III. Major Tasks and Measures for Economic and Social Development in 2009
This year is the 60th anniversary of the founding of New China. It is also a crucial year for dealing with the impact of the global financial crisis, sustaining the country's steady and fairly rapid economic growth, maintaining social harmony and stability, and achieving the goals set forth in the Eleventh Five-Year Plan. We will concentrate on ensuring economic growth. Our basic approach will be to increase domestic demand; our main orientation will be to change the pattern of economic development and adjust the structure of the economy more quickly; we will make deepening reforms in key areas and crucial links and raising the level of the country's open economy into a strong driving force; we will take improving people's lives as our starting point and final goal. We will confront challenges head-on, ease serious conflicts, and promote sound and rapid economic and social development.
1. We will adopt a proactive fiscal policy and an appropriately easy monetary policy and further improve macro control.
We will take reversing the decline in economic growth as the most important goal of macro control. We will make our control more foresighted, responsive and effective to fully encourage economic growth.
We will increase government spending while carrying out structural tax reductions.
1) The central budget deficit and the volume of treasury bonds issued will be increased. The proposed central budget deficit for 2009 is 750 billion yuan, a year-on-year increase of 570 billion yuan, and more treasury bonds will be issued to finance this increase.
2) Tax burden on businesses and individuals will be lowered. We will implement existing preferential tax policies on real estate transactions and on small and medium-sized enterprises and policies on export tax rebates. A total of 100 administrative fees will be either suspended or rescinded.
3) The structure of government expenditures will be improved. More fiscal support will be given to improvement in people's lives, infrastructure development and post-earthquake reconstruction; general expenditures will be strictly controlled, and expenditures on official cars, meetings, receptions for official business and official visits overseas will be reduced. Construction of office buildings for Party and government organs will be strictly controlled.
We will make better use of monetary policy to stimulate economic growth.
1) The total supply of money and credit will be increased by an appropriate amount. A wide range of monetary policy tools will be employed to maintain sufficient liquidity of the banking system. Commercial banks will be guided to appropriately increase their lending, and informal finance will be guided to ensure their healthy development.
2) The credit structure will be improved. Following the policy of encouraging growth in some sectors and discouraging it in others, we will increase credit support for improvement in people's lives, agriculture, rural areas and farmers, major infrastructure development, small and medium-sized enterprises, independent innovation, technological transformation, mergers and reorganizations, energy conservation, pollution reduction, balanced regional development, consumption expansion and post-earthquake reconstruction. In addition, reasonable request of real estate developers for financing will be met.
3) Steady and healthy development of the capital market will be maintained. Capital market infrastructure will be improved to boost investor confidence.
4) Financial regulation and oversight will be strengthened. We will improve financial institutions' ability to manage risks, make progress in developing a security network for the financial system, and guard against systemic risks.
5) The RMB exchange rates will be kept basically stable. The broad money supply (M2) in 2009 will be increased by about 17%.
Fairly rapid growth in investment in fixed assets will be maintained.
1) Government investment will be increased. The central government plans for 1.18 trillion yuan of investment from the fourth quarter of 2008 to the end of 2010, which, with the addition of investment from local governments and nongovernmental sources, will provide funds of about four trillion yuan. The money will be used primarily to speed up development of housing for low-to moderate-income families, projects to improve the well being of rural residents, infrastructure, social programs, environmental protection, economic restructuring and technological upgrading, as well as on post-earthquake reconstruction. In addition to the increased public investment of 104 billion yuan it made at the end of last year to develop housing for low- to moderate-income families and support post-earthquake recovery and reconstruction, the central government is allocating 908 billion yuan for public investment in 2009, an increase of 487.5 billion yuan over last year. In order to make local governments better able to finance related expenditures and increase investment, the State Council approved the issuance of 200 billion yuan of treasury bonds by the Ministry of Finance on their behalf, which will be listed in provincial government budgets.
