REPORT ON THE IMPLEMENTATION OF THE 2017 PLAN FOR

NATIONAL ECONOMIC AND SOCIAL DEVELOPMENT AND ON

THE 2018 DRAFT-PLAN FOR NATIONAL ECONOMIC AND

SOCIAL DEVELOPMENT

Delivered at the First Session ef the

Thirteenth National People's Congres.r on March 5, 2018

National Development and Reform Commission

The official version of this report will be released by Xinhua News Agency.

Esteemed Deputies,

The National Development and Reform Commission has been enttusted by the State

Council to deliver this report on the implementation of the 2017 plan and on the 2018 draft

plan for national economic and social development to the First Session of the 13th National

People's Congress (NPC) for your deliberation. It also invites comments from the members of

the National Committee of the Chinese People's Political Consultative Conference (CPPCC).

I. Implementation of the 2017 Plan for

National Economic and Social Development

Last year, in the face of complex and volatile situations at home and abroad, all regions

and departments, under the strong leadership of the Central Committee of the Communist

Party of China (CPC) with Comrade Xi Jinping at its core, continued to strengthen their

consciousness of the need to maintain political integrity, think in big-picture terms, follow the

leadership core, and keep in alignment, and thoroughly studied and implemented Xi Jinping

Thought on Socialism with Chinese Characteristics for the New Era and the guiding principles

from the 19th National Party Congress. In accordance with the arrangements of the Central

Economic Work Conference and the Report on the Work of the Government, we continued

to apply the underlying principle of pursuing progress while ensuring stability, stuck firmly to

the new vision of development, and earnestly implemented the 2017 Plan approved at the

Fifth Session of the 12th NPC, while also acting in line with a review of the Plan by the NPC's

Financial and Economic Affairs Committee. With the focus on improving the quality and

effect of development and pursuing supply-side sttuctural reform as our main task, we made

coordinated moves to maintain stable growth, promote reform, make sttuctural adjustments,

improve living standards, and guard against risks. Economic performance was stable but

strong, sustained good momentum, and surpassed expectations. The main targets and tasks in

economic and social development for the year were accomplished, and implementation of the

2017 Plan was successful overall.

1. We jot11sed on developing new and improved methods of macro n:gulation, and ensured the economy

operated within an appropriate range.

Thanks to the solid strides we made in economic monitoring, forecasting, and early

warning, we were able to correctly grasp the trends and changes in both the international and

domestic economic environments. On the basis of range-based regulation, we strengthened

targeted, well-timed, and precision regulation. We made greater use of a combination of fiscal,

monetary, consumption, investment, and other macro policies, ensured continuity and stability

between these policies, and focused closely on preventing and controlling risks in key areas,

thus ensuring a stable economic performance.

1

1) Economic growth was kept within an appropriate range.

China's gross domestic product (GDP) reached 82.7 ttillion yuan, an increase of6.9% and

in line with our projected target.

Trillion Yuan

25

20

15

10

5

0

Figure 1. GDP and Growth Rate

-GDP -0-Growth Rate

Quarter I Quarter2 Quarter3

%

23.4582 8 7.8 7.6 7.4 7.2 7 6.8 6.6 6.4 6.2 6

Quarter4

Fiscal policy was made more proactive and effective, the structure of government

expenditures was adjusted and improved, and guarantees for expenditures on key projects and

the people's wellbeing were strengthened. Revenue in China's general public budgets totaled

17.26 ttillion yuan, an increase of 7.4%; and the fiscal deficit was 2.38 ttillion yuan, which is the

same as the budgeted figure. A prudent and neutral monetary policy stance was maintained,

with liquidity remaining basically stable and growth of aggregate financing and credit staying at

a steady and appropriate level. We made use of differential policies, such as targeted cuts to

required reserve ratios and relending to support agriculture, small and micro businesses, and

pov~rty reduction efforts; and we increased financial support for key sectors and weak links. At

the end of December 2017, the M2 money supply had increased by .8.2% and aggregate

financing in the economy by 12%. There was a marked improvement in the performance of

enterprises: Large industrial enterprises (those with annual revenue from their main business

operations of 20 million yuan or more) recorded profits of 7.52 ttillion yuan in 2017, a 21%

increase, and 12.5 percentage points higher than the previous year.

The fundamental role of consumption in driving economic growth was continuously

enhanced. Service consumption in wellbeing industries, such as tourism, culture, sports, health,

elderly care, and education and training, further improved both in terms of quality and scale.

Total retail sales of consumer goods grew by 10.2% in 2017, and the contribution of final

consumption to economic growth reached 58.8%.

2

Tourism

Culture

Sports

Health

Elderly Care

Education&

Training

Box 1: Consumption in Wellbeing Industries

• Implemented the campaign on improving and upgrading rural tourism, supported the construction of facilities for farm-based recreation and rural tourism, improved

the management system for motorhomes, continued to encourage the development

of cruise-liner and·yacht tours, and promoted the integrated development of sports and tourism

•

•

•

•

•

Supported the conversion of bookstores into cultural complexes, steadily pushed

forward trials to boost cultural consumption among urban and rural residents,

carried out pilot projects to see cultural heritage organizations develop creative

cultural products, and promoted the development of the digital culture industry

Formulated development plans for sports industries such as marathons, cycling, and

going on camping excursions by car, and provided support to nongovernmental sectors in organizing large-scale ·sports evonts for the general public .

Encouraged nongovernmental sectors to provide multi-tiered and multifaceted

medical and health services, extended the implementation of policies on income tax

credits for commercial health insurance, and promoted health tourism

· Improved the quality of elderly care services, relaxed access to · the elderly' care

services market, and increased the supply of high-quality products and services

catering to senior citizens' daily needs in areas like housing, food, and

transportation; advanced the reform of state-run elderly care institutions,

enc_ouraged the developm,ent of new management practices and service models in

state-level pilot areas for providing combined medical and care services for the.

elderly; and launched initiatives to boost quality and capacity in the domestic services sector

Deepened reform of educational institutions run by state-owned enterprises, acted

to make education and training activities more geared toward starting businesses and

making innovations, encouraged the investment of private capital in such education

and training programs, and oversaw high-level demonstrations of Chinese-foreign cooperation on running schools

Multiple measures were taken to increase effective investment; the public-private

partnership (PPP) model was extended to more areas in a well-regulated and orderly way; and

total fixed-asset investment rose by 7%. The structure of investment was continually improved,

and investment in living standards, high technology, and industrial technological

transformation grew at a consistently rapid rate, with growth in high-tech manufacturing and

equipment manufacturing hitting 17% and 8.6% respectively.

3

%

80

70 ·

60 ·

50 ·

40

30

Figure 2. Contribution of Consumption and Investment to Economic Growth

--o-- Contribution of final consumption • • •O• • Contribution of grosS capital formation

66.5 59.7 4 58.8

55.3 ~ 0•••• 48 8 . . . ... .

o • ., '········ 41~ 43.1 47 469 ............. 1() .............................. -o •• . •• " ••• •... 32.1

•••·o

20 +-----~-----.-----~----~----~, 2013 2014 2015 2016 2017

2) The general employment sit11ation was positive. The Employment Promotion Plan for the 13th Five-Year Plan Period came into full effect,

and ongoing improvements were made to the system of more proactive employment policies.

Employment and business-startup services were enhanced, better guarantees were set down to

ensure the employment of key groups, and strong progress was recorded in initiatives to

cultivate highly skilled personnel and provide vocational training for migrant workers. A total

of 13.51 million urban jobs were added over the year, and the registered urban unemployment

rate stood at 3.90% at year-end 2017.

Million Jobs

16

14

12

10

8

6

4

2

2013

Figure 3. Urban Jobs Created

11 Increase over the target ,., Annual target

13.22 13.12 13.14 13.51

2014 2015 2016 2017

4

Per capita disposable personal income reached 25,974 yuan, a 7.3% increase in real terms,

and 0.4 percentage point higher than GDP growth. The growth of rural income was yet again

faster than that of urban income.

Yuan 30000

25000

20000

15000

10000

5000

0

Figure 4. Per Capita Disposable Personal Income Levels and Growth Rates

- Per capita disposable personal income -0-Actual growth rate

25974

2013 2014 2015 2016 2017

3) Overall price levels were basicalfy stable.

