intensified. The guidelines for moving ahead with price reform were published and implemented. Pricing controls over nearly 40 goods and services were either lifted or delegated to lower-level governments. We revised the government pricing catalog, with pricing items being reduced by 80% for the central government and by 55% for local governments. We reduced the price of on-grid electricity from coal-fired power plants and the price of electricity for industry and commerce, and significantly decreased natural gas citygate prices for non-residential users. We improved pricing policies to make them more conducive to energy conservation and environmental protection. We further reviewed and standardized charges related to imports and exports.

Box 4: Price Reform in Key Areas

5) Steady progress was made in the reform of State-owned Enterprises (SOEs) and major industries. Ten pilot projects were launched as part of the reform of SOEs and the number of central government enterprises for which the State-owned Assets Supervision and Administration Commission is the investor was reduced from 112 to 106. We started a new round of structural reform of the electricity industry, began trials to reform the petroleum and natural gas exploration and exploitation system, and systematically promoted the reform of state forestry farms and forestry regions, water conservancy enterprises, rural supply and marketing cooperatives, and state farms on reclaimed land.

Box 5: Reform of SOEs

6) Social reforms were deepened. The mechanism for securing funding for urban and rural compulsory education was improved. Reform of the old age insurance system in Party and government bodies and public institutions was launched. Comprehensive reform of public hospitals was fully implemented in all counties with the reform also being carried out on a trial basis in 100 cities. We worked to ensure that all rural and non-working urban residents who have subscribed to basic medical insurance are also covered by the major disease insurance scheme, and actively promoted the system of tiered diagnosis and treatment. The temporary assistance system was implemented throughout the country. We lowered the premiums for unemployment insurance, workers’ compensation, and maternity insurance, which has helped enterprises to reduce annual contributions by over 60 billion yuan. Reform of the system for the use of official vehicles was completed in all organs of the CPC Central Committee and the State Council, this reform was also launched in central government enterprises and public institutions, and its implementation was deepened in local Party and government bodies. Trials to untie industry associations and chambers of commerce from any connections they may have with the government were carried out nationwide. The national park system was implemented on a trial basis in Qinghai and other eight provinces and provincial-level municipalities.

7) The pace to create a new pattern of opening up was accelerated. Guidelines on building new systems for an open economy were issued and implemented. The Vision and Action Plan for Jointly Building the Silk Road Economic Belt and the 21st Century Maritime Silk Road (the Belt and Road) was officially published, and progress was achieved in the development of six economic corridors and six channels for communications and distribution with key countries and ports serving as connection hubs*. Direct investments totaling US$ 14.8 billion were made to the countries involved in the Belt and Road Initiative, an increase of 18.2% over the previous year. The guidelines on international cooperation on industrial capacity and equipment manufacturing were released and implemented, and breakthroughs were made in China’s rail transit technology and nuclear power “going global” . The Asian Infrastructure Investment Bank was officially established and the Silk Road Fund was put into operation. Guidelines relating to certain policies and measures supporting the development and opening up of major border areas were published. As a result of implementing the revised Catalog for the Guidance of Industries for Foreign Investment, the number of industries in which foreign investment is restricted was cut by 50%, the number of industries in which the amount of foreign investment is limited was reduced by 40%, and over 95% of all foreign investment projects are now only required to be placed on record with relevant authorities. The model for managing foreign debt was transformed so that foreign debt needs only to be registered instead of reviewed and approved. An additional three pilot free trade zones were established in Guangdong, Tianjin, and Fujian, and the China (Shanghai) Pilot Free Trade Zone was extended in area. Free trade agreements with the Republic of Korea (RoK) and Australia were signed respectively, as was the Protocol to Amend the Framework Agreement on Comprehensive Economic Cooperation between ASEAN and the People’s Republic of China. Non-financial foreign direct investment totaled US$ 126.3 billion, a year-on-year increase of 5.6%, of which the service sector accounted for over 60%. Non-financial outward direct investment amounted to US$ 118 billion, an increase of 14.7%.

Box 6: International Cooperation on Industrial Capacity and Equipment Manufacturing

3. We continued to pursue innovation-driven development and accelerated the development of new industries and new forms of business. We issued guidelines on deepening structural and institutional reforms and accelerating the implementation of the innovation-driven development strategy, pushed forward pilot reforms for all-round innovation, and devoted great energy to promoting innovation and industrial upgrading.

1) Entrepreneurship and innovation gained momentum. We published and implemented guidelines on certain policies and measures for promoting entrepreneurship and innovation. The Internet Plus action plan was launched and new forms of business continued to emerge in sectors such as big data and E-commerce. Efforts were stepped up to develop support platforms for crowd innovation, crowdsourcing, crowd support, and crowdfunding, with the number of maker spaces in China exceeding 2,300, the number of institutions for demonstrating technology transfer reaching 453, and the total value of the trade in technology reaching almost one trillion yuan. The state seed fund for investment in emerging industries was set up, the public service platforms for small and medium-sized enterprises in 26 provinces were interconnected, and the first National Week for Entrepreneurship and Innovation was held.

* The six economic corridors include the New Eurasian Continental Bridge, the China-Mongolia-Russia corridor, the China-Central Asia-West Asia corridor, the China-Indochina Peninsula corridor, the China-Pakistan corridor, and the Bangladesh-China-India-Myanmar corridor. The six channels for communications and distribution refer to highways, railways, airlines, waterways, pipelines, and information networks.

Box 7: Innovation-Driven Development

2) The transformation and upgrading of traditional industries were accelerated. The Made in China 2025 strategy and the three-year action plan for enhancing the core competitiveness of our manufacturing industries were launched. We advanced major projects in the manufacturing sector aimed at strengthening core competitiveness, promoting industrial rejuvenation, and encouraging technology upgrading. The Chinese-standard EMU trains for which we hold the intellectual property rights rolled off the production line, breakthroughs in the development of a number of sophisticated modern agricultural machines were made, the National Robot Test and Evaluation Center was established, and smooth progress was made in the demonstration and application of Chinese-brand industrial robots. We set up an investment fund for advanced manufacturing, raising 20 billion yuan in the first round of funding, a portion of which came from private investors.

3) Unremitting efforts were made to address the serious problem of overcapacity. In order to curb the expansion of production capacity, we reviewed and reorganized projects that were in violation of relevant regulations, and strictly forbade the registration and construction of new projects in industries that were already burdened with severe overcapacity. Last year we reduced excess production capacity by 13 million metric tons of iron, 17 million metric tons of steel, 38 million metric tons of cement, 300,000 metric tons of electrolytic aluminum, and 11 million weight cases of plate glass. Efforts were stepped up to help turn the coal industry around.

4) New progress was made in the development of strategic emerging industries. The national program for civil space infrastructure was fully implemented; China’ s homegrown large passenger aircraft, the C919, rolled off the production line; and the new regional airliner, the ARJ21, was put into service. The BeiDou Navigation Satellite System was widely used, and sectors such as cloud computing, genetic testing, new-energy vehicles, robotics, and mobile Internet experienced rapid development. A number of industries including integrated circuits, marine engineering equipment, and medical equipment started moving toward the high end.

5) Innovation in and development of the modern service industry were accelerated. We issued guidelines on accelerating the development of consumer services and promoting the upgrading of the consumption structure, further lifted restrictions on market access in the service sector, made solid progress in comprehensive pilot reforms in this area, and advanced smoothly the development of integrated experimental zones for cross-border E-commerce. The value-added of the tertiary industry increased by 8.3% over the previous year.

6) Infrastructure networks were further improved. We pressed ahead with the development of comprehensive transportation systems, with the length of transportation lines open to traffic reaching 4.94 million kilometers. China’s energy supply capacity was enhanced and its energy consumption structure was improved, with the proportion of non-fossil energy consumption increasing to 12% of total energy consumption, while coal consumption decreased to account for 64% of total energy consumption. The National Broadband Internet Agenda was further implemented and next-generation information infrastructure continued to improve.

Box 8: Major Infrastructure Construction

4. We promoted coordinated development between urban and rural areas and between regions and sped up the formation of new areas of growth, growth poles, and growth belts. Positive headway was made in the implementation of the Three Initiatives (the Silk Road Economic Belt and 21st Century Maritime Silk Road Initiative; the coordinated development of the Beijing-Tianjin-Hebei region; and the development of the Yangtze River Economic Belt), the development of the four regions (the western, northeastern, central, and eastern regions), and the promotion of the New Urbanization, all of which have made a contribution toward creating new space for development.

1) The blueprint for the Three Initiatives produced tangible results. The Belt and Road Initiative got off to a good start. Steady progress was made in the coordinated development of the Beijing-Tianjin-Hebei region, with functions non-essential to Beijing’s role as the capital being relocated away from the city in an orderly manner and initial breakthroughs being made in the three key areas of transportation, ecological conservation, and industry. Efforts to develop the Yangtze River Economic Belt were stepped up, with the development of the green, ecological corridor beginning to pick up speed and the comprehensive transportation system being gradually improved.

Box 9: Implementation of the Three Initiatives

2) The development of the four regions became more coordinated. Efforts were increased to accelerate large-scale development in the western region, while effective measures were adopted to respond to the downward pressure on economic development in the northeast. The development of integrated transportation hubs and eco-economic zones in the central region was accelerated. And the eastern region continued to play an exemplary role in carrying out reform and innovation, transforming and upgrading industries, and improving the quality and performance of the economy. In addition, state-level new areas enjoyed sound development.

Box 10: Development of the Four Regions

Box 11: Development of Major Function Platforms

3) The New Urbanization was advanced in an active yet prudent way. Projects to help rural migrant workers become permanent urban residents, to cultivate emerging small and medium-sized cities, and to promote new models of urban development all made smooth progress. Twenty-seven provinces (including autonomous regions and municipalities directly under the central government) as well as the Xinjiang Production and Construction Corps published their guidelines for carrying out reform of the household registration system, and provisional regulations concerning the residence certificate were published and implemented. Steady progress was made in advancing new models of urban development and in the cultivation of emerging small and medium-sized cities. Plans for the development of city clusters were completed for the Yangtze River Delta, and for the Chengdu-Chongqing and Harbin-Changchun regions. We further extended the state comprehensive pilot project for the New Urbanization to two provinces and 135 cities or towns. Positive results were achieved in implementing the reform to replace multiple plans for city (county) development with one master plan.

