Report on the Work of the Government
Delivered at the Second Session of the Twelfth National People’s Congress on March 5, 2014
Li Keqiang, Premier of the State Council
On behalf of the State Council, I now present to you the report on the work of the government for your deliberation, and I welcome comments on my report from the members of the National Committee of the Chinese People’s Political Consultative Conference (CPPCC).
I. Review of Work in 2013
Last year was the first year for this government to perform its functions in accordance with the law, and it had arduous tasks. We faced a complex environment: the world economic recovery was difficult. In China, downward pressure on the economy increased, natural disasters occurred frequently, and there was an array of interrelated problems.
However, the people of all of China’s ethnic groups, under the leadership of the Central Committee of the Communist Party of China (CPC) with Comrade Xi Jinping as General Secretary, confidently met all challenges, strove to overcome difficulties, fully attained the main targets for economic and social development for the year, and made impressive achievements in reform and opening up and in the socialist modernization drive.
– The economy was stable and improved. The gross domestic product (GDP) reached 56.9 trillion yuan, an increase of 7.7% over the previous year. The rise in the consumer price index (CPI) was kept at 2.6%. The registered urban unemployment rate was kept at 4.1% and 13.1 million urban jobs were created, an all-time high. Total imports and exports exceeded US$4 trillion, reaching a new high.
– Personal income continued to rise, and economic performance continued to improve. The per capita disposable income of urban residents rose by 7% in real terms, and the per capita net income of rural residents rose by 9.3% in real terms. The number of rural people living in poverty was reduced by 16.5 million and the urban-rural income gap continued to narrow. The profits of industrial enterprises with annual revenue of 20 million yuan or more from their main business operations rose by 12.2%. Government revenue increased by 10.1%.
– Progress was achieved in adjusting the economic structure. Grain output exceeded 600 million metric tons, increasing for the tenth consecutive year. The value-added of the service sector accounted for 46.1% of GDP, surpassing secondary industry for the first time. The proportion of the gross regional product of the central and western regions to China’s GDP continued to rise, and development in different regions became better balanced. China’s total electricity consumption increased by 7.5%, and the volume of freight transport rose by 9.9%.
– Social programs developed vigorously. Progress was made in education, science and technology, culture, and health. The Shenzhou-10 spacecraft was sent into orbit. The Chang’e-3 lunar lander successfully landed on the moon. The submersible Jiaolong broke the record for manned deep-sea dives. All this shows that the Chinese people definitely have the ability and wisdom to achieve the objective of making the country more innovative.
In the last year, we met more difficulties but delivered a better performance than expected. The economy and society developed both quantitatively and qualitatively, thus laying a good foundation for future development. These achievements encourage us to forge ahead and make further progress.
Last year, we adhered to the general work guideline of making progress while maintaining stability. We worked to maintain stable growth, make structural adjustments and carry out reform in a holistic way. We ensured that the government’s macro policies are stable, micro policies are flexible and social policies meet people’s basic needs. We improved the ways of exercising macro-control and adopted measures with both short-term and long-term benefits in mind. We strove to break new ground, improve quality, and make progress while ensuring stability. All our work got off to a good start.
First, we deepened reform and opening up, invigorated the market, and stimulated internal impetus to growth. In the face of complex international and domestic developments and difficult choices in macro-control, we endeavored to resolve deep-seated problems and difficulties, took reform and opening up as the fundamental way to advance development, and gave full rein to both the invisible hand of the market and the visible hand of the government to promote steady economic growth.
Taking government reform as our starting point, we made accelerating the transformation of government functions, streamlining administration and delegating more power to lower-level governments the top priority of this government.
Reform of State Council bodies was carried out in an orderly manner. We abolished or delegated to lower-level governments 416 items previously subject to State Council review and approval in batches, revised the list of investment projects requiring government review and approval, and carried forward reform of the business registration system.
Local governments actively transformed their functions and reformed their departments, and greatly reduced the matters requiring their review and approval. The pilot project to replace business tax with value-added tax (VAT) was expanded, and 348 administrative fees were either canceled or exempted, thus reducing the burden on businesses by more than 150 billion yuan.