% 30

25

20

15

10

5

0

Price monitoring, analysis, early warning, and regulation were consistently enhanced. We

continued to intensify pricing oversight and law enforcement to tackle monopolistic pricing.

We responded proactively to emergencies such as the fluctuations in natural gas prices, and

carried out special oversight and inspection activities to ensure supply and price levels

remained stable. The consumer price index (CPI) rose by 1.6% for the year.

4) Risk prevention and control in kry areas made steatfy progress.

Efforts to prevent and control local government debt risks moved forward in an orderly

manner, overall stability was maintained in the markets for stocks, bonds, futures, and

insurance, and coordination was strengthened for financial oversight. In the real estate sector,

we saw transaction volumes and price levels stabilize in popular cities. The national reserve

system was further improved. And by managing expectations better and making policies more

open and transparent, we were able to boost confidence in the market.

2. We farther advanced mppfy-side str11ct11ral reform and cvnsistentfy raised the quali!J and effect ef development.

Focusing on the composition of supply, we moved to reduce ineffectiveness and expand

effectiveness, thus achieving a sustained boost in the efficiency of resource allocation.

1) Signijicant progress was made in the jive priori!)' tasks ef cutting overcapaci!J, reducing excess inventory,

deleveraging, lowering costs, and strengtheningpoints ef weakness. 5

Annual targets for reducing excess steel and coal production capacity were surpassed,

substandard steel products were banned outright, and operations were terminated, or

construction was suspended or postponed, for 65 million kilowatts of coal-fired power

generation capacity. As we sped up implementation of trials to develop the housing rental

market in large and medium-sized cities that have'net population inflows, decreases in China's

housing inventory continued, and, at year-end 2017, the area of commodity housing for sale

was 15.3% less than at year-end 2016. Enterprise leverage ratios, while remaining stable, were

trending downward, with the debt-to-asset ratio of large industrial enterprises, which stood at

55.5% at year-end, registering a 0.6 percentage point decrease year on year.

We stepped up efforts to reduce taxes and fees, helping ease the burden on market entities

by more than one trillion yuan for the year. We made a proactive push to address weaknesses in

key sectors and areas in need of attention: Investment in environmental protection,

infrastructure, public service facilities in poor areas, and other sectors grew rapidly. Specifically,

investment in ecological conservation and environmental governance, water conservancy

management, and agriculture recorded respective increases of 23.9%, 16.4%, and 16.4% year

on year, to exceed the overall rate of investment growth by 16.7, 9.2, and 9.2 percentage points

respectively.

2) Positive results were achieved in revitalizing the real economy.

We made solid strides in building China into a manufacturer of quality, speeding up

implementation of the Made in China 2025 initiative and making steady advances in major

projects to build manufacturing innovation centers, strengthen the industrial foundation,

support green manufacturing, and develop intelligent manufacturing; this has helped to boost

the pace of transformation and upgrading in industries like machinery and equipment,

petrochemicals and pharmaceuticals, metallurgy and building materials, new materials, and

textiles. The State Council issued Guidelines on Deepening Implementation of the Internet

Plus Advanced Manufacturing Model and Developing the Industrial Internet (G.F. [2017]

No.SO). Significant results were achieved in promoting the use of new-energy vehicles.

Consistent progress was made in implementing the three-year action plan to enhance core

competitiveness in key industries, including rail transit equipment and industrial robots. We

established Chinese Brands Day.

3) The service sector took strong strides toward achieving high quality and efficien,y.

We accelerated the development of producer and consumer services, introduced and

implemented guidelines on the innovation-driven development of the service sector, and made

solid progress in carrying out a new round of trials on integrated reforms in the service sector.

As a result, the value-added of the sector grew by 8% and its contribution to economic growth

was 58.8%, up 1.3 percentage points over the previous year.

6

%

100

90 80

70

60

50

40

30

20

10

Figure 5. Contribution of Primary, Secondary, and Tertiary Industries to GDP

• Primary industry • Secondary industry mTertiary industry

0 +.--JL___C9:._::.3c.__,__,___._-'9'-".1=---,__,___._-'8"".8"----'--r--'--'8<C.6,,__,__,___.__7,.,_.9"---'----, 2013 2014 2015 2016 2017

4) Infrastructure prqjects produced greater benefits.

Of 172 major water conservancy and supply projects, construction has started on 122,

including 16 last year. We moved faster to unprove the modern comprehensive transportation

system, and continuously optimized the layout of the country's transportation networks.

Investments in railway construction over the year exceeded 800 billion yuan, over 2 trillion

yuan was put into highway and waterway projects, and 82.5 billion yuan was invested in civil

aviation. Further, multimodal transportation developed at a faster pace, with growth of over 20%

in the volume of combined container transport by both rail and sea. The strategy to

revolutionize energy generation and consumption was also unplemented across the board, and

coordinated progress was made in the development of energy infrastructure networks.

•

Railways

• Highways

•

Waterways

Box 2: Major Infrastructure Construction

With 3,038 kilometers of new railway lines coming into operation, China now has a

total of 127,000 kilometers of railway lines in service,\vith 25,000 kilometers of

high-speed lines. The Wuhan-Jiujiang, Baoji-Lanzhou, - - Xi'an-Chengdu,

ShijiazhuangcJinan high0 speed lines and the Jiujiang-Jingdezhen-Quzhou line were

put into operation.

A total of 4. 77 million kilometers of highways are now open to traffic, of which

136,000 kilometers are expressways. The Hong Kong-Zhuhai-Macao Bridge was

fully completed, and is basically ready to come into service.

A total of' 127,000 kilometers of inland waterways are open to navigation .

Construction on the 12.5-meter deepwater channel on the lower Yangtze River

beginning at Nanjing is basically completed. Phase IV of the Yangshan Port· in

Shanghai, the biggest single fully-automated container terminal in the world, came

_ into operation. --

7

Airports

Energy

Water

Conservancy

Information .

•

•

•

•

The total number of China's civil airports in service reached 229. Construction on

the new airports in Beijing and Chengdu was accelerated. 11 airports, including ones

in Songyuan in Jilin, Lancang in Yunnan, and Zunyi in Guizhou, were built and

opened.

Installe_d capacity . stands at 340 million. kilowatts of hydropower, 160 million

kilowatts of wind power, and BO million kilowa.tts of solar power.

Construction began on a number of major water conservancy projects, including the

project to divert water from the Jinsha River to central Yunnan. Of 172 planned

major projects, work has begun on 122, with the total investment in ongoing

projects exceeding 900 billion yuan. Finer-optic networks have been built in all prefectui:e-level cities. As part of

. ru1tionwide trials to provide ,wversal telecommunications services in rural areas,

fiber-optic broadba:nd was extended· to 32,000 villages. Mobile rates for domestic·

roaming and long-distance calls were cancelled nationwi4e, and· average download

-speeds for 4G. mobile communications subscribers rose by 40%.

3. We made positive headwqy in suppfy-side structural reform in the agricultural sector, and saw new

drivers for agricultural and rural development coming on stream more quickfy.

We made solid progress in modernizing agriculture, steadily increased the proportion of

agricultural products that are of high quality, and further strengthened the foundation of

agriculture.

1) Structural aefjustments in agriculture were accelerated.

Grain output reached 618 million metric tons; the area of land used for corn kernel

cultivation was reduced by 1.32 million hectares; and the initiative to replace grain crop with

feed crop was expanded to cover over 866,700 hectares. We made strong progress in

developing high-quality farmland and building a number of high-quality demonstration zones

for water-efficient agriculture. The development of functional zones for grain production,

protective areas for the production of major agricultural products, and areas for growing

high-quality, distinctive local agricultural products was advanced. In addition, trials to utilize

and protect China's chernozem soils, develop crop rotation and fallow land practices, and treat

soil contaminated with heavy metals saw further progress, thus helping to better protect and

improve the quality of cultivated land.

2) Agricultural and rural reform registered steacfy progress. We improved the minimum purchase price policy for rice and wheat, deepened the reform

of the corn purchase and storage system, and refined the policy for ensuring base prices for

cotton and soybeans. Excess stockpiles of grain and cotton decreased more rapidly, and

markets for staple agricultural products like grain, cotton, edible oil, and sugar remained stable.