5. We accelerated the transformation of the agricultural growth model and made solid progress in agricultural modernization. Agricultural and rural development remained steady, and grain output increased for the twelfth consecutive year.

1) Support policies for agriculture were innovated and improved. Investment in agriculture, rural areas, and farmers continued to grow, and for the fifth consecutive year the proportion of funds appropriated for investment in these three areas from the central government budget exceeded 50% of total funds. The program for the review of state funds for agricultural development was successfully completed, and the trials of integrating and optimizing the use of provincial funds for agricultural development were launched. We worked steadily to improve the policy for setting minimum state grain purchase prices and the policy for the temporary state purchase and storage of grain, and solid progress was made in implementing pilot reforms for guaranteeing base prices for cotton in Xinjiang, and for soybean in the northeast and Inner Mongolia. We strengthened regulation over the market for major commodities such as grain, cotton, edible oil, sugar, and chemical fertilizers.

2) Agricultural and rural infrastructure development was further strengthened. Construction on major water conservancy projects was accelerated. We stepped up efforts to upgrade water-saving facilities in medium-sized and large irrigation areas and carried out farmland improvement projects to support the plan to increase China’s grain production capacity by 50 million metric tons, while also developing the infrastructure needed for a modern seed industry and expanding the capacity of grain silos. Further progress was made in strengthening rural infrastructure such as roads, housing, and water, power, and methane supply capacity. In order to increase cooperation and connectivity, urban and rural areas moved faster to jointly build and share infrastructure as well as public service facilities. Pilot projects were launched to control pollution from non-point agricultural sources, utilize and protect chernozem soil in the northeast, and improve the management of grassland reclamation areas; and progress was made in the trials for treating heavy-metal pollution on farmland and the over-abstraction of groundwater.

Box 12: Agricultural and Rural Infrastructure Development

3) New strides were made in agricultural structural adjustment. Grain output reached 621 million metric tons, and harvests and production levels remained high for major agricultural products such as meat, egg, milk, fruits, vegetables, tea, and aquatic products. As much as 54% of livestock and poultry farming is now carried out on a large scale; trials to replace grain crop cultivation with feed crop cultivation and to rotate crops between grain and soybean were launched across the board. The overall level of mechanization in plowing, sowing, and harvesting reached 63%, and advances in agricultural science and technology contributed to 56% of agricultural production.

4) Steady progress was achieved in rural reform. Pilot reforms relating to rural land requisition, the marketization of rural collective land designated for business-related construction, and the system of land used for rural housing were carried out in 33 county-level administrative areas; and trials to allow contracted rural land-use rights and farmers’ home property rights to be used as collateral to borrow money were implemented in 278 county-level administrative areas. The pilot reform relating to granting shareholder rights for rural collective assets proceeded in an orderly manner. The number of family farms, farmers’ cooperatives, leading agricultural enterprises, and other new types of agribusiness amounted to nearly 2.5 million.

6. We intensified efforts to promote ecological progress, and surpassed this year’ s targets for energy conservation and environmental protection. Energy consumption per unit of GDP dropped by at least 5.6%, carbon dioxide emissions by at least 6%, sulfur dioxide emissions by 5.8%, chemical oxygen demand by 3.1%, ammonia nitrogen by 3.6%, nitrogen oxide emissions by 10.9%, and water consumption per 10,000 yuan of value-added of industry by 3.9%.

1) Efforts to promote ecological conservation continued to intensify. We promulgated and implemented both the guidelines on accelerating ecological advancement and the integrated reform plan for promoting ecological progress, and continued to ensure the smooth development of pilot demonstration zones for promoting ecological progress. Environmental policies relating to functional zones, the national plan for marine functional zones, and the revised national plan for ecosystem service zones were published and implemented. We expanded the scope of a new round of projects to return marginal farmland to forest or grassland and afforested 6.32 million hectares of land, and the national vegetation fractional coverage of grasslands reached 54%. Efforts were intensified to prevent the expansion of stony deserts and protect wetlands, and integrated measures were taken to bring soil erosion under control on an additional 5.4 million hectares of land.

2) Further progress was made in energy conservation and emissions reduction. A ceiling on total coal consumption was imposed in each major air-polluting city, and the action plan to promote energy conservation and reduce emissions through the upgrading of coal-fired power plants was fully implemented. The pilot demonstration projects to commission a third party to treat pollution, encourage the trading in of old equipment and parts for remanufactured ones, and implement a system for extended producer responsibility were all carried out in an orderly manner. We promoted both the construction of green buildings and the comprehensive utilization of crop straw.

3) An all-out effort was made to address pollution. The average concentrations of fine particulate matter (PM2.5) dropped by 14.1% in the 74 cities where the new ambient air quality standards were first applied last year. More efforts were made to prevent and control water pollution in major water basins and to protect the ecosystems of lakes; as a result, the proportion of surface water with a water quality rating of Grade III or higher has risen to 66%. The pilot demonstration project to treat and restore contaminated soil was launched, and progress was made in trials for the environmental monitoring of contaminated sites.

4) Fresh achievements were made in responding to climate change. The first round of pilot projects for low-carbon cities (towns) were launched, and trials for trading carbon emissions rights were carried out in Beijing, Tianjin, Shanghai, Chongqing, Guangdong, Hubei, and Shenzhen. Our participation and constructive role at the United Nations Climate Change conference in Paris allowed us to put forward China’s approach to climate governance and make a contribution toward the adoption of the Paris Climate Agreement.

7. We put greater emphasis on ensuring and improving living standards and made consistent progress in improving people’s quality of life. Multiple methods were used to increase investment, strengthen points of weakness, and help those most in need, thereby helping to weave a strong social safety net.

1) The implementation of targeted measures to reduce poverty gathered pace. We launched a number of projects to alleviate poverty, such as relocating people from inhospitable areas, supporting the development of local industries, promoting education and helping to increase health standards in poor areas, and providing support for people seeking employment. The number of people living in poverty in rural areas was reduced by 14.42 million. Greater efforts were made to support the development of the old revolutionary base areas and the revitalization of the former Central Soviet areas including southern Jiangxi. We strengthened support from the central government and pairing assistance programs for underdeveloped localities, and took further steps to promote both the economic and social development and the long-term peace and stability of Xinjiang, Tibet, and Tibetan ethnic areas in Sichuan, Yunnan, Gansu and Qinghai.

2) Personal income increased steadily. Per capita disposable personal income increased by 7.4% in real terms. Rural per capita net income exceeded 10,000 yuan and registered a 7.5% increase in real terms, making it the sixth consecutive year in which the increase in rural per capita net income has surpassed the growth rate of both GDP and urban per capita disposable income. The ratio of urban income to rural income per capita dropped to 2.73:1.

3) Steady progress was made in the area of social security. The number of people covered by basic old-age insurance has reached 858 million. The rate of participation for basic medical insurance stood at over 95% and pension benefits for enterprise retirees continued to rise. The minimum basic pension benefit for rural and non-working urban residents rose from 55 yuan to 70 yuan per month. The annual government subsidy for basic medical insurance covering rural and non-working urban residents was increased from 320 yuan to 380 yuan per person. Work to establish a standardized system to provide basic necessities for people experiencing extreme difficulties began. The system for granting living allowances to people with disabilities who are facing financial difficulties and a caring subsidy to people with serious disabilities was put in place in 20 provinces and provincial-level municipalities, with over eight million people benefiting from the system.

4) Better public services were provided. We continued to improve the basic conditions of badly built and poorly operated schools providing compulsory education in poor areas, launched the plan to strengthen the workforce of teachers in rural areas, and opened up more channels through which students from poor rural areas enter key colleges and universities. The retention rate of nine-year compulsory education reached 93%, while the gross enrollment ratio for senior secondary education reached 87%. We improved the system for community-level medical care services, the prevention and control system for major diseases, and the work to train general practitioners. The per capita government expenditures on basic public health services increased to 40 yuan, with the number of categories of basic public health services increasing to 12. We issued and implemented the national standards to guide the provision of basic public cultural services, and increased support to improve prefecture-level facilities for public cultural services. Significant progress was made in catalyzing innovative development in the sports industry.

Box 13: Provision of Public Services

5) The construction of government-subsidized housing progressed smoothly. We supported government-subsidized housing projects, such as the rebuilding of run-down areas, by increasing central government’s budgetary investments and special funding in this area, allocating special development funds, and securing financing through corporate debt issuance. Over the last year, construction began on 7.83 million government-subsidized housing units in urban areas and construction on 7.72 million units was basically completed.

In assessing performance in relation to meeting the targets projected in the plan, overall targets for national economic and social development, such as the economic growth rate, the consumer price index, the balance of payments, and employment levels, remained within the proper range; those targets reflecting economic structure and quality were further improved; targets regarding social development and people’s wellbeing maintained positive momentum; and targets related to resource conservation and environmental protection were implemented satisfactorily. Overall, planned targets were well met.

