Fellow Deputies,
The National Development and Reform Commission has been entrusted by the State Council to report on the implementation of the 2006 plan for national economic and social development and on the 2007 draft plan for national economic and social development for your deliberation and approval at the Fifth Session of the Tenth National People's Congress (NPC), and also for comments and suggestions from members of the National Committee of the Chinese People's Political Consultative Conference (CPPCC).
I. Implementation of the 2006 Plan for National Economic and Social Development
Under the leadership of the Communist Party of China (CPC), the people of all our ethnic groups in 2006 diligently put into practice major strategic concepts of the Scientific Outlook on Development and building a harmonious socialist society, followed the plan for national economic and social development adopted at the Fourth Session of the Tenth National People's Congress, and accelerated reform and opening up and the modernization drive, resulting in improved conditions and environment for development, a better growth momentum and an overall good start to the Eleventh Five-Year Plan. We took another solid step toward the magnificent goal of building a moderately prosperous society in all respects.
1. The national economy maintained its development momentum, characterized by rapid growth, strong performance and relatively low prices.
Economic growth was fast yet steady. China's GDP for the year reached 20.94 trillion yuan, up 10.7% from the year before. Economic development became more stable, with only minor fluctuations in quarterly and annual GDP growth rates. The consumer price index rose by 1.5% during the year. Although economic growth rate has remained at or slightly above 10% for four consecutive years, price rises have been relatively slow and stable, a situation rarely witnessed in the history of China's development.
The economy performed well. Total government revenue for 2006 was 3.93 trillion yuan, an increase of 24.3%. Large industrial enterprises generated 1.8784 trillion yuan in profits, up 31%. Energy consumption per unit of GDP fell by 1.23%, which is the first drop since 2003. Water consumption per unit of the added value of industry dropped by 9%.
Figure 1.GDP Growth
Prominent difficulties and problems affecting economic performance were alleviated. Investment growth declined. Total fixed asset investment nationwide increased by 24% for the year, a decrease of 5.8 percentage points from the first half of 2006 and 2 percentage points from 2005. Growth of the money supply and credit slowed. At the end of 2006, the broad money supply (M2) had increased by 16.9% compared with 2005, representing a decrease of 2.1 percentage points from the May-end level and 0.6 percentage points less than the figure for the same period of the previous year. The pressure on tight supplies of coal and electricity and on the overloaded transportation system eased noticeably. Stored coal directly supplied to power plants reached 24.11 million tons at the end of 2006, indicating sufficient supply; installed power-generating capacity increased by 100 million kilowatts; electricity generated annually reached 2.8344 trillion kilowatt-hours, up 13.4%; the number of power lines affected by power outages plus the number of outages was down 97% from the year before, and the total power loss caused by outages was down by 82%; and transportation facilities proved adequate to meet transport demand for grain, fertilizer and other key materials.
2. Steady progress was made in building a new socialist countryside.
Policies to favor farmers were improved. The agricultural tax and tax on agricultural specialties were abolished across the country. This was in addition to other previously rescinded agriculture-related taxes and charges, including the butchery tax and animal husbandry tax, thereby relieving the financial burden on farmers by about 125 billion yuan each year. We provided grain farmers with direct subsidies, subsidies for growing superior varieties of crops and purchasing machinery and tools as well as general direct subsidies for agricultural supplies. Total subsidies given out last year exceeded 30 billion yuan. We also increased transfer payments to major grain-producing counties and those with limited financial resources, granting a total of 23.5 billion yuan in rewards and subsidies. The imposition of a minimum grain purchase price was extended from rice to include wheat. Compensation for the expropriation of farmland for large and medium-sized water conservancy and hydroelectric projects was also substantially increased.
Investment to support agriculture continued to increase. A total of 339.7 billion yuan from the central government (excluding12 billion yuan of general direct subsidies to grain growers deriving from special surcharges on oil sales) was spent on agriculture, rural areas and farmers, a year-on-year increase of 42.2 billion yuan. Working and living conditions in rural areas were improved. A total of 6 billion yuan from the central government, triple the amount for the previous year, along with 6.9 billion yuan from local governments was spent on safe drinking water projects in the countryside, benefiting 28.97 million rural residents. The central government also invested 2.5 billion yuan, a year-on-year increase of 150%, and local governments invested 1.56 billion yuan in building rural methane facilities to serve an additional 4.5 million families. In addition, 19 billion yuan from the central government and 24 billion yuan from local governments were invested in the rural road upgrade project, rebuilding and extending 120,000 kilometers of asphalt or cement roads to connect more townships and villages. We encouraged retailers to open stores in more townships and villages, thus setting up more than 100,000 stores in the countryside.
Agricultural structure was further improved. Grain acreage rose by 1.1 million hectares from the previous year to reach 105.38 million hectares. Once again, we had a rich grain harvest with total output amounting to 497.46 million tons, 13.44 million tons more than the year before. High-quality special wheat acreage accounted for 55.2% of China's total wheat acreage and the acreage of high-quality rice accounted for 69.1% of total rice acreage, up6 percentage points and 4 percentage points year-on-year respectively. Cotton and sugar output increased by 17.8% and 16.2%respectively, and the output of meat, milk and aquatic products increased by 4.6%, 18% and 2.8% respectively.