Further, we leveraged the role of the reserves of agricultural materials like chemical fertilizers

and pesticides, and ensured that supply was adequate and prices were basically stable in the

8

agricultural materials market. In terms of the rural collective property-rights system, reform

registered steady progress; so far, contracted rural land-use rights have been determined and

registered for 7 4 million hectares of land. Meanwhile, the rural land reforms for separating

land ownership rights, contract rights, and management rights moved forward in a prudent

manner.

3) New industries and new farms of business in rural areas saw strong development.

E-commerce for agricultural products developed rapidly; farm-based recreation and rural

tourism experienced robust growth; and new types of agribusinesses emerged in ever greater

numbers. We accelerated the integrated development of the primary, secondary, and tertiary

industries in rural areas, established comprehensive demonstrations for introducing

e-commerce into rural areas, fully implemented the "100 counties, 1,000 townships, 10,000

villages" pilot demonstration project to promote rural industrial integration, and built a

number of national modern agricultural industrial parks. From the direct supply and sale of

agricultural products to creative agriculture, educational farms, intelligent agriculture, and

multifunctional agricultural estates, new forms of business are mushrooming in rural areas, and

new drivers for agricultural and rural development are very quickly coming together.

4) Rural living standards and work conditions continued to improve.

We made rapid progress in water conservation in agriculture, with the area of cropland

covered by efficient water-saving irrigation increasing by 1.44 million hectares. Making

headway on the project to build 1 million kilometers of rural roads, a further 285,000

kilometers were built or upgraded, and the dilapidated houses of 1. 906 million rural poor

households were renovated. We sped up the implementation of projects to develop farmland

irrigation and water conservancy, to consolidate and build on progress made in providing safe

drinking water in rural areas, and to build storage and logistics facilities for grain and edible oil,

cold-chain logistics facilities for agricultural products, and public-welfare wholesale markets for

farm produce. We took active steps to develop information infrastructure in rural areas in the

central and western regions and sped up efforts to improve logistics networks at county-,

township-, and village-levels. Work is fully under way on the project to relocate and provide

new housing for residents on the flood plains of the Yellow River's lower reaches.

4. We worked intensive/y on implementing the innovation-driven development strategy, and spurred the

rapid development of new drivers far economic growth.

Focusing on building China into a country of innovators, we further bolstered the role of

innovation as the primary driver of development.

1) Innovation capaci(y continued to improve.

China's investment in research and development (R&D) reached 2.12% of GDP, while the

contribution of scientific and technological progress to economic growth hit 57.5%.

9

% 60.0

59.0

58.0

57.0

56.0

55.0

54.0

53.0

52.0

51.0

Figure 6. Contribution of Scientific and Technological Progress to Economic Growth

54.2

57.5

50.0 +------~----~---~----~---~ 2013 2014 2015 2016 2017

We saw a constant stream of major scientific and technological advances throughout the

year: China's first x-ray astronomy satellite Hutyan was successfully launched; the large

passenger aircraft C919 completed its maiden flight; major breakthroughs were made in the

field of quantum computing; China's first homecmade aircraft carrier successfully took to the

seas; and the first test project for extracting gas from "flammable ice" was successfully

completed in the South China Sea.

Pilot reforms on all-around innovation made further progress as we achieved full

implementation of preliminary trials for 169 measures, of which 13 were implemented on a

nationwide basis. Efforts were sped up to help Beijing and Shanghai build themselves into

science and technology innovation centers, and construction on three comprehensive national

science centers in Huairou . in Beijing, Zhangjiang in Shanghai, and Hefei in Anhui moved

along at a faster pace.

We began work on establishing national laboratories, and made consistent inroads in the

construction of major science and technology infrastructure. There was rapid development in

major national _science and technology projects, and the Programs for Sci-Tech Innovation

2030 Agenda got off the ground. We further fleshed out policies on additional tax deductions for R&D costs, equity-based

incentives for innovation, income tax incentives for personnel who become shareholders

through R&D contributions, and improved methods for defining .new- and high-tech

enterprises. The 17 national innovation demonstration zones and 156 national new- and

high-technology development zones around the country are serving as major platforms and

engines for regional innovative development.

• Communications

Box 3: Major Scientific and Technological Advances

The world's first photon quantum computer, which goes far beyond early classic com uters, was built; the Bei"in -Shan hai Backbone Network, a

10

gender discrimination and discrimination against disadvantaged groups. We will improve the

mechanisms for determining pay levels, allowing for pay rises and ensuring salary payment,

carry out trails to increase personal income and implement special incentive programs, and

deepen reforms in support of change in the income distribution system, to see personal

incomes growing steadily and the income gap between urban and rural residents growing

smaller.

2) We will promote the development ef the multi-tiered social securi!J !JStem.

We will carry out reforms to improve the basic old-age insurance system, and increase

basic pension payments for retirees of enterprises, Party and government bodies, and public

institutions, and basic pension benefits for rural and non-working urban residents. Subsistence

allowances and subsidies for entitled groups will also be increased appropriately. We will pilot

commercial pension schemes that allow for deferred payment of individual income tax, and

transfer in tranches a portion of state capital to top up social security funds. We will take

further steps to integrate the basic medical insurance systems for rural and non-working urban

residents, and improve the insurance scheme for major diseases. We will consolidate and

further improve the mechanism allowing for direct settlement of inpatient medical bills

wherever they are incurred via medical insurance accounts, and connect more community-level

medical institutions to the national information network for basic health insurance. Per capita

government subsidies for basic medical insurance for rural and non-working urban residents

will be further increased. We will develop a nationally unified social security public service

platform, and further improve the systems for social assistance and charity. We will continue to

rebuild dilapidated houses in rural areas and to renovate old residential communities in cities.

3) We will strengthen the capaci!J to supp!J public goods and services.

We will make access to basic public services more equitable, and formulate guidelines on a

system of standards for basic public services. Continuing to prioritize education, we will

deepen comprehensive educational reform, promote coordinated development of compulsory

education in urban and rural areas, and keep working to improve basic conditions in badly built

or poorly operated schools. We will focus on solving pronounced problems in education such

as the heavy extracurricular burdens on elementary and secondary school students, excessively

large numbers of students vying to enroll in popular schools, and large class sizes. We will

increase the provision of public-interest preschool education, and strengthen childcare and

early education services. Further steps will be taken toward making senior secondary education

universal. With a view to deepening integration between vocational education and industry, we

will widen the channels for nongovernmental investment in vocational education and expand

trials of a new type of corporate apprenticeship system as well as a modern apprenticeship

system. We will speed up the development of world-class universities and disciplines. We will

improve education for ethnic minorities, and develop special needs education, continuing

55

education, and online education. In 2018 the retention rate of nine-year compulsory education

is expected to reach 94.2%; the gross enrollment ratio for · senior secondary education is

expected to reach 88.9%; and regular institutions of higher learning are projected to enroll 7 .55

million undergraduate students.

We will go further in implementing the Healthy China initiative, deepen reform of the

medicine and healthcare systems, and promote tiered diagnosis and treatment services. We will

develop community-level medical and healthcare services, build up the ranks of general

practitioners, carry out a new round of plans to improve medical services, and work on

enhancing China's abilities in diagnosing and treating difficult and complicated diseases. We

will improve the system for ensuring medicine sut,plies, and promote and develop traditional

Chinese medicine. The Food Safety Strategy will be implemented.

The elderly care market will be fully opened up, and strong measures will be taken to

ensure the provision of social services for groups that are most in need. We will take concrete

measures to protect the rights and interests of women, minors, persons with disabilities, and

other groups. We will implement the National Population Development Plan, formulate a

medium-to-long-term plan to deal with population aging, improve supporting policies for

allowing couples to have two children, and refine the mechanism for predicting population

trends and issuing early warnings.

