III. Continuing to Ensure Steady and Rapid Economic
Development
We need to focus on accomplishing the following
four tasks for this year's economic development.
1. Continuing to strengthen and improve macro regulation. In the present
state of economic activities, we cannot slacken our macro regulation. We need to
follow prudent fiscal and monetary policies and better coordinate our
macroeconomic policies this year. We must adhere more closely to the principle
of dealing with different sectors individually and expanding some of them while
contracting others, and emphasize the role of market forces and economic and
legal methods in consolidating and building on our achievements in macro
regulation.
Following a prudent fiscal policy. The central government has followed a
proactive fiscal policy since 1998 to counteract the impact of the Asian
financial crisis and boost weak domestic demand. Time has proven that this
policy is correct and that it has produced remarkable results. However, the
scale of investment in China is now quite large and the amount of funds in the
hands of the general public has increased substantially, making it necessary and
possible for us to shift from an expansive proactive fiscal policy to an
appropriately tight fiscal policy. We will appropriately cut the budget deficit
and the quantity of long-term treasury bonds for development this year. The
deficit in the central budget for 2005 will be 300 billion yuan, 19.8 billion
yuan less than was budgeted in 2004. The central government plans to issue 80
billion yuan worth of long-term treasury bonds, 30 billion yuan less than last
year, while allocations from the 2005 central budget for investment in regular
development project s will be increased by 10 billion yuan. The long-term
treasury bonds issued this year will be used mainly to increase investment in
weak links such as agriculture, rural areas and farmers; social development; and
ecological conservation and environmental protection. The funds will also be
used to develop the western region and rejuvenate Northeast China and other old
industrial bases; to support accelerated development in old revolutionary base
areas, ethnic minority areas, border areas, and poverty-stricken areas; and to
continue support for some on-going bond-financed projects. We need to do our
fiscal and tax work conscientiously. Tax collection and management need to be
tightened in accordance with the law by screening and standardizing all
preferential tax policies and strictly controlling tax reductions and exemptions
to ensure that government revenue rises steadily. Increases in general spending
must be strictly held in check to ensure funding for key projects. We need to
practice frugality and eliminate waste in all our work.
Continuing to follow a prudent monetary policy. We will appropriately control
the supply of money and credit in order to support economic development while
guarding against inflation and financial risks. We will improve financial
regulation by flexibly using a variety of monetary policy instruments. We will
guide financial institutions to optimize their credit structure, to improve
their services, to provide working capital to enterprises that are profitable
and have a ready market for their products, to provide more loans for small and
medium-sized enterprises and for rural areas, and to maintain the amount of
medium- and long-term loans at an appropriate level. To ensure safe, efficient
and stable financial operations, we must enhance supervision of financial
enterprises, vigorously yet prudently deal with all types of financial hazards
and crack down on illegal and criminal financial activities.
Reining in the scale of fixed asset investment. We will continue to closely
monitor the two valves of approval for land use and availability of credit. We
will maintain the strictest land management system by improving policies and
intensifying law enforcement. We will improve city planning and land management,
further rectify the land market, strictly limit transformation of farmland for
use in development projects and appropriately control the scale of urban
development. We will accelerate our work of improving the policies and plans for
key industries and the criteria for their market access. We will work hard to
improve the distribution of investment and guide non-government investment into
areas that are developing poorly. We will continue to regulate economic
activities to further alleviate tight supplies of coal, electricity, petroleum
and transportation.
Vigorously expanding consumer demand. We will implement fiscal, tax,
financial and industrial policies that encourage consumption. Consumption on
credit and other new forms of consumption will be developed steadily. We will
improve the consumption environment, paying particular attention to
strengthening the rural infrastructure, expanding rural markets and stimulating
the distribution of agricultural products. New areas of consumption will be
fostered by such means as expanding the consumption of services. We will guide
consumer expectations and enhance consumer confidence to increase immediate
consumption.
Keeping the overall price level basically stable. We will work hard to keep
the prices of grain and other primary farm products basically stable at a
reasonable level, focusing on curbing the excessively rapid rise in the prices
of the real estate and means of production and appropriately handling the timing
and magnitude of price adjustments for public goods and services. Supervision of
markets and prices will be improved to resolutely put an end to price gouging.
2. Improving our work relating to agriculture, rural areas and farmers.
Solving the problems facing agriculture, rural areas and farmers remains a top
priority of all our work. To adapt to the needs of the new stage of our economic
development, we will implement the principle of industry nurturing agriculture
and cities supporting the countryside and rationally redirect the distribution
of national revenue toward the development of agriculture and rural areas. We
will expand support for this development in a number of ways, with the focus on
expanding overall agricultural production capacity, steadily improving grain
production and constantly increasing rural incomes.