All 18 obligatory targets have been achieved as planned. Of the 41 anticipatory targets, the performance of 35 was in line with or better than expectations, 5 fell short of the projected figures, and there is one target for which the figures are not comparable due to changes in the statistical standards. It should be noted that the anticipatory targets are neither mandatory nor predicted; they are development objectives that the government hopes to achieve and a reflection of the anticipated direction of national development and policy orientation. The actual performance of these targets is objectively decided by the market, and may be higher or lower than the projected figures. The reasons for the discrepancies between the projected figures for some anticipatory targets and the actual performance are as follows: First, in order to reflect the orientation of macro-control policies toward boosting domestic demand, the targets of total retail sales of consumer goods and fixed-asset investment were set slightly higher than the estimated figures. These were targets for us to work toward over the course of the whole year, and as a result, there was a minor difference between the actual performance and the projected figures. The actual increase in the total retail sales of consumer goods basically met the projected target in real terms, but was lower than the target set at the beginning of the year in nominal terms because of imported deflation, the decline in the prices of some domestically manufactured goods, and the limited increase in the prices of agricultural products. In the face of a sluggish international market and insufficient domestic demand, total fixed-asset investment also fell short of the projected figure set at the beginning of 2015. This was due to serious overcapacity in some manufacturing industries; excess supply in the real estate markets of third- and fourth-tier cities; and a sustained fall in the prices of goods for investment as well as other factors. Second, unique factors resulted in the target for spending on R&D being lower than the projected figure. This was due to the increasing downward pressure on economic growth and the continued decline in the profits of enterprises in 2015. In addition, the figure for spending on R&D as a percentage of GDP in 2014 was adjusted statistically from 2.09% at the beginning of the year to 2.05% at the end of the year. These factors meant that the 2015 target for R&D spending as a percentage of GDP was not achieved. Third, changes in the international economic environment caused the yearly figures for some targets to be lower than the projected figures. Under the influence of a slowdown in the growth of world trade and a slump in energy prices on the international market, the growth of total import and export volume was slower than projected. A sharp drop in the prices of major commodities on the global market and the slackening demand for natural gas on the domestic market also meant that natural gas output for last year fell short of the projected target. Finally, the statistical standards for calculating the population using household registration have been adjusted by the competent department, and therefore the actual figure for the percentage of the population registered as urban residents in 2015 is not comparable with the projected figure.

In brief, facing complex situations both at home and abroad, 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, and the concerted efforts of all regions and departments and the people of all our ethnic groups. Through five years of hard work, the major targets set out in the Twelfth Five-Year Plan for National Economic and Social Development have been successfully completed.

At the same time, we should also be keenly aware that the world economy is still undergoing profound adjustment, the divergence of economies is pronounced, growth of the global economy and trade are sluggish, geopolitical risks are on the rise, the foundation for economic recovery is still weak, and external instabilities and uncertainties are increasing. In this current period of development, China must simultaneously manage the slowdown in economic growth, make difficult structural adjustments, and absorb the effects of previous economic stimulus policies. As the adverse effects of a sustained slowdown in economic growth continue to persist and deep-seated and longstanding problems, especially structural problems, become more serious, the conditions for China’s development may become even more complex and the difficulties even more formidable.

First, the downward pressure on China’s economy is mounting. The slowdown in the growth of demand is continuing. With international demand remaining weak, the situation in relation to foreign trade has become more challenging and complex. Affected by the persistently low prices of manufactured goods and the rising costs of labor and other factors of production, growth in investment is slow, particularly in the area of manufacturing. As downward pressure on China’s economy begins to affect employment and personal income, it may also spread to and affect private consumption.

Second, the difficulties faced by the real economy are building. Having been pressed by insufficient demand as well as a rise in overall costs, the ability of enterprises in some industries to make a profit has decreased, and with losses in some industries increasing the number of enterprises facing difficulty is also rising. This has resulted in layoffs and hidden unemployment within some enterprises and industries.

Third, structural problems are becoming more prominent. Weak effective demand has been coincident with insufficient effective supply, and the transition from the old to the new drivers of growth has been unbalanced. The delayed adjustment of the supply system has resulted in supply-side structural problems becoming more pronounced, and effective supply has not yet adapted to aggregate demand or to changes in the structure of demand, while structural overcapacity is still a significant problem.

Fourth, ecological and environmental problems are still grave. Air pollution remains serious, with the frequent occurrence of heavy smog in some cities and areas. The quality of the water environment is relatively poor and the over-abstraction of groundwater is severe in some regions; while other regions face an arduous task in bringing soil pollution under control. The construction of environmental infrastructure lags behind.

Fifth, challenges and risks in other areas are accumulating and intertwining. The growth of government revenue is slowing down; the imbalance between revenue and expenditures is becoming more pronounced; and there are risks and hidden dangers in local government debt. The amount and ratio of non-performing loans reported by banks have increased; the debt ratios of enterprises are also rising; illegal fund-raising is becoming more frequent; and hidden financial risks are mounting. At the same time, there are also new problems to be addressed in relation to workplace safety and the people’s well-being.

We must attach great importance to these issues, carry out a full evaluation of the difficulties and challenges that have arisen as a result of downward pressure on the economy, and become more aware of potential dangers and the bottom line. We need to maintain our strategic focus while taking timely steps to undertake early warning initiatives, formulate contingency plans, and exercise anticipatory regulation; such measures will ensure that we can respond effectively to these problems and resolve them.

II. Guiding the New Normal and Applying the New Development Philosophy in 2016

This is the first year of the decisive stage in finishing building a moderately prosperous society in all respects and it is also an important year for surmounting the difficulties we face in the push toward structural reform. Effectively carrying out our economic work for this year is hugely important to ensuring that we can finish building a moderately prosperous society in all respects within the 13th Five-Year Plan Period (2016-2020).

1. General Requirements

We need to fully implement the guiding principles of the 18th National Party Congress and the third, fourth, and fifth plenary sessions of the 18th CPC Central Committee; follow the guidance of Deng Xiaoping Theory, the Theory of Three Represents, and the Scientific Outlook on Development; and fully put into practice the guidelines from General Secretary Xi Jinping’ s major political addresses. We need to strengthen and improve the Party’ s leadership over economic work; coordinate China’s domestic and international efforts; act in accordance with the overall plan for promoting all-round socialist economic, political, cultural, social, and ecological development and the Four-Pronged Comprehensive Strategy*; and keep firmly in mind and put into practice the philosophy of innovative, coordinated, green, open, and shared development. We need to adapt ourselves to the new normal in China’s economic development; adhere to the reform and opening up policy as well as the general principle of seeking progress while keeping performance stable; and continue to ensure steady economic growth, make structural adjustments, improve the standard of living, and guard against risks. We need to follow the general guidelines of keeping macro policies stable, industrial policies targeted, micro policies flexible, and reform policies practical, while also making sure social policies meet people’s basic needs. The economy needs to continue operating within an appropriate range. We must be strategically prepared for a prolonged struggle, and tactically well prepared so that the challenges we may face can be overcome. We will intensify structural reform-as we increase aggregate demand by an appropriate degree, we will also work to cut overcapacity and excess inventory, deleverage, reduce costs, and strengthen points of weakness in order to improve the quality and efficiency of the supply system. Moreover, we will increase the effectiveness of investment, accelerate the fostering of new driving forces for development, upgrade and improve traditional comparative advantages, and strengthen the drivers for sustainable growth so that China’s overall productivity improves and its economic and social development gets off to a good start for the 13th Five-Year Plan period.

2. Major Targets

Acting in line with the general requirements listed above and taking into account both what is necessary and what is possible, we have set forth the main targets for China’s economic and social development in 2016 as follows:

- Ensuring steady and sound economic development

GDP is projected to grow by 6.5-7%. In setting this target, we have made the following considerations: First, such a rate is necessary for laying a good foundation for achieving the goal of finishing building a moderately prosperous society in all respects during the 13th Five-Year Plan period. To attain this goal by 2020, the economy needs to grow at an annual average rate of above 6.5% during the 13th Five-Year Plan period. Should the economy grow slower than 6.5% this year, growth rates for the next four years would have to be higher. This year’s target of GDP growth between 6.5% and 7% will help us to gain the initiative and avoid increasing pressure for higher growth rates over the next few years. Second, this rate will help to effectively stimulate employment. In view of the correlation between economic growth and employment, a growth rate of between 6.5% and 7% should be able to create more than 10 million urban jobs. Third, such a rate is conducive to guiding market expectations and boosting confidence. As an elastic range of acceptable economic growth rates, this target is in line with China’s potential growth rate and market expectations, which will allow it to play a positive role in helping to bolster confidence. At the same time, we are also aware that China will face a more complicated development environment this year and the slowdown in our economic growth has not yet been reversed. This means that stronger policies and greater efforts will be required if we are to achieve the targeted growth rate.

- Making further progress in achieving a better-quality, more efficient, upgraded economy

Both investment and consumption are projected to continue growing steadily, and the contribution of consumption toward economic growth is also projected to continue rising. The foundation of agriculture will be further strengthened, positive results will be achieved in industrial transformation and upgrading, the growth of strategic emerging industries will accelerate, and the contribution of the value-added of the service sector to GDP will continue to increase. Scientific and technological progress is expected to play a greater role in supporting economic growth and R&D spending as a percentage of GDP will be increased steadily. Energy consumption and carbon dioxide emissions per unit of GDP will be reduced by at least 3.4% and 3.9% respectively, water consumption per 10,000 yuan of GDP will fall by 5.1%; and chemical oxygen demand is projected to fall by 2%, ammonia nitrogen by 2%, sulfur dioxide emissions by 3%, and nitrogen oxide emissions by 3%. For those cities at prefectural level or above that fell short of the national standards for PM2.5 last year, their PM2.5 concentrations will be cut by 3% this year; and air quality in cities at prefectural level or above is expected to be good or excellent for 77% of the year. The proportion of surface water with a water quality rating of Grade III or higher will reach 66.5%, while the proportion of that lower than Grade V will be kept within 9.2%.

* The Four-Pronged Comprehensive Strategy refers to making comprehensive moves to finish building a moderately prosperous society in all respects, deepen reform, advance the law-based governance of China, and strengthen Party self-conduct.

- Keeping the overall price level basically stable

In setting a targeted increase of around 3% for CPI, we have taken the following into account: First, the continued impact from last year’s CPI increase will be slightly greater than that of the year before. According to our forecast, the contribution of the previous year’s CPI increase on the growth of CPI this year will be slightly higher than last year’s 0.5%. Second, new factors will contribute to an increase in prices. Although weak demand will make a significant price rebound almost impossible, there will still be additional factors driving price increases: a rise in prices of services as a result of an increase in labor costs, the possibility of cyclical price fluctuations of a number of agricultural products, and the impact of further price reforms. Third, this target will help to guide market expectations. A target of higher price increases will be conducive to reducing expectations of deflation.