We will ensure that the Law on Guaranteeing Public Cultural Services is fully enforced and

a modern public cultural services system is put in place. We will initiate cultural programs

designed to benefit the public, promote the building of community-level comprehensive

cultural service centers, and take solid steps to develop key state cultural programs like the

National Library's national archive of strategically important documents. We will do more to

see that fine traditional Chinese culture is kept alive and further developed. We will ensure that

philosophy and the social sciences flourish, and develop new types of distinctively Chinese

think tanks. We will implement the Fitness for All initiative, raise the popularity of community

sports, and boost development of the sports industry. We will strictly enforce the workplace

safety responsibility system, move forward systemic and institutional reforms on disaster

prevention, mitigation, and relief, strengthen community governance systems, and improve the

public safety system.

4) We will reform the housing {)'Stem and build long-term mechanisms at a faster pace.

In line with the principle that housing is for living in, not for speculation, we will continue

to exercise regulation on a categorized basis and implement policies railored to local conditions,

in order to meet personal-use housing demand and firmly rein in speculative demand. We will

reform. the housing provident fund system, and carry out exploratory work on establishing

state policy-backed financial institutions that specialize in housing. We will develop a sound

long-term mechanism to facilitate the stable and healthy development of the real estate market,

56

Aerospace

Transportation

Energy

Biology

Marine technology

quantum-secured communication network, came into service; and the BeiDou Navigation SateJlite System started to exp'!fid into a global network.

• The Tianzhou-1 cargo spaceship completed a successful flight into space; the first large hard X-ray modulation telescope Hufyan, was successfully launched; and China's Dark Matter Particle Explorer Wukong, detected traces of what are suspected to be dark matter.

• China's homemade airliner, the C919, made its maideo flight; the AG600, an . amphibious'aircraft for firefighting and marine rescue,. completed its first test

flight; and the Chinese0standard high-speed train Renaissance EMU ( electric multiple-unit) for which intellectual propetty rights are under full Chinese ownership, went into s~ce.

• China's artificial sun, the Experimental Advanced Superconducting Tokamak, set a new world record; and the first trial to mine gas from flammable ice was completed successfully in the South China Sea.

• Domestically-developed "sea rice," or saline:alkali tolerant. rice, successfully passed production test; the Chinese Academy of Scieoces unveiled a new germplasm of high-yield rice; and Chinese scientists succeeded in assembling complete active chromosomes through chemi.cal synthesis,

• China's first homebuilt aircraft carrier was launched; the new 10,000-tonne destroyer eotered the water; and the Chinese-made underwater glider Sea Wings set a new world record bv reaching a depth of 6,329 meters below sea level.

2) Entrepreneurship and innovation initiatives rontinued to build momentum.

The State Council Guidelines on Sttengthening the . Implementation of the

Innovation-driven Development Sttategy and Further Advancing Enttepreneurship and

Innovation Initiatives (G.F. (2017] No.37) were promulgated. We supported the establishment

of 92 new national enttepreneurship and innovation demonstration centers, developed 4,298

maker-spaces, 3,255 incubators for technology enterprises, and over 400 business accelerators,

and held the third National Enttepreneurship and Innovation Week and the Innovating China

Tour. A total of 6.074 million enterprises were registered in 2017, a year-on-year increase of

9.9% or an average of 16,600 new businesses per day.

Ten Thousand

1.90

1.70

1.50

1.30

1.10

0.90

0.70

0.50

Figure 7. Number of New Companies Registered per Day

1.66

2013 2014 2015 2016 2017

11

3) Emerging industries flourished. The Development Plan for China's Strategic Emerging Industries during the 13th

Five-Year Plan Period was fully implemented. Major projects progressed smoothly in a variety

of fields, such as integrated circuits, artificial intelligence, big data, the digital economy,

next-generation information infrastructure, civil space infrastructure, general aviation, and new

public-interest health technologies. The value-added of large enterprises in high-tech

manufacturing, strategic emerging industries, and equipment manufacturing grew by 13.4%,

11 %, and 11.3% respectively, which is 6.8, 4.4, and 4.7 percentage points higher than the

value-added of large industrial enterprises.

We worked intensively on the "Internet Plus" initiative, helping to revitalize the real

economy and speed up its transformation and upgrading. Last year saw China setting the pace

for the development of the sharing economy, online shopping, mobile payments, genetic

testing, and other new sectors. The proportion of the population using mobile broadband

reached 81.4%. Online retail sales totaled 7.18 trillion yuan in 2017, an increase of 32.2%.

5. We comprehensively deepened economic structural reform, and unleashed new impetus for economic and

social development. Centering on developing an efficient market and an effective government, we worked

consistently to increase the coverage and depth of reform in major areas and key sectors.

1) &forms to streamline administration, delegate powers, and improve regulation and services made

farther headwqy. In 2017, 127 items of administrative approval by State Council departments or local

governments on behalf of the central government were abolished. Trials to grant market

access on the basis of a negative list were extended to 15 provinces. We released and

implemented the national catalog of professional qualifications and the catalog of

government-set business service fees.

We fully implemented reforms to merge all business licenses and certificates into one

certificate, and made steady progress in extending trials to separate operating permits and

business licenses. The Measures for Managing the Approval and Filing of Enterprise-Funded

Projects were introduced, and 12 sets of laws and regulations were revised, thus helping to

reduce to two the number of preconditions for projects requiring government review and

approval and making possible simultaneous processing for other items requiring preliminary

review and approval. The oversight model drawing on inspections of randomly selected entities by randomly

selected inspectors and the public release of inspection results has been fully adopted in a

range of areas, including pricing, industry and commerce administration, quality inspection,

taxation, and customs. We pressed ahead with the integration of government information

systems and the sharing of government information, achieving the initial outcomes of

12

connecting 71 departments and 32 localities online and implementing data sharing and

joined-up services across 16 key sectors.

2) Reform of State-owned Enterprises (SO Es) and state capital saw positive advances.

Three groups of pilot reforms on mixed ownership have been carried out in 50 SOEs.

The reform to introduce corporate system in SOEs has been basically completed, and the

merging and restructuring of central government enterprises has picked up pace. We steadily

carried out trials to establish state capital investment and management companies, and put in

place the framework of a multi-tiered, categorized management system for executives ill

central government enterprises. Regulation of state-owned assets was further strengthened.

3) Reform in mqjor industries made new strides.

Reform of the electricity industry was accelerated. Pricing reforms for electricity

transmission and distribution were extended to all provincial-level grids, the proportion of

market-based electricity transactions reached 26%, and smooth progress was registered in trials

on raising the number of electricity distributors.

The CPC Central Committee and the State Council's Guidelines on Deepening the

Reform of the Petroleum and Natural Gas Industries were implemented, and reform of the

salt industry continued across the country. We introduced guidelines on further tightening

pricing regulation over monopoly industries, and intensified efforts to oversee and review costs

concerning government-set prices. The first two groups of trials to delink industry associations

and chambers of commerce from the government were completed.

4) Reform of the fiscal, tax, and financial systems made solid progress.

Reforms to share fiscal powers and expenditure responsibilities between the central and

local governments were carried out on a per sector basis, and reform of the budget

management system moved to the next stage. The value added tax (VA1) system was improved,

and the reform to levy a water resource tax was piloted in more areas.

We stepped up reforms in state-owned commercial banks and in development and

policy-backed financial institutions, carried forward reforms to make interest rates and the

Renminbi (RMB) exchange rate more · market-based, prudently advanced the

internationalization of the RMB, and deepened implementation of the management system of

foreign-debt registration for enterprises. Last year also saw the establishment of the Financial

Stability and Development Committee under the State Council, which ensured reform of the

financial oversight system proceeded in an active and prudent way.

5) Price reform was deepened.

Guidelines on comprehensively deepening price reform were published and .implemented.

We made continued efforts to advance price reform in the energy sector, completing the initial

phase in reforming electricity-transmission and -distribution pricing on provincial-level grids,

cutting natural gas city gate prices for non-household users, and setting up a system for

13

oversight of natural gas prices· throughout the industrial chain. Markups on pharmaceuticals

sold by public hospitals were fully abolished and price controls on medical services, like VIP

services, provided by public medical institutions were lifted in an orderly manner. We

accelerated price reform in the transportation industry, and made solid steps in advancing price

reform of water resources.

Electricity

Natural Gas

Box 4: Price Reform in Key Sectors

• Electricity transmission pricing rules, were introduced for trans-provincial and

-regional electricity trnnsmission projects .and regional power grids; and a pricing

1;1echaniS!Il was established for . electricity distributed through local and .

