Full Text: Report on the Work of the Government

II. The Plan for Work in 2015

China is the largest developing country in the world; it is still in the primary stage of socialism, where it will remain for a long time to come. At this stage, development is of primary importance to China; it is both the basis for and the key to solving every problem we face. In order to defuse problems and risks, avoid falling into the "middle-income trap," and achieve modernization, China must rely on development, and development requires an appropriate growth rate.

At the same time, China's economic development has entered a new normal. Our country is in a crucial period during which challenges need to be overcome and problems need to be resolved. Systemic, institutional, and structural problems have become "tigers in the road" holding up development. Without deepening reform and making economic structural adjustments, we will have a difficult time sustaining steady and sound development.

We must be adamant in pursuing economic development as our central task and make a thorough job of development as the top priority for ensuring the governance and revitalization of the country. We must continue to promote development in a sound and balanced way through reform and speed up the transformation of the growth model so as to achieve quality, efficient, and sustainable development.

At present, the world economy is undergoing profound adjustment, its recovery lacks drive, the influence of geopolitics is increasing, and there are a greater number of uncertainties at play. Promoting growth, creating jobs, and making structural adjustments have become common goals for the international community. With downward pressure on China's economy building and deep-seated problems in development surfacing, the difficulties we are to encounter in the year ahead may be even more formidable than those of last year.

On the other hand, China is still in an important period of strategic opportunity during which great progress can be made in development. Our country's development has enormous potential and is hugely resilient, and we have ample room for growth. Steady progress is being made in the development of new types of industrialization, applications of information technologies, urbanization, and agricultural modernization; the foundation underpinning development is becoming stronger by the day; benefits of reform are being delivered as we speak; and we have gained much experience in conducting macro regulation. We must strengthen our awareness of latent problems while remaining fully confident and taking an active approach to development.

This coming year will be crucial for comprehensively deepening reform, the first year for fully advancing the law-based governance of the country, and a critical year for ensuring steady growth and making structural adjustments. The overall requirements for the government's work this year are as follows:

-- hold high the great banner of socialism with Chinese characteristics;

-- follow the guidance of Deng Xiaoping Theory, the important thought of Three Represents, and the Scientific Outlook on Development;

-- comprehensively implement the guiding principles of the 18th National Party Congress and the third and fourth plenary sessions of the 18th CPC Central Committee;

-- put into practice the guiding principles from General Secretary Xi Jinping's major speeches;

-- act in accordance with the Four-Pronged Comprehensive Strategy;*

-- actively adapt to and guide the new normal in China's economic development;

-- adhere to the general principle of seeking progress while keeping performance stable;

-- ensure that the economy performs within an appropriate range;

-- focus on strengthening the quality and benefits of economic development;

-- give greater priority to transforming the growth model and making structural adjustments;

-- tackle tough problems of reform head on;

-- pursue innovation-driven development;

-- strengthen risk prevention and control;

-- strengthen safeguards for people's standard of living;

-- get the right balance between carrying out reform, pursuing development, and ensuring stability;

-- promote all-round socialist economic, political, cultural, social, and ecological advancement; and

-- achieve steady and sound economic development and ensure social harmony and stability.

Keeping in mind these requirements, we must focus on achieving the dual objectives of maintaining a medium-high rate of growth and moving toward a medium-high level of development. We need to maintain policy continuity and keep expectations stable while moving forward with reform and structural adjustment, and we need to develop twin engines to drive development: popular entrepreneurship and innovation, paired with increased supplies of public goods and services. This will ensure that our growth rate is adjusted without weakening momentum and that growth in quantity is underpinned by greater quality, thereby achieving a better-quality, more efficient, upgraded economy.

We have set the main targets for China's economic and social development for this year as follows:

-- increase the GDP by approximately 7%;

-- keep the increase in the CPI at around 3%;

-- create over ten million jobs in urban areas;

-- ensure that the registered urban unemployment rate does not rise above 4.5%;

-- increase imports and exports by around 6%;

-- achieve a basic balance of payments;

-- ensure that personal incomes increase in step with economic development; and

-- cut energy intensity by 3.1%, and continue to reduce the emissions of major pollutants.

The target growth rate of approximately 7% takes into consideration what is needed and what is possible. This target is both aligned with our goal of finishing building a moderately prosperous society in all respects and is appropriate in terms of the need to grow and upgrade our economy. It is also in keeping with the objective laws of development as well as conditions in China. If China's economy can grow at this rate for a relatively long time, we will secure a more solid material foundation for modernization.

At the same time, the aim of maintaining stable growth is to ensure employment. As the service sector becomes larger, the number of small and micro businesses grows, and the economy gains in size, a growth rate of approximately 7% will ensure ample employment. Local governments need to set targets based on local conditions, be fully motivated to make progress, and tap into their full potential so as to deliver better outcomes.