- Continuing to improve living standards

More than 10 million new urban jobs are expected to be created this year, and the registered urban unemployment rate will be kept within 4.5%. This will help to ensure that employment remains stable and will also provide leeway to address overcapacity, carry out enterprise mergers and reorganizations, and respond to the issue of hidden unemployment. Personal income will increase in step with economic growth and the income gap between urban and rural residents will continue to narrow. The number of rural residents living in poverty will be reduced by over 10 million and the percentage of the population registered as urban residents will increase by more than 1.3 percentage points. In order to ensure continuous improvement of the social security system, the overall management of social insurance accounts will be turned over to higher-level authorities, coverage will continue to be expanded, and the level of benefits will be increased appropriately. The coverage and equitable delivery of education, health care, culture, and other basic public services will continue to expand.

- Keeping the equilibrium in the balance of payments

The growth rate in the export of goods from China is projected to be faster than that of world trade, the volume of imports is expected to expand, and the proportion of trade in services in relation to the total volume of foreign trade will continue to increase. Foreign investment utilized by China will keep rising, and outbound direct investment is expected to grow rapidly.

3. Orientation of Macroeconomic Policies

Clear requirements were put forth at the Central Economic Work Conference held in Beijing last December for adapting to and guiding the new normal in economic development. In particular, the conference examined how the new normal should be viewed and handled, and in light of this, three approaches we must follow and ten areas of effort we need to highlight were emphasized. The new philosophy of innovative, coordinated, green, open, and shared development, put forward in the CPC Central Committee’s Recommendations for the 13th Five-Year Plan for Economic and Social Development, will serve as a guide for economic and social development during the 13th Five-Year Plan period and beyond. To achieve the targets for economic and social development in 2016, we must keep firmly in mind the requirements for guiding the new normal in the economy and put into practice the new development philosophy. We need to channel greater energy into supply-side structural reform while increasing aggregate demand by an appropriate degree. We need to implement the general philosophy of keeping macro policies stable, industrial policies targeted, micro policies flexible, and reform policies practical, while also making sure social policies meet people’s basic needs; at the same time, we need to make sure all policies are well coordinated and work together to create synergy.

- Keeping macro policies stable

We will ensure continuity in and make improvements to macroeconomic policies, strengthen range-based, targeted, and well-timed regulation, increase support for the real economy, and make sure the economy operates within an appropriate range.

On the one hand, we will increase the intensity of our proactive fiscal policy. The government deficit for 2016 is projected to be 2.18 trillion yuan nationwide, which represents a year-on-year increase of 560 billion yuan and a deficit-to-GDP ratio of 3%. Of this amount, the central government deficit will be 1.4 trillion yuan, and the remaining 780 billion yuan will come from the local government deficit. First, a scaled-up deficit in the short term will allow us to increase government spending and central budgetary investment by an appropriate amount, and more importantly to make up for the decrease in government revenue caused by tax and fee reductions, thus ensuring the government can fully meet all of its spending responsibilities. Second, we will optimize the structure of budgetary expenditures, make innovations in the way budgetary funds are used, put surplus budgetary funds to better use, and increase or reduce budgetary expenditures as necessary. Third, an appropriate increase will be allowed in the issuance of special bonds by local governments mainly to support land reserve, transportation, water conservancy, urban infrastructure, and other projects that will yield a certain degree of revenue. Local governments will continue to issue bonds to replace outstanding debts.

On the other hand, we will appropriately increase the flexibility of our prudent monetary policy. We will maintain reasonably ample liquidity and allow an appropriate increase in the aggregate financing of the economy. The M2 money supply is projected to grow by around 13% in 2016, roughly the same as last year. First, we will ensure a smooth transmission mechanism for monetary policy, lower financing costs for the real economy, ensure the financial sector serves the real economy more efficiently, and help solve the problem of financing being difficult and costly to obtain. Second, with the aim of expanding the issuance of bonds and equities as well as other financing channels, we will develop project revenue bonds, high-yield bonds, convertibles, extendable bonds, perpetual notes, and other hybrid securities. We will also raise the proportion of direct financing. Third, we will improve the market-based RMB exchange rate regime and continue to implement a managed floating exchange rate system, thereby allowing the RMB exchange rate to float more freely while also ensuring basic stability is maintained and the rate remains at an appropriate and balanced level. We will exert effective control over abnormal cross-border flow of capital.

While effectively implementing fiscal and monetary policies, we will coordinate the use of and increase compatibility between policies on industrial development, regional development, investment, consumption, and prices and strengthen counter-cyclical adjustments so as to create a stable macro environment for economic development and structural reform.

- Keeping industrial policies targeted

The direction of structural reform needs to be accurately determined; we need to stimulate increases in demand by making innovations on the supply side, and encourage the emergence of new areas of growth. First, we will continue to pursue innovation-driven development. In order to increase incentives for innovation and promote its practical application, we will implement action plans to encourage the commoditization and application of scientific and technological advances and carry out the intellectual property rights strategy, reform the system of property rights on scientific and technological advances, carry out preferential tax policies on equity and option rights, and improve the methods for distributing dividends and giving rewards. We will give full play to the role of entrepreneurship and innovation initiatives and the Internet Plus in pooling the wisdom and strength of the general public. Second, we will focus on invigorating existing resources. We will accelerate technological transformation and upgrading, revitalize existing industries and enterprises, take our industries to a new level, redouble efforts to develop the real economy, and encourage small and medium-sized enterprises to develop on the basis of innovation and transformation. Third, we will move faster to promote green development. We will encourage exploration and experimentation in promoting ecological progress and improve related institutions, and work hard to put in place an industrial system and spatial planning that are eco-friendly to spur on the development of green production and promote a green lifestyle.

- Keeping micro policies flexible

We will improve the market environment, invigorate businesses, and unlock the potential of consumers. First, with a focus on addressing the issue of the unsynchronized, uncoordinated, and incomplete delegation of powers to lower level governments, we will deepen reform of the government review and approval system, further relax restrictions on market access, and impose stronger and more effective oversight, thereby ensuring more efficient and convenient services for entrepreneurship and innovation, business investment and operations, and the general public. Second, in order to protect the property rights and legitimate interests of enterprises under all types of ownership, we will implement a review system to ensure fair competition, remove market barriers and local protectionism, and lift restrictions to ensure the free flow of commodities and factors of production, thus creating a relaxed investment and operating environment in which enterprises under all types of ownership can develop themselves through innovation. We will ensure that nongovernmental investments and investments by governments and SOEs are treated equally in terms of project review, financing services, fiscal and tax policies, and the use of land. Third, we will enhance our ability to provide effective supply and ensure it better corresponds to demand by creating new supply and improving the quality and efficiency of supply, which will ensure that the diversified and personalized demand of different consumer groups is fully satisfied.

- Keeping reform policies practicable

We will continue to raise the quality of our reform plans, improve reform implementation mechanisms, and make good use of pilot reforms, so that the results of reform are tangible and our people gain an increasingly greater sense of benefit. First, we will adhere to a problem-oriented approach. With a focus on resolving the main problems, we will channel our energy into carrying out important reforms that have a bearing on the overall situation, and we will rely on reforms to resolve the serious issues and problems that are hindering development. We will accelerate reform related to government review and approval; investment and financing; prices; SOEs; fiscal, tax, and financial systems; and social management. Second, we will strengthen coordination. In making reform more systemic, comprehensive, and balanced, we will ensure that major and critical reforms are guided by effective top-level planning, while also coordinating work on related reforms so as to create synergy. Third, we will spare no effort to ensure that reforms are fully implemented. We will work hard to address the issues of how to make sure that reform plans are tailored to reality, how to remove obstructions created during the adjustment of interests, and how to ensure the assumption of responsibilities for implementing reforms. We will give full rein to the initiative of community-level organizations and encourage local governments to explore which methods for implementing reform are best suited to local conditions, thereby ensuring that reform implementation is accurate, thorough, and effective.

- Making sure social policies meet people’s basic needs

We will work hard to ensure the wellbeing of our people, giving full play to the role of the social safety net as a stabilizer. On the one hand, we will increase the supply of public services. Public services should be inclusive, equitable, and sustainable, and should guarantee the basic needs of the people. We will ensure everyone has access to basic necessities and basic public services. On the other hand, we will improve systems to ensure there is a cushion in place for those most in need. We will provide support to economically disadvantaged families based on their type of situation, increasing government funds for unemployment assistance and subsistence allowances, while ensuring that those poor families who are not supported by industry-led poverty-alleviation or employment assistance programs are covered by social security programs and have their basic needs met.

III. Major Tasks for Economic and Social Development in 2016

In 2016, with the focus on adapting to and guiding the new normal in economic development and applying the new development philosophy, we will carry out work in the following nine areas to ensure a good start to the 13th Five-Year Plan:

1. Making progress in major tasks for supply-side structural reform

We will adjust existing resources so as to upgrade traditional drivers for development, while also incorporating additional effective resources so as to foster new drivers; at the same time, we will make the supply structure more adaptable and flexible with a view to increasing the impetus for sustainable growth.

1) We will actively and steadily address overcapacity. We will put greater emphasis on making use of market forces, economic measures and rule of law approaches; on applying targeted policies tailored to local conditions and specific industries and enterprises in an orderly fashion; and on addressing both the symptoms and root causes of overcapacity by establishing a permanent market-based mechanism for adjusting enterprises’ production capacity. We will adopt strict standards for environmental protection, energy consumption, safety, and technology; tighten control on the expansion of production capacity; enforce strict financial and credit rules; work with enterprises on a case-by-case basis to carry out mergers, reorganizations, debt restructuring, or bankruptcy through reorganization or liquidation; and actively yet prudently deal with enterprises that have long been indebted, insolvent, and uncompetitive. We will increase support through fiscal, tax, financial, and land policies to help turn around and upgrade the steel, coal, and other industries. When addressing the issue of overcapacity, priority will be given to ensuring proper arrangements are made for workers who are laid off, and funds for rewards and subsidies will be set up to ensure they are resettled and provided with employment.