· newly-built grids. Enterprise electricity costs were. cut by around 100 billion yuan

in 2017.

• Oversight was tightened over pipeline transmission prices for gas. Supervision

and auditing of the costs of natural gas transmission through trans-provincial

pipelines began and contributed to a 16% reduction in costs. Natural gas city gate

prices for non-household users fell by 0.1 yuan per cubic meter, and enterprise

gas costs were cut by 16 billion yuan.

· ?dedical Services •

in Public

. l\farkups o_nall pharmaceuticals sold by public medical institutions were abolished

nation..;,;_de, and the prices ofmedical services became ;,,ore ,;tional; initial steps·

Hospitals·

Transportation

Water Resources

Business Service

' . - - '

were taken to set up a new mechanism for subsidizing public medi.cal institutions:

• Regulations on the oversight and auditing of the pricing costs of passenger rail

lines were issued, price controls were lifted on tickets for domestic flight routes

with five or more airline . companies operating on them; adjustments and

improvements were made to the pricing system for delivery of regular packages;

and the pricing mechanism for port services was refined .

•

•

.Solid· progress was made in comprehensive p~cing reforms for wa.ter used in . agriculture, and · a performance evaluation mechanism and · an incentive

·. mechanism: that links performance with fund illocation were put in place: Pricing

reforms were deepened: for water supplies in cities, and guidelines· to ·accelerate·

the establishment · of a system for imposing progressive surcharges on

non-household consumers that exceed water use quotas were issued ..

Central government-set business service fees were reviewed and standardized,

and controls were further eased over prices for citizen-identity authentication

Fees services, transaction services for state sugar and meat reserves, and agency

services for personal visa applications.

6) The market environment became fairer and more competitive.

We rigorously implemented the CPC Central Committee and the State Council's

Guidelines on Improving the Property Rights Protection System and Ensuring the Law-Based

Protection of Property Rights, helped push forward work on formulating the Civil Code, and

released revised regulations on the handling of economic crimes by public security agencies.

Work on developing the social credit system was accelerated: over 60 State Council

departments signed 4 memorandums on jointly providing incentives for good faith and 29 on

14

talcing joint punitive actions against bad faith, and more than 100 measures concerning rewards

and punishments were formulated. We were active in building the government administrative

integrity system and made solid strides in addressing failures to act in good faith in the

government's administration. Development of the review system to ensure fair competition

was accelerated. Protection for intellectual property rights was strengthened.

6. With strong emphasis on the Belt and Road Initiative (BRI), we steadi/y improved the new !JS!ems for

an open ecvnomy.

As we focused on enhancing the levels of what is "brought in" and improving the

composition of what "goes global," deeper, higher-level opening up rapidly unfolded in all

areas of China's economy.

1) Work on the Belt and Road Initiative progressed in an effective, order/y, and e.flicient fashion.

We successfully held the first-ever Belt and Road Forum for International Cooperation in

2017. Under the Belt and Road Initiative, China has so far signed 101 cooperation agreements

with 86 different countries and international organizations. China-Europe freight train services

have registered a total of 6,637 trips-3,673 of these being made in 2017 alone. The

Mombasa-Nairobi railway line has been completed and is in service, construction began on

the Hungary-Serbia, China-Laos, and China-Thailand lines, and work on the Jakarta-Bandung

high-speed line made positive headway. The double-line crude oil pipelining project between

China and Russia was completed. We also made steady strides in the development of the

China-Belarus Industrial Park and the China-Thailand Rayong Industrial Park.

Coordinating

Policies

Connecting

Facilities

Opening Trade

Routes

Facilitating

Fund Flows

Box 5: Progress in the Belt and Road Initiative

• The Belt and Road Initiative has received a positive response and support from

over 100 countries and international organizations. . China has signed BRI

agreements with all of the 16 countries from Central and Eastern Europe. We

also signed independent cooperation agreements with Laos and Hungary.

•

•

•

We accelerated surface, maritime, spatial, and internet connectivity, making

positive progress in building railways, highways, pillar ports, oil and gas pipelines,

spatial information corridors, and cross-border optical cables, as well as

breakthroughs in harmonizing policies, rules, and standards. China is

cooperating with 14 countries from Asia, Europe, and Latin America on building

the Digital (Online) Silk Road.

Cooperation on investment and trade continue to expand. Saudi Arabia was just

one of 8 countries we signed industrial capacity cooperation documents with,

and 7 5 overseas economic and trade cooperation zones have been set up in

relevant countries. We accelerated negotiations on free trade areas. and published

a Maritime Silk Road trade index.

We issued and implemented the General Plan for Providing Financial Support

for the Belt and Road Initiative, helping speed up the development of

multi-tiered support systems for investment and financing. We actively worked to

raise the ability of the Silk Road Fund to support the Initiative, and financial

15

Fostering

Friendship .

•

institutions have made good progress in establishing overseas RMB funds .. We

have concluded bilateral currency swap agreements worth a total of 1.4 trillion

yuan with the central banks of 24 participant countries and regions along the

Belt and Road.

Promoting· person-to-person and cultural exchange and cooperation, we

. ··completed over 40. agreements on science and technology cooperation and over

300 action plans •on cultural exchange with BRI0involvi:d countries; established

35 overseas. Chinese cultural centers, 140 Confucius Institutes, and 135

. E:onfucius·.Classrooms,• as well as 16 .overseas traditional Chinese medicine

centers; and. set up in · partnership 45 international laboratories and. research

centers.

2) Foreign trade saw steaefy recovery and growth.

The total value of goods imported and exported for the year stood at 27. 79 trillion yuan, a

14.2% increase which marked a reversal to the declines of the previous two years. New

business forms and models in foreign ttade enjoyed rapid development. In line with the release

of the Plan for the Development of Services Trade during the 13th Five-Year Plan Period, we

stepped up ttials to develop new approaches in services ttade. Work to promote the

nationwide integration of customs clearance procedutes continued and reductions were made

to import tariffs on a selection of consumer goods.

Trillion Yuan

30

25

20

15

10

5

0

Figure 8. Total Import and Export of Goods

II Export Volume a Import Volume 27.79

25.82 26.42 24.55 24.34

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:: ,:i.:io:: •• > •• > < < < < < < • > > > > > < < < < < < • > > > > > < < < < < < >. > > > >

< '< < <' > > > > • >

2013 2014 2015 2016 2017

3) Utilized foreign investment levels remained stable and witnessed improvements in structure.

We inttoduced policies and measutes to promote greater use of foreign investment and

stimulate its growth, as part of the effort to open China wider to the world. We revised the

catalog of industties open to foreign investment, implemented a negative list system for

foreign investment, and made further sttides in fostering a fairer investment climate for both

16

domestic and foreign entities. We started construction on seven pilot free trade zones in

Liaoning, Zhejiang, Henan, Hubei, Chongqing, Sichuan, and Shaanxi. Non-financial foreign

direct investment totaled US$ 131 billion, up 4% year on year, and utilized foreign investment

in high-tech manufacturing and high-tech services experienced particularly strong growth. The

role of national development zones as a platform for opening up was notably enhanced.

4) Outward investment grew in a standardized and order/y wqy.

We formulated and introduced the Guidelines on Better Guiding and Regulating Outward

Investment, the Management Provisions for Outward Investment by Enterprises, and the

Interim Measures for Reporting on the Registration (Approval) of Outward Investment. At the

same time as tightening regulation over outward investment, these steps have also served to

make it easier. Enterprises' outward investment became more rational, with the bulk of

investments flowing into manufacturing, leasing and business services, wholesale and retail

businesses, information transmission, software, and IT services. Non-financial outward direct

investment reached US$ 120.1 billion in 2017.

1. We made farther strides in coordinated development between urban and rural areas and between regions

and stepped up efforts to foster new growth areas, growth poles, and growth belts.

We strengthened integration and coordination between regions, increased both the quality

and levels of new urbanization, and further expanded and improved the layout of regional

development.

1) Regional development became more balanced.