All this further improved the market environment and invigorated businesses. The number of newly registered businesses increased by 27.6% nationwide. Private investment increased to 63% of the country’s total investment. Interest rate controls on loans were completely lifted. A trial on implementing the National Equities and Exchange Quotations was carried out nationwide. Unified registration of immovable property was launched. The reform greatly invigorated the market and stimulated development and social creativity, and boosted our efforts to streamline administration and delegate more power to lower-level governments.
We deepened reform endeavors. The China (Shanghai) Pilot Free Trade Zone was established and the management model of pre-establishment national treatment (PENT) with a negative list was introduced. The vision of establishing a Silk Road economic belt and a 21st century maritime Silk Road was put forward. The China-ASEAN Free Trade Zone was upgraded. Free trade agreements were respectively signed with Switzerland and Iceland.
We implemented the policy to keep increases in foreign trade stable and improved customs, inspection, quarantine and other supervision and control services. Major trade disputes over anti-dumping and countervailing duties on Chinese products, such as photovoltaic solar products, were successfully resolved. We marketed China’s high-speed rail and nuclear power technologies and equipment on the international market. China’s outbound investment increased significantly. The number of Chinese tourists going overseas reached close to 100 million. The sustained progress of opening up created more space for China’s development.
Second, we improved our thinking on and ways of conducting macro-control and ensured that the economy performed within a proper range. In the face of economic fluctuations, we maintained confidence, and stressed the need to maintain steady growth and ensure that employment does not fall below the prescribed minimum level and that inflation does not rise above the projected level. As the economic performance remained within the proper range, we concentrated our efforts on improving the growth model and making structural adjustments by unswervingly following the underlying principles of our macro-control policy. This enhanced public confidence in the market and kept expectations stable.
In the first half of last year, China’s exports fluctuated drastically, the economic growth rate continued to decline, central government revenue registered negative growth for the first time in many years, and the inter-bank offered rate for lending rose sharply. There was overseas speculation that China’s economy would have a “hard landing.”
In response to all this, we adhered to a proactive fiscal policy and a prudent monetary policy. We did not adopt short-term stimulus measures, increase the deficit or issue excessive currency. Instead, we increased effective supply, unleashed potential demand, confidently dealt with short-term market fluctuations, and kept economic activities from sliding out of the proper range. All these efforts reassured the market and played a vital role in sustaining steady economic growth. Last year, the deficit was kept within the budgeted range and the broad money supply (M2) increased by 13.6%, well within the target range.
While keeping macroeconomic policy stable, we made good use of both existing and additional monetary and financial resources. We improved the structure of budgetary expenditures and integrated and cut special transfer payments. The regular expenditures of central Party and government departments and public institutions were cut by 5%, and the regular expenditures of local governments were also reduced. The money saved was used to improve people’s lives and grow the economy. Over six million small businesses with low profits benefited from tax breaks. We got a clear picture of total government debt in the whole country through auditing. We tightened financial supervision and liquidity management, thus ensuring sound financial operations.
Third, we focused on adjusting the economic structure and raising the quality and returns of development. To address structural problems that hinder development, we strove to take well-targeted steps and used both the market and differential policies to maintain steady growth while upgrading the economic structure. And we also promoted industrial transformation in the course of carrying out innovation-driven development, thereby raising the quality and returns of development, promoting industrial upgrading and creating conditions for sustaining long-term development.
The foundation of agriculture was consolidated and strengthened. We carried out integrated and comprehensive pilot reforms to modernize agriculture and supported the development of diversified and large-scale farming. Reinforcement of 15,000 small reservoirs was completed. More than 63 million additional rural people gained access to safe drinking water. Ecological conservation and development were strengthened, and China’s forest coverage increased to 21.6% of the total land area.