2) We will work to lower business costs. We should cut the cost of operating for enterprises in the real economy, working hard to reduce transaction costs imposed by government, labor costs, the tax burden, financing costs, energy costs, land-use expenses, and logistics costs, and we will also explore the possibility of reducing social insurance premiums. We will streamline the government review and approval process as well as related procedures for enterprises, and help them make innovations in management. We will raise minimum wages by a reasonable amount. We will continue to revise and streamline taxes and fees; draw up lists and catalogs to manage all fees and charges relating to enterprises; replace business tax with VAT in all industries; accelerate reform of the resource tax; and research the feasibility of streamlining and consolidating old-age insurance, medical insurance, unemployment insurance, workers’ compensation, maternity insurance, and the housing provident fund. Improvements will be made to the housing provident fund system and the proportion that enterprises contribute to the fund will be reduced by an appropriate amount. We will further liberalize interest rates, develop equity financing, increase the issuance of bonds, and steadily reduce overall financing costs for enterprises. We will accelerate structural reform of the electricity, heat, petroleum, and natural gas industries, and advance reform of the commodity distribution system.

3) We will reduce commodity housing stock in a well-ordered way. In carrying out reform of the housing system, we will focus on meeting the demand of new urban residents by appropriately lowering transaction costs, encouraging rural migrant workers to purchase homes in small and medium-sized cities, and implementing policies to provide incentives for first-time home buyers. In order to develop the housing rental market, we will encourage both individuals and investors from various types of institutions to purchase commodity housing stock so as to increase the supply of rental housing. We will expand the use of direct monetary housing subsidies for people displaced by the rebuilding of run-down areas and other housing requisition projects, and also provide subsidies for people living in public rental housing. We will ensure efficient use of the housing provident fund, and gradually allow self-employed people and rural migrant workers, who have adequate financial resources, to participate in the housing provident fund scheme on a voluntary basis.

4) We will work to strengthen points of weakness. In a bid to win the battle against poverty, we will integrate the task of poverty alleviation with the tasks of increasing effective supply and addressing overcapacity. We will support the upgrading of equipment and technology in enterprises. We will see to it that manufacturing becomes higher-end, smarter, more eco-friendly, and better able to provide services; and with the aim of fostering and developing emerging industries, we will use measures such as injecting capital into the investment fund for advanced manufacturing, making equity investments, and subsidizing investment to finance the implementation of a number of demonstration programs that are project-oriented and industry-specific. We will also work to reinforce points of weakness in our hard and soft infrastructure. With the focus on developing integrated transportation hubs, we will step up efforts to extend water, power, and gas supply networks and roads to every “last kilometer” in rural areas; develop next-generation information infrastructure, new-energy vehicle facilities, urban underground pipeline networks, gas storage facilities, intercity transportation infrastructure, and urban and rural logistics networks; and promote ecological protection and environmental improvement. We will promote integrated development of transportation and logistics infrastructure so as to improve their overall efficiency and returns. We will comprehensively develop education, speed up efforts to promote education in the central and western regions, and strengthen training for rural migrant workers, commercial farmers, former military personnel, laid-off workers, and the unemployed. We will protect and restore mountain, water, forest, and farmland ecosystems, step up environmental governance efforts, reform the foundational systems for environmental governance, increase our capacity to conserve ecosystems and improve the environment, and build ecological security shields.

5) We will guard against and defuse financial and other risks. In order to keep the economy operating within an appropriate range and ensure the continuity and stability of development, we will improve the monitoring and early-warning system for economic performance, conduct preparatory research to maintain policy options for different eventualities, create new methods of macro regulation and improve existing ones, and increase our capacity for predicting and guarding against risks. We will strengthen the system for macro-prudential financial regulation, comprehensively oversee and regulate systemically important financial institutions, financial holding companies, and key financial infrastructures. We will set up sound anticipatory mechanisms for monitoring, assessing, and responding to financial risks, and improve contingency plans for handling the risks in the stock market, foreign exchange market, and bond market as well as the mechanism for financial institutions exiting the market. We will support banks in writing off nonperforming loans and systematically reduce credit default risks. We will regulate all financing activities; launch a campaign to address risks related to Internet finance; crack down harder on financial fraud and illegal fundraising; and work to ensure that no systemic or regional financial risks occur. To ease the imbalance between revenue and expenditures, we will better regulate the ceilings imposed on local government debt, improve budgetary management, and advance the systems for giving early warning against risks and for the assessment and oversight of debt. We will also improve the unified management of government debt and the way in which local government bonds are issued. We will increase support for the real economy, and prevent the aggravation and spread of debt chains and broken chains of funding among enterprises. We will implement policies to support enterprises in keeping employment stable, subsidize enterprises’ contribution to social insurance premiums, and reduce taxes and fees, while also increasing support for reemployment. We will improve and innovate social governance and intensify efforts to identify, mediate, and defuse social conflicts so as to ensure social harmony and stability.

2. Tapping the potential of domestic demand with new ideas and measures

We will effectively promote both the fundamental role of consumer spending and the key role of investment in stimulating growth and further consolidate the foundation of domestic demand, thereby ensuring that the economy operates within an appropriate range.

1) We will promote consumer spending in new areas and guide new forms of supply to create new drivers of growth. In keeping pace with the upgrading of the private consumption mix, we will work to promote innovation in supply, thereby accelerating the formation of a pattern of positive interaction between consumption and supply and of coordination between the upgrade in demand and the upgrade in industry. Total retail sales of consumer goods are expected to increase by around 11% in 2016.

First, we will use all possible measures to enhance people’s ability to consume. We will work to increase the incomes of low- and middle-income groups. We will implement an income distribution policy that is conducive to the commoditization and application of scientific and technological advances. We will improve the mechanism for stimulating the growth of rural income, and explore ways to improve the mechanism for distributing revenues from the appreciation in land values between collectives and the state.

Second, we will nurture and expand new areas of consumer spending. We will keep housing, vehicle, and other major consumption stable. We will boost broadband speeds, lower rates for Internet services, and speed up efforts to combine online-offline activities, while also working to expand consumption in areas such as wearable devices, smart homes, and digital media. We will develop new forms of consumption in relation to services; effectively implement the system of paid vacations; develop rural tourism, tourism to sites of significance in early CPC history, ecological tourism, as well as travel for study; expand consumption by the elderly and the young in an orderly manner; and expand and guide cultural consumption. At the same time as we develop general aviation, cruise liners, yachts, and other emerging areas of consumption, we will also advocate green consumption that helps conserve resources and improve the environment. We will unleash the potential for consumption in rural areas.

Third, we will increase effective supply and unleash potential consumer demand. We will encourage and support local governments and enterprises in intensifying their efforts to extend broadband connectivity to rural villages, develop information infrastructure in small and medium-sized cities as well as civil space infrastructure, and promote the development of tourism infrastructure and public service facilities. We will support the development of cultural entertainment complexes in cities, and help open large stadiums and gymnasiums funded by nongovernmental investors to the public free of charge or at a lower price. We will provide more products and services related to health, household, elderly care, long-term care, and cultural and creative industries.

Fourth, we will improve the consumption environment. We will improve the level of standardization in all industries and improve the mechanism for protecting consumers’ rights and interests. We will launch campaigns to improve the supply of consumer goods, and introduce a system of punitive damages against producers whose products do not meet quality standards. We will improve policies related to tariffs on consumer goods. We will implement the food safety strategy, and establish sound systems for food safety standards and for ensuring product traceability. We will improve drug quality. We will tighten oversight of prices and step up efforts to counter monopolistic pricing to safeguard fair market competition.

2) We will strengthen points of weakness, adjust the economic structure, and improve the performance of investment. While ensuring investment in key areas and for weak links, we will innovate the way in which government-managed funds are used, and use central government budgetary investment and special development funds to attract more investment from non-governmental sources. We will also intensify efforts to shore up weak spots and increase effective investment. Total fixed-asset investment is projected to increase by around 10.5% in 2016.

First, we will further improve the use of budgetary investment. Appropriation for investment in the central government budget this year is planned to be 500 billion yuan. This investment will mainly go toward government-subsidized housing; grain production and water conservancy; railway construction in the central and western regions; scientific and technological innovation; energy conservation, environmental protection, and ecological improvement; education, health, culture, and other social programs; as well as toward the development of old revolutionary base areas, ethnic minority areas, border areas, and poor areas.

Second, we will give full play to the leading role of special development funds. An appropriate amount of capital will be raised in a market-based manner for special development funds on a quarterly basis. We will encourage nongovernmental capital to increase in step with government development funds, so that government investment and credit funds can produce positive results together. Corporate bonds issuance will be expanded and the issuance of new-type corporate bonds will be encouraged, such as those for developing urban utility tunnels, parking lots, strategic emerging industries, and elderly care services, for building and upgrading power distribution grids, for supporting entrepreneurship and innovation incubators, and for launching eco-friendly initiatives.

Third, we will develop an investment plan on a rolling three-year basis. We will build up the number of government investment projects in reserve so that rolling groups of projects can be approved, launched, and completed one after another; such a continuous, rolling reserve mechanism will help to maintain a beneficial cycle of government investment.

Fourth, we will work to stimulate nongovernmental investment. We will make overall arrangements for investment funds from the central government budget and special development funds, giving priority to developing PPP projects that are in line with government criteria. We will also further relax restrictions on market access to open up more channels for private investment. The formulation of the regulations on government investment, the regulations on franchising of infrastructure and public utilities, and the regulations concerning the management of investment projects that are subject to government review and reporting will all be accelerated.

Fifth, we will strengthen major construction projects in key areas and areas of weakness. We will increase efforts to press ahead with the key projects in the 13th Five-Year Plan as well as other major projects, such as those to reduce poverty; rebuild run-down areas; upgrade rural power grids and urban power distribution grids; develop major water conservancy projects, railways, highways, and urban rail transit facilities; control water pollution in key water basins; and promote technological upgrading in enterprises. Construction will begin on 20 major water conservancy projects. We will launch major strategic projects including the 100-200-300 Transportation Program, the project to develop wind and photovoltaic power bases in northwestern China, and the project to promote military-civilian integration. We will strengthen management in relation to investments and tighten the supervision and inspection of projects.

Box 14: The 100-200-300 Transportation Program

3. Channeling more effort into reforms in major areas and in relation to key issues

To ensure that market vitality remains constant, we will promptly introduce a range of measures aimed at leading reform efforts and put more focus on the efficiency of institutional supply.