We stepped up support for economic and social development in old revolutionary base

areas, areas with concentrations of ethnic minorities, and border areas; border areas in

particular secured major progress in development and opening up. The Plan for the

Large-Scale Development of the Western Region during the 13th Five-Year Plan Period came

into effect, and the levels of development and opening up in the western region continued to

grow; 17 major projects were launched over the year, representing a total investment of 494.1

billion yuan. In the northeast, the economy showed more signs of recovery, as SOE reform,

private-sector development, work on improving the business climate, and cooperative

partnerships with areas in the eastern region all gathered pace. The central region continuously

raised its ability to secure dynamic and sustainable development, and has emerged as a new

pillar for national economic growth. In the eastern region, we saw strong and rapid growth of

new economic drivers, and good strides were made in regional cooperation in the pan-Pearl

River Delta. Steady progress was achieved in transforming the economies of resource-depleted

cities, rebuilding independent industrial and mining areas and old industrial areas within cities,

and implementing comprehensive solutions in areas affected by mining-induced subsidence.

State-level new areas further demonstrated the leading role they have to play in development,

and solid advances were made in establishing demonstration zones for the airport economy,

17

industrial relocation, and integrated industrial and urban development. We accelerated

implementation of the National Development Plan for the Marine Economy during the 13th

Five-Year Plan Period.

2) Important steps were taken in promoting the coordinated development of the Beijing-Tiafljin-Hebei

region. Xiongan New Area was officially established, and development of Beijing's

sub-administrative center was accelerated. In work to relieve Beijing of functions nonessential

to its role as China's capital, policies and guidelines were announced and implemented to

control the number of new projects and effectively complete existing ones, and a portion of

general manufacturing enterprises and wholesale markets that were scheduled for relocation

were moved out of the downtown area in an orderly way. Work to finish stretches of highway

that lead nowhere and widen bottleneck sections of road in the region was accelerated, and the

coordinated efforts to prevent and control air pollution delivered positive outcomes. A number

of key projects on coordinated industrial development were completed; and the fund for

coordinated industrial development in the region came into operation.

Box 6: Progress in the Beijing-Tianjin-Hebei Integration Initiative

· Xio~g,m ;New Area ·

Beijing's Sub-Administrative

Center

B~eak:throughs in . Key Areas

Innovation

Public Services

• Important progress .was made in drawirig up development plans, and a basic planning framework . has taken · shape. Initiatives conceroing ecological conserwtion · and · environmental ·· protection, afforestation, and cultural protection were launched.

• The urban design plans and the general plan for Tongzhou District were formulated, and the first-phase construction on the administrative zone was basically completed. Beijing government organs and departments took the lead in relocation.

• We formulated and implemented the work plan on preventing and controlling air polluiion in Beijing, Tianjin, and-26 other cities in the region. In 2017, the

.· . annual ayerage concenttaiiqns. of fine particulate matter (PM2s) in 13 key.cities. across the region were 40% lower than 2013 levels. A total of 79 medical and p~maceutical enterprises have relocated from Beiju:tg to Beijing-Cangzhou Biomedical Park in Cangzho'u. -

• Work on the national science and technology innovation center in Beijing was accelerated. Pilot reforms on all-around innovation have proceeded according to plan, and 18 measures, which produced strong results in the most recent stage, were spread to the rest of the country. Over 200 maker-spaces were established in the region.

• · A total of12 uoiversity·alliaO:ces and 7 university collaborative centers foi innovation were established, and trans-regional, medical consortium, were set up. Over 230 hospitals achieved shazjng and mutual recognition of clinical examination results and medical imaging examinations. Steady. progress was

. made in rovi · · :assistance .thro h airin ams. ·

3) Development of the Yangtze Economic Belt registered positive progress.

Full implementation of the General Plan for Developing the Yangtze Economic Belt was

achieved. The mechanism for cross-provincial consultation and cooperation worked effectively

throughout the year, and we began to see a pattern of well-coordinated environmental

18

protection taking shape. Dedicated campaigns were carried out to regulate illegal ports and

illegal sand mining and to assess the safety of drinking water sources. We moved swiftly to

develop systems for ecological conservation and environmental protection, like negative-list

management and trans-regional cross-section surveys. We worked aggressively on projects to

improve the water environment, restore water ecosystems, and conserve water resources. We

stepped up work on building an integrated multidimensional transportation corridor, making

smooth progress on establishing Shanghai, Wuhan, and Chongqing as major shipping centers

and bringing expressways between Shanghai and Chengdu, Shanghai and Chongqing, and

Shanghai and Kunming into full operation.

Box 7: Progress in Developing the Yangtze Economic Belt

• A plan to delegate the work set. out in the General Plan for Developing the

Yangtze Economic Belt was published, and 11 provinces and. municipalities Plans and Policies along the Yangtze · River also published plans for implementing . the General

Plan. Dedicated plans for ecological cons~rvation and · environmental·

protection were formulated.

Ecological

Conservation &

Environmental

Protection

Integrated

Transportation

Corridor

Coordinated Development

• Dedicated campaigns were launched · to tackle prominent problems impeding

well-coordinated environmental protection, regulate illegal ports and illegal

sand mining, prevent and control chemical pollution along the Yangtze River,

inspect sewage discharged into rivers, assess the safety of drinking water

sources along the Yangtze River, and protect and utilize the Yangtze's shoreline.

A total of 959 illegal ports were wound up, and ecological restoration has been

completed for most these.

• We continued to enhance the functions of the Yangtze golden watercourse.

The main part of the 12.5°metre-deep shipping channel running from Nanjing

to the Yangtze Estuary was completed, and the project to improve the

Jing-River watercourse at the middle section of the Yangtze was completed and

passed acceptance inspection. We moved to standardize ship types, steadily

developed direct ocean-and-river container ttansportatiqn, actively promoted

the building of an integrated transportation network, accelerated regional

integration of customs clearance procedures, and further improved the

mechanism for achieving compatibility in customs clearance procedures along . the Yangtze Rivet

• The consultation and cooperation mechanism, with participation from all 11

(Yangtze Economic Belt) provinces and municipalities and coordination by a

central leading group, is operating effectively. Breakthroughs were made in

coordinated prevention and control of environmental pollution, connectivity

· of infrastructure, coordinated development of industries, and development of

systems for market integration.

4) Steaefy progress was made in developing the Guangdong-Hong Kong-Macao Greater Bqy Area.

The Framework Agreement on Deepening Guangdong-Hong Kong-Macao Cooperation

and Promoting the. De.velopment of the Greater Bay Area was signed, joint efforts to compile 19

a general plan for the development of the area picked up pace, and work on plans to build an

international science and technology innovation center progressed smoothly. The Hong

Kong-Zhuhai-Macao Bridge was fully completed, and is basically ready to come into service.

5) New, people-centered urbanization made solid progress.

We took orderly steps to grant urban residency to more people with rural household

registration living in urban areas, reformed the household registration system, and

implemented the residence certificate system. The percentage of permanent and registered

urban residents reached 58.52% and 42.35% respectively, both up about 1 percentage point

year on year. We continued to improve the structure of urbanization. We moved more quickly

to implement plans for the development·of city clusters such as the Yangtze River Delta, the

middle-section Yangtze region, the Chengdu-Chongqing region, the Harbin-Changchun region,

the Central Plains Economic Zone, and the Beibu Bay Economic Zone in Guangxi; and

completed plans for the development of the Guanzhong Plains region, the

Hohhot-Baotou-Ordos-Yulin region, and other cross-provincial city clusters. We adopted a

market-based, standardized approach to promoting the development of small towns with

unique features and small cities. New urbanization trials made positive headway.

%

Figure 9. Permanent and Registered Urban Residents as a Percentage of the Total Population

70.00 --<>-- Pennanent Urban Residents • • -O• • Registered Urban Residents

65.00

60.00

55.00 ·

50.00

45.00

40.00

35.00 ·

30.00

56.10 57.35 58.52 53~:73~ _ _:54:-~77:...--:0c.:::.---::------oo

42.35 39.90 ~~~? ......... o

35.70 35.90 ..... .o••·······••W\J" o,, • • • • • • • • • • •O • • • • • •

' . 2013 2014 2015 2016 2017

Note: Following the State Council's implementation of the Guidelines on Promoting the Reform of the Household Registration System

(G.F. [2014] No.25) in July 2014, statistical standards for calculating the percentage of registered urban residents were adjusted in 2015.