Figure 2.Safe Drinking Water Projects in the Countryside
Figure 3.Rural Methane Facilities
3. Improvement was made in economic restructuring.
Industrial restructuring was accelerated. Total added value of large high-tech enterprises rose by 18.7%, 2.1 percentage points higher than the average for all large industrial enterprises. A significant breakthrough was made in the independent manufacture of key equipment including complete sets of hot tandem mills for large steel sheets and the air-cooling system for large power stations. Further progress was made in restructuring industries with excess production capacity. A number of backward production facilities were shut down in accordance with the law. For example, in the steel industry, a number of smaller blast furnaces with a capacity under 100 cubic meters and small converters with a production capacity under 15 tons were closed down. All aluminum Soderberg cells were eliminated. Most wet-processing kilns for making cement have now been shut down or demolished, increasing the proportion of new dry-process cement to over 50% of total cement output. In the coal sector, a total of 5,931 smaller mines were closed down, eliminating backward facilities with total production capacity of 110 million tons that did not meet safety requirements or were damaging to resources. Figure 4.Added Value of High-tech Enterprises Since 2003
Major strides were made in the field of independent innovation. Detailed provisions for the implementation of policies to support independent innovation were released. Preliminary deliberations were launched for 16 major science and technology projects. The central and local governments earmarked 126.038 billion yuan for science and technology, a year-on-year increase of 26.2%. National engineering research centers for projects such as medical ultrasound and fuel cells were established, and technology centers of 92 more enterprises received state recognition. A pilot project to nurture the first group of innovation-based enterprises was launched. Major innovation results were achieved in the demonstration project of the next-generation Internet and the development and manufacture of the Goodson-2 general purpose high-performance microprocessor chip. The Experimental Advanced Super conducting Tokamak, the first of its kind in the world, was developed.
The service sector enjoyed steady development. Its scale continued to expand, with a total added value of 8.2703 trillion yuan, an increase of 10.3%. Its structure and service quality were also improved. Transport capacity of the national transportation system was notably increased, evidenced by the following. An additional 93,700 kilometers of highways were built, including 4,325 kilometers of expressways; newly built railways opened to traffic totaled 1,605 kilometers, and double-track railways 705 kilometers; 252 berths were added or expanded at seaports, including 144 deepwater berths catering to tonnage exceeding 10,000; renovation and expansion work at Capital Airport of Beijing and Pudong Airport of Shanghai progressed smoothly; and five branch-line airports in the middle and western parts of the country, including Nyingchi Airport in the Tibet Autonomous Region, were put into operation. Development of service industries related to business and production such as logistics, banking, insurance and information services was accelerated. A variety of new businesses and new products emerged in the consumer service industry.
Fresh achievements were made in balancing regional development. Formulation of the plan for the large-scale development of the western region during the Eleventh Five-Year Plan period was completed, and 41% of investment funds from the central government budget and from the sale of treasury bonds for the year were spent in the western region. Construction was started on all 12 key projects designated early last year. Industries taking advantage of local characteristics and strengths enjoyed accelerated development, progress in returning farmland to forests was consolidated and pilot projects to promote subsistence grain farming in the western five provinces and autonomous regions were launched. In northeast China and other old industrial bases, progress was made in trials to transform the economies of cities reliant on natural resources, in addressing the problem of sinkholes in coal mining areas, and in turning shantytowns into proper residential areas and key enterprises strengthened their capacity for independent innovation and their production and manufacturing capacities. Implementation of the strategy for the rejuvenation of the central region was initiated. Guidelines for boosting development of the central region were issued, and support policies were clarified. The eastern region continued to lead development, and rapid progress was made in the trial reforms for comprehensive and sustainable development in the Binhai New Area of Tianjin and the Pudong New Area of Shanghai.
4. Work related to social programs and people's well-being was strengthened.
Progress was made in education development, which is a national priority. The goal of making nine-year compulsory education generally available and basically eliminating illiteracy among young and middle-aged adults was realized in an additional 83 counties. Reform of the mechanism to guarantee funding for compulsory education in rural areas got off to a good start, benefiting 52 million elementary and middle school students in 2006. Each elementary school student paid 140 yuan less on average, and middle school student 180 yuan. A total of 37.3 million students from poor rural families in the central and western regions received free textbooks and 7.8 million rural students living on campus were provided with living allowances. A fund of 4billion yuan from the central government budget was invested to support the building of 2,858 boarding schools and facilities for providing modern distance learning at 85,800 elementary and middle schools. A further 2.85 billion yuan from the central government budget was allocated to fund the construction of 321 practice laboratories for vocational education, 28 demonstration vocational colleges, 478 secondary vocational schools and county-level vocational education centers. The secondary gross enrollment ratio reached 59%, and the tertiary gross enrollment ratio 22%. Further improvement in the public health system and family planning was made last year. Funds totaling 2.7 billion yuan from the sale of treasury bonds and 1.7 billion yuan from local governments were pumped into infrastructure development of 5,436 town and township health clinics and 672 county-level hospitals, Chinese medical hospitals, and maternity and child-care centers. A number of food and drug inspection and supervision facilities were built in the central and western regions with funds from the sale of treasury bonds. A community-based health service network covering all big and medium-sized cities across the country began to take shape. The number of rural residents taking part in the new rural cooperative medical care system now totals 410 million and the coverage rate based on county units has reached 50.7%. The natural population growth rate was 5.28.
Figure 5.Counties Achieving the Goal of Making Nine-year Compulsory Education Generally Available and Basically Eliminating Illiteracy Among Young and Middle-aged Adults Since 2003
Figure 6.Coverage Rate, Based on County Units, of the New Rural Cooperative Medical Care System (Percent)
Culture, tourism and sports enjoyed rapid development. The goal of extending radio and TV coverage to every village with electricity and minimum size of 50 households was completely realized and the project to screen more movies in rural areas progressed smoothly. Steady progress was made in key cultural projects including the second phase of the National Library of China, the second phase of the China Art Gallery and some provincial museums. More emphasis was also placed on the protection of cultural heritage. Number of dodomestic and outbound tourist trips grew by 15% and 11.3% respectively. Infrastructure development for tou