1) We will intensify efforts to streamline administration, delegate more powers, improving regulation, and provide better services. We will continue to delegate the power of or cancel the requirement for government review on more items and ensure that the delegation of powers is better coordinated. We will make the lists of all local governments’ powers and responsibilities available to the public, carry out trials for compiling lists of powers and responsibilities of departments under the State Council, and begin trials to use a negative list for market access in certain regions. We will press ahead with coordinated law enforcement and oversight using big data, and coordinate oversight through market, credit, and legal measures. We will move faster to set up a credit rating system, expand the scope and services of the platform for sharing information on credit nationwide, and strengthen the mechanism to give joint incentives to those who act in good faith and to take joint punitive actions against those who act in bad faith. We will implement a national unified system of credit rating codes; press ahead with the reform to replace the separate business license, organization code certificate, and taxation registration certificate with a unified business license with a unified social credit code; and conduct trials to separate operating permits and business licenses. We will speed up the reform of making the trade of public resources more market-based, and establish a unified trading platform by integrating existing ones. We will improve the way in which the government provides public services, expand Internet Plus government services, promote better information sharing between government departments, and move faster to standardize government review and approval. We will ensure a unified registration system for immovable property is implemented at community level.

2) We will deepen reform of the investment and financing systems. We will make innovations in investment management and create new mechanisms for investment and financing; further streamline investment approval procedures; reduce, combine, and regulate the items required for a construction project when applying for government approval; improve the online platform for reviewing, approving, and monitoring investment projects; and put in place a new system for carrying out the combined review and approval of investment projects for enterprises. We will improve the mechanism for facilitating cooperation between the government, banks, enterprises, and nongovernmental investors, and promote application of PPP models such as franchise operations to encourage nongovernmental capital’s participation in the development and operation of major government projects.

3) We will deepen reform of prices. We will work to lift pricing controls over competitive areas in the power, petroleum, natural gas, and transportation industries. We will extend to more areas the trial price reform for electricity transmission and distribution, and improve the policy for adjusting prices for electricity generated by environmentally friendly facilities. We will improve the pricing mechanism for refined oil products. We will steadily advance reform of medical service prices. Comprehensive reform of the pricing for water used in agriculture will be carried out. We will establish sound rules for market prices, strengthen price oversight, and safeguard order in relation to prices and fees.

4) We will meet head-on the most difficult problems related to SOE reform. We will step up efforts to reorganize or establish state capital investment companies and operating companies. We will reform SOEs by introducing a mixed ownership structure, and begin trials and demonstrations in key industries such as railway, civil aviation, telecommunications, and defense. We will carry out structural reform of the power, petroleum, natural gas, and salt industries. We will promulgate guidelines on further improving the property rights system.

5) We will accelerate reform of the fiscal and tax systems. We will introduce guidelines on appropriately dividing powers and spending responsibilities between the central and local governments. We will increase the percentage of funds transferred from the central government budget for state capital operations to the general public budget. We will expand the reform to replace business tax with VAT to the construction, real estate, financial, and consumer service industries, and make the input VAT on enterprises’ new immovable property deductible, so as to ensure that the tax burden on all industries can be reduced rather than increased. We will implement reform to levy the price-based resource tax on all resource products, advance reform of the excise tax and the environmental protection tax, and steadily carry out reform of personal income tax that is based on adjusted gross income as well as specific types of income.

6) We will advance financial reform. We will diversify the system of financial institutions; deepen reform of state-owned commercial banks, developmental financial institutions, and policy-backed financial institutions; and continue to conventionalize the establishment of private banks. We will develop inclusive finance to increase financial services for micro, small, and medium-sized businesses as well as for rural areas, paying particular attention to poor areas. We will promote the sound, well-regulated development of new forms of business in the financial sector. We will take steady steps to realize RMB capital account convertibility. We will promote the sound development of a multi-level capital market and improve the system for financial oversight and regulation. A catastrophe insurance system will be established.

In addition, we will continue to deepen reform in areas related to people’s wellbeing and social programs, including reform of the education, elderly care, cultural, medical, and health care systems and reform of the airspace management system.

4. Implementing the innovation-driven development strategy

In pursuing innovative development, we will fully implement the strategy for innovation-driven development, deepen efforts to promote entrepreneurship and innovation across society, and deepen reform of the science and technology management system. We will expand the resources, increase the space, and improve the environment for stimulating the enthusiasm and potential for innovation and entrepreneurship across all sectors of society, particularly enterprises.

1) We will increase the supply of resources for innovation. We will promote the development of major national science and technology infrastructure and national laboratories and industrial innovation centers. Comprehensive national science centers will be established in areas with a concentration of major science and technology infrastructure, and a new group of major science and technology programs and projects will be launched. We will systematically conduct pilot reforms for all-round innovation, and organize the implementation of the project to develop 100 top innovative enterprises.

2) We will accelerate the implementation of the action plan for entrepreneurship and innovation. We will help to establish more entrepreneurship and innovation demonstration centers; create more platforms to support crowd innovation, crowdsourcing, crowd support, and crowdfunding; and develop maker spaces, particularly spaces for specialized crowd innovation. We will develop the sharing economy. Local authorities and large corporations will be encouraged to establish venture capital, entrepreneurship and innovation platforms, and science and technology innovation centers. We will focus on supporting the development of platforms for business incubation, start-up assistance, and public services for start-ups and innovation. We will move forward with the Internet Plus action plan and the innovation project to promote open, big data. We will put in place high-speed, mobile, secure, and ubiquitous next-generation information infrastructure, intensify efforts to implement information technology development projects that benefit the general public, and improve the mechanisms for providing universal service in telecommunications. The Online Silk Road Agenda will be initiated. We will continue to make the National Week for Entrepreneurship and Innovation a success and support the development of more events that are geared toward promoting entrepreneurship and innovation.

3) We will develop strategic emerging industries. We will promptly make overall arrangements for developing infrastructure, public resource repositories, and global innovation networks to underpin the development of strategic emerging industries. We will carry out additional major programs and projects in strategically important fields such as high-performance integrated circuits, new-type displays, space technology applications, general aviation, and biomedicine. A national development fund for strategic industries will be established, trials will be carried out to provide protection against financing risks, and we will promote the development of strategic emerging industry clusters.

4) We will improve the core competitiveness of the manufacturing sector. We will deepen efforts to implement the Made in China 2025 strategy. With a focus on major areas and key issues, we will strive to make breakthroughs in core technologies and ensure the industrial application of these technologies. We will accelerate development of smart manufacturing technology and equipment, and promote the sound development of rail transit, new energy vehicles, pharmaceuticals, petrochemical, coal chemicals, and food industries. We will carry out activities to improve quality and branding within the manufacturing sector, and strengthen the national quality infrastructure of China.

5) We will accelerate the high-quality, efficient development of the service sector. In accordance with the two guidelines in relation to accelerating the development of producer services and consumer services, we will further relax controls for market access in the service sector, level the playing field, and ensure that producer service industries become more specialized and move toward the higher end of the value chain while consumer service industries produce more refined and higher-quality products. Innovation will be promoted in high-tech service industries. Another group of national trials for comprehensive reform in the service sector will be carried out, from which transferable experiences and applicable practices will be promptly spread to other areas.

6) We will improve the policies and environment for encouraging innovative development. We will grant extra tax deductions for research and development costs, improve preferential tax policies for new- and high-tech companies and science and technology business incubators, and implement a mechanism to subsidize the initial costs of insuring new materials and key parts and components. Reform of colleges and research institutes will continue to move ahead, regulations will be formulated to make it possible for researchers to take on part-time work, create their own start-ups or pursue on-the-job inventions, and an income distribution mechanism to encourage entrepreneurship and innovation will be formed.

5. Improving the foundation of agriculture

Our support for major development tasks will not be perfunctory; we will ensure that the investment momentum in agriculture and rural areas does not diminish, and that total investment continues to increase. In 2016, total grain output will stand at over 550 million metric tons.

1) We will guarantee food security in China. We will hold provincial governors responsible for food security across the board and improve the mechanism under which the central and local authorities work together to ensure food security. In order to ensure that grain production, cultivated land acreage, and production capacity all remain stable, we will make explorations into establishing functional zones for grain production and protective areas for the production of major agricultural products. We will guarantee grain production in major grain-producing areas, especially in the core areas for grain production. We will complete our work on designating and providing protection for permanent basic cropland nationwide, and will strengthen the development of high-quality farmland, major agricultural product-producing centers, national seed cultivation and production centers and regional centers for cultivating superior crop varieties, and grain storage and logistics. Actions will be taken to protect and improve the quality of cultivated land. The subsidy for purchasing superior crop varieties, the direct subsidy for grain growers, and general subsidies for purchasing agricultural supplies will all be integrated into a single agricultural subsidy. Improvements will be made to the mechanism for subsidizing major grain- and hog-producing counties as well as other major agricultural production areas. We will improve the price-setting mechanism for grain and other important agricultural products as well as the system for their purchase and storage. We will develop the grain industry, and expand the coverage of policy-based agricultural insurance to ensure better protection against agricultural risks.

2) We will promote the integrated development of the primary, secondary, and tertiary industries in rural areas. We will coordinate the production of food, cash, and feed crops and the development of the farming, forestry, livestock, and fishing industries, and promote integrated planting, breeding, and processing operations; at the same time, we will nurture new types of agribusiness and fully engage the multiple functions of agriculture. Pilot demonstration projects for rural industrial integration will be carried out in about 100 counties, 1,000 townships and 100,000 villages. We will improve the mechanism for integrating farmers’ interests into agricultural industry chains so that farmers can receive more benefits as rural industrial integration produces more value. The branding of agricultural products will be improved by making the agricultural industry chain more procedure-based and brand-development focused and by tightening production management, product certification, and post-certification supervision. We will improve the modern distribution system for agricultural products and supplies as well as cold-chain logistics networks for agricultural products. We will ensure the online marketing and offline distribution of agricultural products are integrated. We will deepen reform of the rural collective property rights system as well as reform of state farms on reclaimed land, collective forest tenure, state forestry farms, farmland irrigation and water conservancy, and rural supply and marketing cooperatives.