8. We strengthened energ; and resource consen;ation and environmental protection, and secured new

achievements in promoting green development.

Energy consumption and carbon dioxide emissions per unit of GDP fell by 3. 7% and 5.1 %

respectively, and water consumption per 10,000 yuan of GDP dropped by 5.6%, which means

the three indicators are in line with annual targets.

1) The {YStem for building an ecological civilization developed rapidfy.

Steady progress was made in developing national ecological civilization pilot zones in

Fujian, Jiangxi, and Guizhou provinces. The trials of improving the national system for 20

natural-resource asset management showed positive progress; and Zhejiang, Fujian, Henan,

and Sichuan provinces piloted a system for the paid use and trade of energy consumption

rights. We implemented the emissions permit system nationwide, successfully rolled out the

river and lake chief systems across the country, and made solid headway in implementing a

system of rehabilitation for farmland, grassland, and rivers and lakes. New advances were

registered in implementing the compensation system for ecological conservation: the central

government gave more support to local governments in this regard and more trials were

carried out for trans-regional ecological compensation. The General Plan for Establishing a

National Park System was implemented, with trials moving forward in national parks at the

Yangtze, Yellow, and Lancang river sources, in the habitats of Siberian tigers, Far Eastern

leopards, and giant pandas, and in the Qilian Mountains.

2) Implementation ef the fanctional zoning strategy was deepened.

The CPC Central Committee and the State Council's Guidelines on Improving the

Functional Zoning Strategy and System and the National Land Plan were issued and put into

effect, work on provincial-level land plans was basically completed, the formulation of a new

general plan for national land use began, and supporting measures were further improved.

Solid progress was made in the reform for rolling separate spatial plans of cities and counties

into a single plan. Industrial negative lists for key ecosystem service zones were further

implemented. We improved the long-term mechanisms for monitoring and providing early

warning on the carrying capacity of resources and the environment. We set technical standards

for enforcing ecological-conservation red lines in 15 provinces, autonomous regions, and

municipalities, including Beijing, Tianjin, and Hebei, 11 more on the Yangtze Economic Belt,

and Ningxia.

3) Energy and resources were used more ifftcient(y.

We carried out performance evaluations in relation to 2016 targets and responsibilities for

controlling the total amount and intensity of energy consumption. We implemented the

strictest possible systems for managing water resources, protecting arable land, and using land

economically. We further improved the system for the exploitation of mineral resources, and

began reforming the system for the sale of mining rights. We worked to cultivate and build up

industries committed to energy conservation and environmental protection, and expanded the

top-runner system for energy and water efficiency. We strengthened planning and guidance for

renewable resources, improved the system for extended producer responsibility, started

building centers for the resource-recycling industry, and set evaluation standards for clean

production in key industries.

4) Environmental governance and ecological conseroation were strengthened.

The central government carried out environmental protection inspections m all 31

provinces, autonomous regions, and municipalities. Three major action plans on addressing air,

21

water, and soil pollution were fully implemented. Where possible, we upgraded coal-fired

power, plants to achieve ultra-low emissions, resulting in upgrades on over 700 million

kilowatts of capacity. More than 3 million old and high-emission vehicles were removed from

roads. Centralized sewage treatment facilities were built in 2,198 areas with high concentrations

of industry. We promoted a comprehensive /lpproach to improving mountain, river, forest,

farmland, lake, and grassland ecosystems in key areas such as those at the source of dust

storms affecting Beijing and Tianjin, karst areas under threat from stony deserts, as well as the

sources of the Yangtze, Yellow, and Lancang rivers. Major projects were carried out to return

marginal farmland to forests and grazing land to grassland, protect natural forests, and

preserve biodiversity; over the course of the year, an estimated 15.664 million hectares of land

were afforested. We continued trials on comprehensively managing water pollution in key

drainage basins, agricultural pollution from non-point sources, and former grassland now

under cultivation in transition areas between cropland and grassland, as well as trials on

protecting chemozem soils in the northeast. We implemented plans for sorting household

waste.

5) Efforts to respond to climate change were intensified.

'.I'he national carbon emissions trading scheme was successfully launched. We further

implemented the Work Plan to Control Greenhouse Gas Emissions during the 13th Five-Year

Plan Period, and carried out performance evaluations in relation to 2016 targets on controlling

greenhouse gas emissions. We coordinated and promoted pilots and demonstrations on

low-carbon development, and launched trials for developing climate resilient cities. China

worked proactively to ensure the Fiji Momentum for Implementation was successfully adopted

at the United Nations Climate Change Conference in Bonn. And South-South cooperation,on

climate change registered progress, with the project to set up 10 low-carbon demonstration

zones, launch 100 mitigation and adaption programs, and provide 1,000 places on

climate-change training programs proceeding smoothly.

9. We focused on ensuring and improvingpeople's wellbeing and farther raised living standards.

Upholding our vision of people-centered development, we continued to increase

investment in areas related to living standards.

1) S ignijicant progress was made in the fight against poverty.

Central government funding to subsidize local poverty alleviation programs was increased

by 30.3%. Investment from the central government budget totaled 24.4 billion yuan, and a

further 7.249 billion yuan of loan-interest subsidies were provided to relocate people from

inhospitable areas. A total of 12.89 million people living in rural areas were helped out of

poverty throughout the year, our target of relocating 3.4 million people from inhospitable areas

was reached, and the poverty headcount ratio dropped to 3.1 %. Targeting areas of extreme

poverty and particular groups living in poverty, we made solid strides in poverty elimination by

22

developing local industries, boosting education, employment, science and technology, and

medical services, and providing ecological-conservation subsidies. We stepped up work-relief

programs in poor areas, and provided more support to develop infrastructure and public

service facilities.

2) The soda/ security [YSfem was improved.

Critical progress was made in the top-level design of the old-age insurance system, and the

Implementation Plan on Transferring a Portion of State Capital into Social Security Funds was

released and put into action. We saw good progress in integrating the basic medical insurance

schemes for rural and non-working urban residents. Further, we made an important

breakthrough in enabling patients to settle medical bills incurred in any locality via their

medical insurance accounts, with the establishment of an information network for this service

that connects all provincial-level systems and all localities whose medical insurance funds are

under unified national management.

The system for providing senior-citizen allowances was fully implemented in the country's

31 provincial-level administrative areas and the Xinjiang Production and Construction Corps.

The number of urban workers and the number of rural and nonworking urban residents

covered by the basic old-age -insurance scheme reached 402 and 513 million respectively. Work

began to renovate 6.09 million units of housing in run-down urban areas.

Social

Insurance

Social

Assistance

Service

Capacity

Benefits

• Box 8: Improved Social Security

Work on formulating the Plan on the Central Regulation System for Basic Old-Age .

Insurance Funds was accelerated. The Regulations for Enterprise Annuities were

officially released, and gradual improvements are being made to the persooal account

of workers' basic medical insurance and the system for bringing outpatient

expenditures under unified management.

• Links between the system for medical assistance and serious disease insurance wez:e

strengthened in terms of recipients, payments, services, supervision, and

management. Trials to establish a unified system for subsistence allowances in rural

and urban areas continued to see progress, and a sound, dynamic adjustment

mechanism for rural and urban subsistence allowance standards was established

• More progress was made on ensuring. on-the0spot settlement of medical bills via medical insurance accounts. A total· of 8,499 designated hospitals and medjcal

institutions have been connected to the national information network for this

service, which covers all types of basic medical insurance holders and new-type rural

cooperative medical care participants. Inpatient costs meeting relevant provisions,

whether incun:ed within the patients' home province or not, can now be settled on

the spot via their medical insurance accounts. Sustained efforts were made in trials to

integrate medical and care services for the elderly.

• Basic pension benefits for retirees were raised by approximately 5.5% on average;

government subsidies for basic medical insurance for rural and non-working urban

residents have risen to 450 yuan per person per year. Monthly per capita subsistence

23

allowances were increased to 534.1 yuan for urban residents and 350.9 yuan for rural

residents, up 8.0% and 12.5% respectively year on year.

3) The !JSfem of basic public services was enhanced.