Adjustment of the industrial structure was accelerated. We encouraged the development of the service sector, and supported the development of strategic emerging industries. The 4G mobile communications system was put into commercial operation. We worked actively to resolve the serious problem of excess production capacity in some industries. We tried hard to conserve energy, reduce emissions and prevent and control pollution. Energy intensity was cut by 3.7%, and emissions of sulfur dioxide and chemical oxygen demand decreased by 3.5% and 2.9%, respectively.
Infrastructure was strengthened. The first phase of the eastern route of the South-to-North Water Diversion Project was put into operation ahead of plan, and the main part of the first phase of the central route was completed as planned. Underground pipe networks and other urban infrastructure were improved. Oil, natural gas and electric power networks were expanded, and electricity generated from non-fossil energy amounted to 22.3% of the total electricity output. Civil aviation, water transport, information and postal service networks were improved. The total length of expressways and railways in service both exceeded 100,000 kilometers, with the length of high-speed railways in service reaching 11,000 kilometers, ranking first in the world.
We continued to pursue innovation-driven development. China’s R&D spending accounted for over 2% of its GDP. We deepened reform of the science and technology management system and implemented knowledge and technology innovation projects. Major breakthroughs were made in a number of key technologies, such as the building of supercomputers and smart robots and the cultivation of super-hybrid rice.
Fourth, we ensured and improved people’s wellbeing and upheld social fairness and justice. At a time when government expenditures exceeded government revenue by a large amount, we took improving people’s wellbeing as the starting point and goal of our work, gave high priority to improving the relevant systems, ensured that people’s basic living needs are met, and promoted the development of social programs.
We ensured that the people have access to basic daily necessities. We implemented the program for promoting employment of university graduates, thus enabling the vast majority of new college graduates to find jobs. We improved employment services and vocational skills training for rural migrant workers, and provided employment assistance to urban residents having difficulties in finding jobs. We improved the systems of social aid and old-age insurance. Subsistence allowances for urban and rural residents were raised by 13.1% and 17.7% respectively, and basic pension benefits for enterprise retirees were increased by 10%. Construction of 6.66 million government-subsidized housing units was started, and 5.44 million such housing units were basically completed. Thanks to these efforts, over ten million people with housing difficulties moved into new homes.
We promoted education development and reform. We launched the project to alleviate poverty through education and continued to implement the plan to improve poorly built and low performing rural schools providing compulsory education. The project to improve nutrition of rural students covered 32 million students, and living allowances were issued to rural teachers in contiguous poor areas. The number of students from poor rural areas who were enrolled by key colleges and universities increased by 8.5% over the previous year.
We deepened reform of the medical and health care systems. The basic medical insurance system now covers all the population in general, and the per capita government subsidy for rural and urban residents covered by this system increased to 280 yuan. The system of using basic medicines was implemented in over 80% of village clinics. Pilot programs of medical insurance covering major diseases were carried out in 28 provincial-level administrative areas. A trial project was launched to provide emergency assistance for disease treatment. We comprehensively implemented the national project to provide basic public health services. Six million rural women received free pre-pregnancy checkups.
We promoted the sound development of the cultural sector. A number of high-quality cultural works were produced, and more public cultural facilities were opened free of charge. We deepened reform of the cultural management system and developed the market for cultural products. The added value of the culture industry increased by over 15%. We improved the national fitness service system, and successfully held the Twelfth National Games in an economic way.
Fifth, we improved social governance and maintained social harmony and stability. In the face of natural disasters and other emergencies, we worked in an orderly and efficient way and in accordance with laws and regulations, put people first, and responded in a well-planned way. We both coped with emergencies effectively and explored how to set up new mechanisms to improve social governance.
Last year, several severe natural disasters occurred in China, including earthquakes in Lushan, Sichuan Province, and in Min and Zhang counties, Gansu Province; floods in the Heilong, Songhua and Nen river areas; high temperatures and drought in southern China; and ferocious typhoons in coastal areas. The transmission of avian flu to humans also occurred. We improved the emergency response and disaster relief mechanism based on separate responsibilities for central and local governments and close coordination between them. With the central government coordinating overall aid and assistance and local governments in the affected areas exercising direct relief management, people’s lives and property received the best possible protection.