3) We will promote the sustainable development of agriculture. We will see to it that farmers move more quickly to adjust what and how much they grow or breed, particularly in relation to corn. We will formulate and implement a plan to let cropland and grassland lie fallow and to impose a moratorium on fishing in certain rivers and lakes. We will extend to more areas the trials for comprehensively dealing with pollution from non-point agricultural sources and for utilizing and conserving chernozem soil in the northeast. We will also launch trials to address the overdevelopment of surface water and step up efforts to deal with the heavy-metal pollution of cultivated land and the over-extraction of groundwater. We will establish pilot demonstration zones for sustainable agricultural development.

4) We will make further progress in building a new socialist countryside. We will make innovations in the investment and financing systems and mechanisms for rural infrastructure. We will continue to improve the power supply, water supply, transportation, and communications facilities in rural areas and the comprehensive water conservancy and meteorological systems for preventing and mitigating disasters. We will launch a project to consolidate and build on the achievements made in ensuring safe drinking water in rural areas, and we will improve the living environment for rural residents and promote the recycling and safe disposal of agricultural waste. We will prioritize the development of social programs in rural areas and in cities and towns where a relatively large number of people from rural areas take up employment and become urban residents. We will promote the coordinated development of the New Urbanization and the building of a new countryside.

6. Promoting coordinated and integrated development between regions and between urban and rural areas

In pursuing coordinated development, we will promote coordination between regions and integration between urban and rural areas. We will foster synergy between the Three Initiatives (the Belt and Road Initiative, the coordinated development of the Beijing-Tianjin-Hebei region, and the development of the Yangtze River Economic Belt) and the coordinated development of the western, northeastern, central, and eastern regions to form a new pattern of regional development that gives play to the leading role of core areas and makes it possible for different regions to work together.

1) We will focus on implementing the Three Initiatives. We will coordinate work to advance the Belt and Road Initiative. We will fully implement the plan for the coordinated development of the Beijing-Tianjin-Hebei region, research and implement policies and measures related to controlling the number of new projects launched and effectively carrying out existing ones, launch projects to relieve Beijing of functions nonessential to its role as China’ s capital, continue to support the three major areas-integrated transportation, ecological conservation and environmental protection, and industrial upgrading and relocation-in making initial breakthroughs, strengthen the trials and demonstration projects for innovation-driven development, and accelerate the establishment of the systems and mechanisms for coordinated development. In order to focus on ecological conservation and pursue green development in the Yangtze River Economic Belt, we will give top priority to restoring the ecological environment in the Yangtze River valley, while pressing ahead with the effort to develop a green, ecological corridor, a high-level integrated multidimensional transportation corridor, and a modern industrial corridor; and we will also encourage city clusters in the Yangtze River Delta, along the middle reaches of the Yangtze, and in the Chengdu-Chongqing region to lead the development of the Yangtze River Economic Belt.

2) We will press ahead with the coordinated development of the western, northeastern, central, and eastern regions. We will support Ningxia, Guizhou, and other parts of the western region in developing open inland economies, each with its own distinctive features, and help to establish innovation platforms and systems. We will increase investment in infrastructure and other needed areas in the central and western regions, step up efforts to protect and restore the ecological environment, and cultivate and expand competitive industries that take advantage of local strengths. We will implement a new round of strategies for revitalizing the northeast and other old industrial bases, and promote the development of city clusters along the Harbin-Dalian Economic Belt. We will introduce a new ten-year plan to promote the rise of the central region; drive forward the development of major economic zones such as the city clusters along the middle reaches of the Yangtze, the Central Plains Economic Zone, and the city cluster along the Yangtze in Anhui Province; press ahead with the development of the eco-economic belts along the Huai and Han rivers; and support the development of clean energy production centers in Shanxi. We will continue to support the exemplary role of the eastern region in leading the rest of the country in pursuing reform and innovation, transforming and upgrading industries, and improving the quality and performance of the economy. We will increase efforts to turn Hainan into an international tourist island. We will work to develop the marine economy and build demonstration zones for this purpose. We will move forward with the development of state-level new areas, demonstration zones for industrial relocation, and other major function platforms, and encourage all localities to lead the way and explore new paths in the reform of systems and mechanisms and in the pursuit of coordinated development between regions. Successful practices that have been developed in national experimental zones for integrated, complete reform will be applied to other regions in an orderly manner. We will promote the integrated development of key areas and support city clusters with suitable conditions in exploring the further integration of urban development.

Box 15: New Strategies for Revitalizing the Northeast and Other Old Industrial Bases

3) We will advance people-centered New Urbanization. We will implement the plan to grant urban household registration to 100 million people. We will deepen the implementation of the guidelines on promoting the New Urbanization; accelerate reform of the household registration system and implementation of the residence certificate system; establish a sound mechanism for adjusting the land designated for construction, development funds, and transfer payments in line with the number of migrant workers that have been granted urban household registration in an area; and encourage and guide rural migrant workers in obtaining urban household registration. We will put urban land held in reserve for construction to better use and carry out trial reforms relating to rural land requisition, the marketization of rural collective land designated for business-related construction, and the rural land used for private housing. A plan for the national urban system will be drawn up. We will continue to promote the cultivation of emerging small and medium-sized cities, small towns with unique features, and new models of urban development, and, where conditions permit, we will help development zones and land border areas to improve the overall functions of cities. Great efforts will be directed toward developing smart cities, green cities, and sponge cities. We will develop urban utility tunnels and ensure construction starts on 2,000 kilometers of such tunnels. We will move faster to develop intercity railways in city clusters in the Beijing-Tianjin-Hebei region, the Yangtze River Delta, the Pearl River Delta, and the Chengdu-Chongqing region.

Box 16: The New Urbanization

7. Promoting green, circular, and low-carbon development

In pursuing green development, we will drive forward the revolution in energy generation and consumption to make development more eco-friendly.

1) We will move faster to build functional zones. We will revise the plan for functional zoning, implement a negative list of industries for key ecosystem service zones, release a national functional zoning map and catalogs of major agricultural production zones and key ecosystem service zones, and draw up and implement provincial-level plans for marine functional zoning. We will carry out trials for spatial planning at provincial level and conduct research on establishing a long-term monitoring and early-warning system for resource and environmental carrying capacity.

2) We will use energy and resources more efficiently. We will release the 2030 strategy for revolutionizing energy generation and consumption, push forward the transformation and development of the energy sector, and exercise control over both the total amount and intensity of energy consumption. In order to continue the dynamic development of renewable energy, we will work to address the issue of idle capacity in water, wind, and solar power by increasing the capacity of power grids to absorb electricity generated from renewable energy sources. We will actively develop distributed energy and smart grids, and apply an energy-saving, low-carbon approach to the management of power distribution. In order to expedite the growth of industries in relation to energy conservation, environmental protection, and ecological improvement, we will carry out green manufacturing programs, support green and clean production along with a comprehensive eco-friendly approach to the use of resources, and carry out major energy conservation and environmental protection projects. We will promote circular operations within industrial parks, a circular approach to constructing industrial systems, and pilot and demonstration projects for a circular economy. A plan for increasing the energy efficiency of buildings and promote the construction of green buildings will be implemented throughout the construction industry chain. We will take comprehensive measures to build a water-conserving society, and promote efficient and intensive use of land.

3) We will improve the quality of the environment and ecosystems. We will fully implement the action plans for preventing and controlling air and water pollution, release and implement an action plan for addressing soil pollution, and remain persistent in the fight against smog and water pollution. We will strictly control the expansion of coal production capacity and the capacity of coal-fired power plants, ensure cleaner use of coal in non-industrial sectors, expand the use of electricity to replace less environmentally friendly forms of energy and promote the use of electricity generated from renewable energy sources, and move faster to upgrade coal-fired power plants and the quality of fuel across the board. Third party governance will be introduced in the treatment of environmental pollution. We will launch a new round of efforts to return marginal cultivated land to forest or grassland, and intensify efforts to carry out the national afforestation project. We will move steadily forward with the establishment of a system of national parks. We will continue to advance the comprehensive governance of the water environment in key water basins and the environment in key areas, such as those at the source of dust storms affecting Beijing and Tianjin, areas afflicted by the spread of stony deserts, and areas where grazing land has been returned to grassland. A major biodiversity protection project will be launched. We will step up the ecological conservation of lakes and wetlands and establish ecological red lines for forests, grasslands, wetlands and the ocean. We will improve the mechanisms for compensating ecological conservation efforts. We will ensure the implementation of environmental impact assessment for strategies and plans and enforce stricter environmental standards for project approval. We will carry out ecological rehabilitation in cities to restore and improve their ecological functions. Pilot programs will be launched to place county- and prefecture-level environmental monitoring, inspection, and law enforcement bodies directly under the jurisdiction of provincial-level environmental bodies.

4) We will promote low-carbon development. We will continue to push forward pilot and demonstration programs for low-carbon development, move faster to create a national market for carbon emission rights trading, and formulate a complete set of rules and regulations concerning such trading and its oversight. We will constructively participate in international negotiations, work to ensure the proper design and implementation of follow-up mechanisms for the agreement reached at the 2015 United Nations Climate Change Conference in Paris, play an active role in guiding the rule-making process for global climate governance, and continue to strengthen South-South cooperation on climate change.

Box 17: Green and Low-Carbon Development

8. Improving the performance of the open economy

In pursuing open development, we will improve the plan for regional opening up, increase outbound investment and international cooperation, work to optimize imports and exports, actively utilize foreign capital, cultivate new strengths to give us a competitive edge internationally, and play an effective role in global economic governance.

1) We will ensure the successful implementation of the Silk Road Economic Belt and the 21st Century Maritime Silk Road Initiative. We will increase the cohesion between the development strategy of China and those of other countries along the routes, steadily carry out signature projects aimed at strengthening connectivity and increasing energy and resource cooperation, build up a reserve of major projects for the Belt and Road Initiative, and set up a number of patterns for bilateral and multilateral cooperation. We will actively advance the development of international economic cooperation corridors, such as the China-Mongolia-Russia corridor and the China-Indochina Peninsula corridor. We will coordinate the development of China-Europe freight train routes, simplify customs clearance procedures along the lines, and expedite the building of international logistics gateways. We will steadily construct strategic maritime hubs and ensure that maritime trade routes are unobstructed. Information platforms will be developed, such as the official website of the Belt and Road Initiative. We will actively encourage Chinese culture and traditional Chinese medicine to extend their reach overseas, further develop and open up border areas, upgrade both border and cross-border economic cooperation zones, and enhance international and regional cooperation with neighboring countries.

