2. Vigorously promoting sound and rapid development of the economy
Thoroughly applying the Scientific Outlook on Development and promoting sound and rapid economic development is a focal point of the work of the Standing Committee. In our work, we focused on major problems in economic and social development, employed a full range of oversight means, strengthened follow-up oversight, made improvements in our work, and improved the legal framework, thereby making the work of the NPC more thorough and dynamic.
First, we carried forward implementation of the major macro-control decisions and arrangements of the Central Committee. In the face of a complicated, volatile international economic situation and serious conflicts and problems hindering domestic economic development last year, the Central Committee sized up the situation and promptly shifted the primary task for macro-control, which had been defined at the beginning of the year to be the prevention of excessively fast economic growth from becoming overheated growth and the prevention of structural price increases from turning into significant inflation, and redefined it to be maintenance of steady and rapid economic growth and curbing price hikes in mid-2008. In response to the rapidly spreading global financial crisis, in November the Central Committee resolutely shifted to a proactive fiscal policy and a moderately easy monetary policy and adopted a series of policies and measures to boost domestic demand and promote economic growth.
In order to ensure proper implementation of the Central Committee's major policies and arrangements, the Standing Committee, in addition to hearing and deliberating the reports on strengthening macro-control in the financial sector and stabilizing prices as originally scheduled, also deliberated and approved the report of the State Council on responding to the global financial crisis and ensuring steady and rapid economic development at its December meeting in response to the latest developments in the global financial crisis. At the meeting, members of the Standing Committee fully affirmed the State Council's work. In addition, they also noted that because the current global financial crisis was spreading and its impact on China's real economy was continuing to widen, the external economic environment for the country's development was worsening by the day. It was also noted that because of insufficient effective demand, some deep-rooted issues and problems in China's economic and social development would also become more serious. This required us to be more aware of potential danger and bring our thinking and actions in line with the Central Committee's analysis and judgment of the situation and its overall work arrangements. It was necessary for us to faithfully follow the guiding principles of the Central Economic Work Conference, transform serious challenges into development opportunities, and change market pressure into an impetus for adjustment. While working to maintain steady and rapid economic development, we needed to concentrate on speeding up transformation of the pattern of economic development and carrying out economic restructuring. Everyone present at the meeting emphasized that the excess production capacity in many industries made it imperative for us to strictly maintain the orientation of policies and investment and avoid low-level, redundant construction and a new round of haphazard urban expansion in implementing the proactive fiscal policy and the moderately easy monetary policy.
To ensure smooth implementation of the proactive fiscal policy, we proposed funding additional investment programs in 2008 from that year's surplus revenue in the central budget in accordance with the relevant provisions of the Budget Law, which had to be reported to the Standing Committee as required by law. We agreed that a certain proportion of the funds should be disbursed before the NPC approves the 2009 central budget in order to ensure adequate funding for key development projects and that when the budget is approved it should be implemented accordingly. We also suggested that the bonds issued for local governments, which need to be approved by the State Council and issued by the Ministry of Finance on their behalf, be incorporated into their budgets and submitted to the people's congress or its standing committee at the corresponding level for approval.
Second, we promoted transformation of the pattern of economic development. Accelerating change in the pattern of economic development and promoting improvement and upgrading of the industrial structure are pressing and major strategic tasks that have an overall bearing on the national economy. The Standing Committee heard and deliberated the State Council's report on the intermediate assessment of the implementation of the Outline of the Eleventh Five-Year Plan at its December meeting. Those present at the meeting fully acknowledged the achievements made, analyzed problems from an objective perspective, and made pertinent suggestions. They noted that the assessment showed satisfactory progress was being made toward most of the targets set forth in the outline and that the outline was being implemented satisfactorily on the whole. However, three of the four indices reflecting the condition of the economic structure - added value of the service sector, employment in the service sector, and R&D expenditures - failed to achieve the expected progress, and two major binding targets - energy consumption per unit of GDP and total emissions of major pollutants - fell far short of the set goals. To a great extent this showed that the pattern of China's economic development had not been transformed fundamentally: industry still holds the dominant position in the industrial structure, exports and investment still play the leading role in the demand structure, and serious problems such as mounting pressure on resources and the environment, increasing difficulty in expanding employment, and insufficient consumption still exist. We proposed that the State Council and relevant departments attach great importance to these problems, accelerate the implementation of the "three transformations" in the pattern of economic development [transformation from relying mainly on investment and exports to relying on a well coordinated combination of consumption, investment and exports, transformation from secondary industry serving as the major driving force to primary, secondary and tertiary industries jointly driving economic growth, and transformation from relying heavily on increased consumption of material resources to relying mainly on advances in science and technology, improvement in the quality of the workforce and innovation in management - Tr.] in accordance with the guiding principles of the Seventeenth Congress, and work harder to fulfill the objectives and tasks set forth in the Outline of the Eleventh Five-Year Plan. The Standing Committee also prodded governments at all levels and other concerned parties to apply the Scientific Outlook on Development and transform the pattern of economic development by enacting the Law to Promote a Circular Economy, revising the Patent Law, hearing and deliberating the State Council's report on preventing and controlling water pollution, and investigating compliance with the Environmental Impact Assessment Law.
Third, we promoted reform and development in rural areas. Doing the work related to agriculture, rural areas and farmers well has an overall bearing on the progress of the cause of the Party and the state. The last Standing Committee made significant achievements in tracking and overseeing these problems over the course of five consecutive years. Last year the Standing Committee heard and deliberated the State Council's report on spurring steady increase in rural incomes and related reports and made important suggestions on how to do a good job in work related to agriculture, rural areas and farmers. It investigated compliance with the Law on Specialized Farmer Cooperatives and acquired an in-depth understanding of the development of all types of specialized farmer cooperatives and the major problems facing them. We called for the implementation of all the policy support stipulated by the law to enable them to play a bigger role in strengthening the organization of farmers and guiding them in competing in domestic and international markets. The oversight by the NPC effectively promoted the building of a new socialist countryside. Thanks to the concerted efforts of the State Council, local governments at all levels and farmers, the growth rate of rural per capita net income reached 8% in 2008 following an annual increase of over 300 yuan or more than 6% over the previous four years running. Both total output and the yield per unit area reached an all-time high in the same year. By the end of 2008, the number of specialized farmer cooperatives nationwide exceeded 110,000, covering over 1.4 million households. The average annual income of rural households that have joined the cooperatives was more than 20% higher than that of those that have not. While fully confirming these achievements, members of the Standing Committee also pointed out that we needed to attach great importance to problems such as the still low overall income level of farmers, the widening income gap between urban and rural residents, the declining comparative returns from agriculture, backward agricultural infrastructure, and new difficulties facing rural workers looking for nonagricultural employment. They also pointed out the need to effectively promote rural reform, significantly increase our funding for agriculture, rural areas and farmers, strictly protect arable land, gradually make the prices of grain and other agricultural products more reasonable, constantly improve financial and technical services to aid agriculture and benefit farmers, support and guide the development of the non-public sector of the economy and rural workers seeking employment in a variety of nonagricultural sectors, maintain steady agricultural development and sustain increase in rural incomes.