*The strategy is to make comprehensive moves to:

1) finish building a moderately prosperous society;

2) deepen reform;

3) advance the law-based governance of China; and

4) strengthen Party self-conduct.

To deliver a good performance in the work of the government this year, we need to concentrate on the following three areas:

First, we need to ensure continuity in and make improvements to macroeconomic policies.

We will continue to implement proactive fiscal policy and prudent monetary policy. We will pay greater attention to anticipatory adjustments, fine-tuning, and targeted regulation. We will put both existing and additional financial resources to good use, focusing particularly on strengthening weak spots. We will improve micro-level vitality to underpin macroeconomic stability, explore new ways of achieving supply to boost demand, and balance total supply and demand through structural adjustments to ensure the economy performs within an appropriate range.

Our proactive fiscal policy must sustain the momentum of economic growth and increase economic returns. The government budget deficit for 2015 is projected to be 1.62 trillion yuan, an increase of 270 billion yuan over last year, which means that the deficit to GDP ratio will rise from last year's 2.1% to 2.3%. Of this amount, the central government deficit will account for 1.12 trillion yuan, an increase of 170 billion yuan, and local government deficit will account for 500 billion yuan, an increase of 100 billion yuan. We need to find the right balance between managing debt and maintaining steady growth. We will develop and improve mechanisms for local governments to secure financing through bond issuance. We will allow local governments to issue an appropriate amount of special bonds, ensure continued financing for eligible projects already under construction, and guard against and defuse risks and latent dangers. We will improve the mix of budgetary spending, redouble our efforts to put government funds on hand into use, and strengthen the effectiveness of government spending. We will continue to make structural tax reductions and cut fees across the board so as to further lighten the burden on enterprises, particularly small and micro businesses.

We will pursue prudent and balanced monetary policy. The M2 money supply is forecasted to grow by around 12% in 2015, but the actual growth may be slightly higher than this projection depending on the needs of economic development. We will work to strengthen and improve macro-prudential regulation, adopt a flexible approach in our use of monetary policy tools including open market operations, interest rates, required reserve ratios, and re-lending, and maintain steady growth in the supply of money and credit as well as aggregate financing in the economy. We will speed up the turnover of funds, improve the credit structure, increase the proportion of direct financing to total financing, and reduce the cost of financing, thereby allowing more financial resources to be channeled into the real economy.

Second, we need to maintain a proper balance between ensuring steady growth and making structural adjustments.

In its current stage of development, China has to simultaneously deal with the slowdown in economic growth, make difficult structural adjustments, and absorb the effects of previous economic stimulus policies. As resource-related and environmental constraints grow and costs for labor and other factors of production rise, a model of development that draws on high levels of investment and energy consumption and is heavily driven by quantitative expansion becomes difficult to sustain. We must therefore improve the economic structure while ensuring steady growth. The growth rate must be kept steady to ensure that economic performance is stable, and that employment and personal incomes carry on increasing, thus creating a favorable environment for making structural adjustments and transforming the growth model.

At the same time, structural adjustments must be made to consolidate the foundation for ensuring steady growth. We need to increase research and development spending, raise total factor productivity, improve quality, standards, and brand-building, strengthen the service sector and strategic emerging industries and increase their share of the economy, improve the overall structure of economic growth, and work harder to foster new areas of growth and growth poles. With these efforts, we can ensure that economic upgrading and development reinforce each other.

Third, we need to nurture and hasten the birth of a new force for driving economic and social development.

As the force that has traditionally driven economic growth is weakening, it is imperative that we intensify structural reform, boost efforts to implement the strategy of pursuing innovation-driven development, and upgrade traditional engines while creating new ones for driving development.

We will increase the supply of public goods and services, increase government input in areas like education and health care, and encourage nongovernmental participation to improve the efficiency of supply. This will bolster weak spots and benefit the people, as well as increase demand and promote development.

At the same time, we will also encourage people to start their own businesses and to make innovations, which will not only create more jobs and increase personal incomes, but also improve upwards social mobility and social equity and justice.

China has a population of 1.3 billion and a workforce of 900 million. Our people are hardworking and talented, and there is no limit to their ingenuity. When an abundance of market cells spring into life, they will form a mighty driving force for development, ensuring China's economy remains resilient in spite of the downward pressure on it, and continues to be full of life and dynamism. The government should be bold in imposing a reform on itself so as to leave ample space for the market and society to play their respective roles and level the playing field for fair competition. Individuals and enterprises must have the mettle to promote their business development and make innovations, and our society needs to nurture a culture of entrepreneurship and innovation. In this way, while creating wealth, people will be able to meet their cultural and intellectual needs and realize their full potential in life.

This year is the final year for completing the 12th Five-Year Plan. As we strive to accomplish the tasks and objectives for economic and social development set forth in this plan, we need to formulate the 13th Five-Year Plan, bringing to this work the spirit of reform and innovation and adopting a scientific approach.