2) We will expand international cooperation on industrial capacity and equipment manufacturing. We will create a project reserve for industrial-capacity cooperation based on key industries and countries. We will set up a sound mechanism for connecting our provinces, regions and leading enterprises with key countries, and improve the system for managing major risks. We will move faster to make arrangements for bilateral industrial-capacity cooperation and make full use of multilateral platforms to promote effective cooperation; we will actively engage in cooperation with developed countries on the third market, so as to support Chinese technologies, equipment, standards, and services in “going global” . We will improve related fiscal and financial policies, set up outbound RMB cooperative funds and bilateral and multilateral industrial-capacity cooperation funds, and encourage cooperation between financial institutions and enterprises in this area. In 2016, China’ s non-financial outward direct investment is projected to be approximately US$130 billion, an increase of around 10%.

3) We will promote the steady growth and structural adjustment of foreign trade. We will effectively apply the policy of export tax rebates. We will put into action the policies and measures for reviewing and regulating fees related to imports and exports, strictly enforce the system of lists and catalogs of fees related to foreign trade, and accelerate the building of the Single Window System and the integration of customs clearance procedures to enhance trade facilitation. We will encourage processing trade to move to the central and western regions and to extend toward the medium-high end of the industry chain. We will encourage the development of new business models for foreign trade, push forward the development of integrated pilot zones for cross-border E-commerce while also expanding the scope of the pilot scheme, and support the building of overseas storehouses and exhibition centers. We will promote the integrated development of trade in goods and in services and vigorously support the export of services in finance, insurance, logistics, and maintenance. We will adopt a more active import policy to support the import of advanced technology and equipment and important parts and components; increase the reserve of important energy and resources; and appropriately increase the import of consumer goods. We will deepen bilateral and multilateral economic and trade cooperation, build an international network of high-standard free trade areas, step up negotiations on the Regional Comprehensive Economic Partnership Agreement, accelerate negotiations on free trade such as those on the China-Japan-RoK Free Trade Area, and facilitate negotiations on investment agreements with the United States and the European Union.

4) We will use foreign capital more effectively. We will continue to improve the business environment. We will advance reform to introduce a negative list in managing foreign investment. The service sector will be further opened up in areas such as finance, education, elderly care, culture, telecommunications, the Internet, trade, and logistics; the manufacturing sector will also be opened wider and direct foreign investments will be encouraged toward the high end of traditional industries, strategic emerging industries, and modern services. The catalog of industries with local strengths in central and western regions for foreign investment will be updated to support the relocation of foreign-invested industries to these regions. We will complete a timely review of and promote the experiences from pilot free trade zones and continue to expand the pilot scheme to other regions. We will promote the innovation-driven growth of development zones and update the catalog of development zones that have been approved and published by the state. Reforms of the foreign investment management system and foreign debt management will be deepened, and the system for carrying out security reviews of foreign investments will be improved. Non-financial foreign direct investment is expected to be approximately US$128 billion in 2016.

9. Working to safeguard and improve living standards

In pursuing shared development, we will give greater prominence to improving people’ s standard of living, take strong and targeted measures to reduce poverty, deepen reform and innovation in key areas concerning public services, and make every effort to ensure the supply of basic public services.

1) We will move forward with targeted measures to fight poverty across the board. We will support development and poverty reduction in contiguous poor areas, launch the action plan for revitalizing the key old revolutionary base areas where poverty is an issue, and speed up the development of all old revolutionary base areas. We will also boost support for alleviating poverty in border areas and areas with concentrations of ethnic minorities. We will work hard to improve infrastructure and basic public services in poor areas, with a priority on roads, water supply, power, and Internet access. A great deal of effort will be devoted to ensuring key poverty alleviation programs are implemented. We will continue to support the development of Xinjiang, Tibet, and the Tibetan ethnic areas in Sichuan, Yunnan, Gansu, and Qinghai provinces, increasing central government support for these areas, and scaling up one-to-one assistance programs.

Box 18: Key Poverty Alleviation Programs

2) We will provide employment support to help meet the people’ s basic needs. With a view to providing coordinated support to priority groups, such as college graduates, migrant workers, and those having difficulty finding employment, to help them start a business or find employment, we will work to properly resettle workers laid off due to the phasing-out of excess production capacity, carry out the program for promoting the employment of college graduates and providing them with business start-up guidance, flesh out the public service system for employment and business start-ups, and deepen the implementation of the pilot program for supporting rural migrant workers in starting businesses in their hometowns. We will strengthen community-level employment and start-up service facilities and increase employment assistance to ensure people’ s basic needs are met. We will fully leverage the role of strategic emerging industries, new forms of business, and major state projects in encouraging employment and business start-ups, while fostering new sources of job creation. We will also promote flexible employment and non-standard employment.

3) We will strengthen the key links of social security. We will release an overall plan for old-age insurance reform, further raise basic pension benefits for retirees, and work to place the social pooling accounts of workers’ old-age insurance under unified national management. We will formulate methods for diverting a portion of state capital into social security funds. We will comprehensively advance the integration of the basic medical insurance schemes for rural and non-working urban residents, raise the annual government subsidy for these two schemes to 420 yuan per person, accelerate our work to enable people to settle medical bills incurred in any locality via their basic medical insurance accounts, and increase the cohesion between basic medical insurance and other schemes, such as major disease insurance, medical assistance, and assistance for emergency disease treatment. We will coordinate the development of social assistance systems for urban and rural residents and improve the system for providing services and insurance to people with disabilities and children living in difficult conditions. We will continue to build government-subsidized housing in urban areas and improve the housing conditions of both low- and middle-income groups and people facing difficulties. In 2016, we will renovate six million units of housing in run-down urban areas and 3.14 million dilapidated rural houses.

4) We will see to it that all sectors of society become more involved in providing public services and more people benefit from them. We will establish a national list of basic public services, carry out the national project to upgrade services for the general population, and improve facilities for compulsory education, medical and health care, public cultural services, elderly care, community sports, care and nursing for people with disabilities, social welfare, and basic funeral and interment services. We will increase the provision of public-interest pre-school education, refine the distribution of schools in rural areas, and move faster to help public schools providing compulsory education in urban and rural areas meet standards and to make senior secondary education universal. Some regular institutions of higher learning in developed regions will be selected to implement the program for setting an enrollment quota for students from central and western regions, and we will carry out the program for regular institutions of higher learning to enroll a set number of students from poor areas with pre-conditions for employment after graduation; these programs will help to ensure students from rural and poor areas are unobstructed in continuing their education. We will improve the modern vocational education system and launch programs to integrate vocational education with industry. We will ensure the quality of teaching and the capacity for innovation within institutions of higher learning are improved, and encourage regular undergraduate colleges to shift their focus toward providing applied education if they are in a position to do so. We will see to it that the education resources of schools and educational institutions of all types and at all levels are made available for the provision of urban and rural community-level education as well as education for the elderly. In 2016, regular institutions of higher learning are projected to enroll 7.05 million undergraduate students and 818,000 graduate students. We will speed up the development of the program to ensure a healthy population, reinforce weak areas in the medical services system, better allocate medical and health care resources, strengthen the training of general practitioners and pediatricians, and accelerate the development of tiered medical diagnosis and treatment. We will fully implement the policy for allowing one couple to have two children, enhance the system for providing maternal and child care and related support policies, and promote balanced growth of the population. We will actively develop traditional Chinese medicine and the medicine of ethnic minorities. We will move forward with the trials for comprehensive reform of the elderly services. We will improve basic public service policies so as to facilitate better integration of the migrant population in cities. To promote socialist cultural and ethical progress, we will accelerate cultural reform and development; encourage philosophy and the social sciences to flourish; and develop literature, art, the press, publishing, radio, television, film, and archives. We will develop new types of Chinese-style think tanks. We will accelerate the development of sports such as soccer and winter sports.

We will deepen cooperation with Hong Kong and Macao in the areas of investment, the economy, and trade; put into practice the agreement on trade in services with Hong Kong and Macao under the framework of Closer Economic Partnership Arrangements (CEPA); open the country’ s interior wider to Hong Kong and Macao; and comprehensively upgrade the CEPA. We will support Hong Kong and Macao in participating in the development of the Belt and Road Initiative. We will move faster to develop the platforms in Qianhai, Nansha, and Hengqin among others for cooperation between Guangdong and Hong Kong and Macao, and deepen regional cooperation in the pan-Pearl River Delta. We will provide further support for Macao in its efforts to build a platform to facilitate business and trade cooperation between China and Portuguese language countries and appropriately diversify its economy. We will continue to promote the development of cross-Straits economic and trade cooperation to benefit the people on both sides of the Taiwan Straits.

Fellow Deputies,

Accomplishing the work for economic and social development in this first year of the 13th Five-Year Plan 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 Theory of Three Represents, and the Scientific Outlook on Development as our guide, and fully implement the guidelines from General Secretary Xi Jinping’s major political addresses. We will willingly accept the oversight of the NPC, and seek comments and suggestions from the CPPCC National Committee with an open mind. Let us pool together our hearts and our energy to overcome the difficulties ahead, and work with creativity to ensure a good start to the 13th Five-Year Plan and sustain steady and sound economic and social development.

Tables and Figures

1. Performance of the Main Targets in the 2015 Plan for National Economic and Social Development

2. The Primary, Secondary, and The Tertiary Industries as a Percentage of GDP

3. Urban Jobs Newly Created

4. Non-Financial Inward and Outward Foreign Direct Investment

5. Grain Output

6. Rate of Decline in Energy Consumption per Unit of GDP

7. Increases in Urban and Rural Incomes and the Ratio of Urban Income to Rural Income

8. Urban Government-subsidized Housing Projects and Renovation of Dilapidated Rural Houses