Workplace safety and market oversight were strengthened. We improved relevant mechanisms, conducted thorough investigations into major workplace accidents and held those involved accountable. As a result, serious and major work-related accidents decreased by 16.9%. We merged food and drug oversight agencies, carried out a campaign to improve food and drug safety, exercised strict oversight over the quality of infant formula in accordance with drug supervision regulations, and strove to ensure that people have access to safe food and drugs.
To enhance law-based governance, the State Council made proposals to the Standing Committee of the National People’s Congress on enacting or revising 34 laws, put forward a bill for abolishing the system of reeducation through labor, and enacted or revised 47 administrative regulations. We improved the system for handling people’s complaints expressed in letters or visits and for mediating disputes, and prevented and defused social conflicts. We cracked down on all kinds of crime in accordance with the law.
We fully implemented the CPC Central Committee’s eight-point decision on improving Party and government conduct, carried out the campaign to heighten awareness of and implement the mass line, firmly opposed formalism, bureaucracy, hedonism and extravagance, and strictly implemented the State Council’s three-point decision on curbing government spending. Spending by central government bodies on official overseas visits, official vehicles, and official hospitality was reduced by 35%, and spending by provincial-level governments on official hospitality decreased by 26%. Efforts to uphold integrity and fight corruption were strengthened and a number of people violating the law or discipline were brought to justice.
Last year, we made new ground in conducting China’s diplomacy. President Xi Jinping and other new state leaders accomplished much through their participation in major multilateral events, including the G20 Leaders Summit, the APEC Economic Leaders Meeting, the Shanghai Cooperation Organization Summit, the BRICS Leaders Meeting, and the East Asian leaders meetings, and their visits to a number of countries.
China entered a new phase in pursuing neighborhood diplomacy. Progress was made in economic diplomacy. China’s exchanges and cooperation with other developing countries reached a new level. China’s relations with other major countries steadily grew through interaction. China played the role of a large responsible country in important international and regional issues and hotspot issues. We resolutely safeguarded China’s sovereignty, territorial integrity and maritime rights and interests. China’s influence in the world further increased.
The achievements we made last year did not come easily. We owe them to the correct leadership of the Party Central Committee with Comrade Xi Jinping as General Secretary as well as to the concerted efforts of the whole Party, the entire armed forces, and the people of all of China’s ethnic groups.
On behalf of the State Council, I express our sincere gratitude to the people of all our ethnic groups and to the democratic parties, people’s organizations and people from all sectors of society. I express our heartfelt appreciation to our compatriots in the Hong Kong and Macao special administrative regions, our Taiwan compatriots, and overseas Chinese. I also express our sincere thanks to foreign governments, international organizations and friends from all over the world that show understanding of and support China in its endeavor to achieve modernization.
In carrying out our work ahead, we will adhere to the thinking and practices that proved effective in last year’s government work and keep improving them.
At the same time, we must be keenly aware of the many difficulties and problems on our road ahead. The main ones are: The foundation for sustaining steady economic growth is not yet firm, and the internal impetus driving growth needs to be increased. Risks and hidden dangers still exist in public finance and banking; some industries are heavily burdened by excess production capacity; and the exercise of macro-controls has become more difficult. Increasing agricultural output and rural incomes is becoming more difficult. Air, water and soil pollution is severe in some places, and the task of conserving energy and reducing emissions remains arduous. There are major structural problems constraining employment. There are still many problems which people are unhappy about in housing, food and drug safety, medical services, old-age services, education, income distribution, land expropriation and resettlement, and public order. Serious and major industrial accidents occur frequently. The social credibility system needs to be improved. Some government employees are prone to corruption and some still do not perform their duties with integrity and diligence.
Some of these problems have arisen in the course of development and others have occurred because we have not done our work well enough. The government must first examine itself to identify the causes of these problems and work out ways to resolve them. It must follow people’s wishes in exercising governance. We must firmly bear in mind our duties and mission, increase our sense of vigilance against potential dangers, be eager to take on challenges, work tirelessly and effectively to solve problems, and truly live up to people’s expectations.