2) Government investment will be used to guide other types of investment to desirable areas. New channels and areas for nongovernmental investment will be opened. More corporate bonds will be issued. Investment of nongovernmental capital in areas that accord with the state's industrial policy will be encouraged. More non-state funds will be attracted to projects encouraged by the government, especially infrastructure projects for post-earthquake reconstruction.
3) Supervision of investment projects and investment funds will be tightened. Construction procedures will be strictly followed to firmly block a new round of energy-intensive, highly polluting, low-level and redundant projects. Oversight and inspection of the entire construction process on projects funded by the government will be intensified to ensure project quality. Nobody will be allowed to misappropriate, hold back or waste development funds, and all funds will be used effectively. China's total investment in fixed assets will grow by 20% in 2009.
We will work hard to expand consumption, particularly consumer spending.
1) We will do everything possible to increase personal incomes and boost consumption. We will continue to raise general direct subsidies for agricultural supplies, subsidies for superior varieties of crops, and subsidies for the purchase of agricultural machinery and tools, and expand coverage of the subsidies. We will raise basic old-age pensions for enterprise retirees and cost of living allowances for urban and rural residents. We will increase the subsidies and living allowances for members of entitled groups and other eligible people. Personal income from property will also be increased.
2) New growth areas of consumption will be fostered and developed. Purchase of ordinary commodity housing will be encouraged. Purchase of homes for non-investment purpose will be supported. The used home market and the market for rental housing will be standardized and developed. We will implement policies to reduce the vehicle purchase tax and subsidize rural residents' vehicle purchases to stabilize and increase consumer spending on cars and motorcycles. Consumption for community-based services such as retail outlets, property management and domestic service will be strongly developed. Consumption in the areas of tourism, culture, sports and fitness as well as animation and the Internet will be vigorously promoted to meet consumer needs arising from the revision of the schedule of national legal holidays. Development of e-commerce will be accelerated.
3) We will improve the consumption environment and consumption-related policies. We will increase consumer credit, strengthen urban and rural consumption infrastructure, and improve the system of consumer services. The policy to promote the purchase of domestic appliances by rural residents will be carried out throughout the country, and more appliances such as water heaters, computers, air-conditioners, microwave ovens and induction cookers will be available at subsidized prices. We will speed up efforts to encourage retailers to open stores in more townships and towns and expand chain operations in rural areas. Community services and facilities for the convenience of urban residents will be improved. We will tighten oversight and review of prices and charges related to agriculture, enterprises, transportation, education, medical care, drugs and real estate to protect consumers' legitimate rights and interests.
4) Consumer expectations will be improved to increase people's willingness to spend. Regulations and policies restricting consumption will be eliminated. We will increase subsidies for poor people and students from poor families as needed. We will stimulate immediate consumption by allaying people's concerns that increasing consumption will make them unable to meet basic living needs later on. China's retail sales of consumer goods will rise by 14% in 2009. This figure is based on the fact that retail sales of consumer goods have experienced sustained rapid growth in recent years, that we have adopted more, effective policies for stimulating consumption and they are gradually achieving noticeable results, and that prices are projected to rise much less this year, as well as other factors that will influence consumer demand such as greater difficulty in creating jobs and increasing personal income.
We need to do a good job regulating economic activities. We will make full use of the mechanism for coordinating distribution of coal, electricity, petroleum, gas and transport services to ensure their sufficient supplies. We will promptly solve problems relating to the supply and transportation of coal for key areas such as home use, power generation and heating supply. We will effectively allocate electricity, facilitate cross-province trade in power generating capacity and optimize electricity distribution. We will balance supply and demand for refined petroleum products and coordinate their production and transportation with demand. All these measures will enable us to meet the demand for energy in people's lives, public transportation, public utilities and other key areas. We will ensure that sufficient supplies of coal, electricity, petroleum, gas and transport capacity reach disaster-stricken areas and other key areas at crucial times. We will improve emergency response plans and mechanisms, increase reserves of goods and materials for possible emergencies, and work effectively to strengthen the emergency response system.