We issued the Plan for Ensuring Equitable Access to Basic Public Services during the 13th

Five-Year Plan Period, and started drawing up the national list of basic public services. The

retention rate for nine-year compulsory education rose to 93.8% and the gross enrollment ratio

for senior secondary education reached 88.3%; government spending on education as a

percentage of GDP once again exceeded 4%. All municipal-level public hospitals joined

medical consortiums, and the number of beds in medical and healthcare institutions reached

5.66 pet 1,000 people. With the Law on Guaranteeing Public Cultural Services officially

coming into effect, we moved quickly to help county-level governments to implement the

national standards for guiding the provision of basic public cultural services and provincial

standards for providing these services. The Guidelines on Public Fitness were implemented.

The Plan for Developing Elderly Services and Developing the Elderly Care System during the

13th Five-Year Plan Period was also put into action. Throughout the year, we worked on

strengthening social security programs to meet basic needs: The number of disabled people

with financial difficulties receiving living allowances and people with serious disabilities

receiving care subsidies topped 10 million, while the number of residents who received

subsistence allowances and extremely vulnerable people whose basic living needs were ensured

reached neatly 60 million. A comprehensive protection and care system was set up for children

left behind in rural areas; and about 500,000 orphans and children with AIDS received

government support. Implementation of the two-child policy continued; and 17 .23 million

babies were born over the course of the year, bringing the total population at year end to 1.39

billion, with a natural population growth rate of 5.32%0.

Public Education

Medical and Health Care

•

•

Box 9: Better Basic Public Services

A unified policy was put in: place which exempts students receiving compulsory education from having to pay tuition and fees and purchase textbooks and introduces a living-expenses subsidy for students from families with financial

. difficulties; inspections and evaluations were· condu~ted on· the implementation of

policies concerning balanced development of compulsory education at county level; an action plan to make senior secondary education universal was carried out; policies

on government assistance were improved; and the subsidy scheme for improving the nutrition of rural students receiving compulsory education was fuJJy implemented" in

all key counties included in the national program to alleviate poverty through

· development The national project on basic public health services was implemented; the medium-to-long-term plan for chronic disease prevention and control was issued and implemented; contracted family-doctor services and medical consortiums were further advanced; and regulation over health management through traditional

Chinese medicine was improved.

24

-- ·• Detailed measures were drawn up to assess aod verify extreme_ poverty, aod policies

providing support for people in extreme poverty were implemented. A_ reasonably

Social universal subsidy -system for senior citizens was established._ Pilot reforms were

Services carried out to develop at-home aod community-based elderly care. Demobilized

military personnel were given support to fu:td jobs or start businesses, with a focus

on making sure this work _was traosparent aod open.

Culture and

Sports

Services for People with Disabilities

Billion

1.395

1.39

1.385

1.38 1.375 1.37

1.365

1.36 1.355

1.35

1.345

• The Law on Guaraoteeing Public Cultural Services was implemented; aod

construction on multipurpose centers for cultural services in communities was fully

under way. National campaigns to promote reading were stepped up. More progress

was made in extending digital wireless coverage of radio and televwion

programming. More public sports complexes were opened up to the public for free

or for a small fee. More nonprofit public fitness activities were organized.

• The second phase of the plao to improve special education begao; aod students with

disabilities from poor families were exempted from paying tuition for 12 years of

education. Basic rehabilitation services were provided to 7.817 million people with

disabilities; support was given to renovate the homes of 890,000 people with

disabilities to increase their livability; and accelerated efforts were made to provide

inclividual subsistence allowaoces for unemployecl adults with severe disabilities.

FigurelO. Year-End National Population and the Natural Population Growth Rate

""'Year-End National Population -0-Natural Population Growth Rates

1.39008

2013 2014 2015 2016 2017

%,

20

18 16

14 12 10 8

6

4

2

0

In assessing economic and social development in 2017, the performance for major targets,

such as economic growth, employment, CPI, and the balance of payments, stayed within an

appropriate range, and there were continued improvements in the performance for targets

reflecting the quality and effect of development, like those concerning innovation and the

people's wellbeing. Overall, the targets in the 2017 Plan were satisfactorily met.

25

Of the 19 obligatory annual tatgets, 16 were achieved, while actual performance fell short

of expectations for three. These were the proportion of non-fossil fuels in primary energy

consumption, the proportion of days with good or excellent air quality for cities at or above

prefectural level, and the proportion of surface water with a quality rating of Grade III or

above. The situation in relation to these tatgets is as follows:

1) Boosted by the turnaround in the industrial sector, thermal electricity generation saw a

notable increase in 2017, and coal consumption registered growth for the first time in four

years. Further, inadequate streamflow was an issue in the first half of the year, which caused

lower growth in hydroelectric power generation than the previous years. Taken together, these

factors resulted .in the proportion of non-fossil fuels in primary energy consumption coming in

at 0.6 percentage point below the planned annual tatget.

2) On the back of a recovery in industrial productivity, emissions increased in 2017. This,

along with unfavorable meteorological conditions in the first quarter of the year, meant that

the tatget for days with good or excellent air quality for cities at or above prefectural level was

missed by one percentage point.

3) The discharge of water pollutants remained consistently high throughout the country in

2017 and there was a year-on-year decrease in average precipitation. As a result, the proportion

of surface water at Grade III quality or above was 0.4 percentage point below the annual

tatget.

For the 13th Five-Year Plan period (2016-2020), these three tatgets are set as increases of

no less than 3, 3.3, and 4 percentage points respectively. During the first two years of this

period, increases of 1.7, 1.3, and 1.9 percentage points have been achieved. We believe that,

with hard work over the next three years, we can still meet the tatgets set out in the 13th

Five-Year Plan.

Of the 46 anticipatory tatgets, the performance of 44 was in line with or better than

expectations; total fixed-asset investment and total import and· export volume of services fell

short of expectations.

The reasons for total fixed-asset investment being lower than the projected figure are:

First, as a result of our commitment to the new development philosophy over the last few

years, we have been paying more attention to improving the structure and efficiency of

investment, while trying to reduce reliance on it. Despite slower-than-projected investment

growth last year, China's economy continued to perform stably and generated good

momentum, an achievement which reflects the work we have done in adjusting the

composition of demand and replacing old drivers of growth with new ones. On the other

hand, under the influence of low returns on investment, unclear prospects for the market, and

a business environment that still awaits further improvement, investment from private sources

and in the manufacturing sector was sluggish, which also contributed to last year's slowdown

26

in fixed-asset investment growth.

The reasons for the total import and export volume of services falling short of the

projected figure are: First, over the last few years, the structure of services trade has further

improved with rapid growth in new forms of business, and strong headway being made in

exploring new ways of conducting services trade. In 2017 service exports increased by 10.6%,

surpassing growth in service imports for the first time in seven years. On the other hand, as a

result of a year-on-year decrease in inbound and outbound tourism and changes in statistical

standards, the growth of the total import and export volume of services slowed and fell short

of the target set at the beginning of the year.

Overall, economic performance in 2017 remained consistently stable with good

momentum for growth, allowing us to take yet another firm step toward securing a decisive

victory in building a moderately prosperous society in all respects. Given the extremely

challenging and complex economic conditions both at home and abroad, China's achievements

in economic and social development have not come easily. They are the result of the strong

leadership of the CPC Central Committee with Comrade Xi Jinping at its core, the result of

the sound guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a

New Era, the result of the cumulative effect of a whole series of important policy decisions

and measures taken by the Central Committee and the State Council since the 18th Party

Congress, and, more importantly, the result of the concerted and persistent efforts of the

Party and the Chinese people of all ethnic groups.

Over the past five years, under the guidance of Xi Jinping Thought on Socialism with

Chinese Characteristics for a New Era, all regions and departments have upheld the underlying

principle of pursuing progress while ensuring stability, put into practice the new development

philosophy, fulfilled the goals of the 12th Five-Year Plan, and made smooth progress in

implementing the 13th Five-Year Plan.

First, the strength of the economy has grown substantially. China's GDP rose from 54

trillion yuan in 2012 to 82.7 trillion yuan and grew at an average annual rate of 7.1%,

contributing more than 30% of global economic growth.

Second, the quality and effect of development have significantly improved. Revenue in

China's general public budgets went up from 11. 7 trillion yuan to 17.3 trillion yuan. Per capita

labor productivity rose from 73,000 yuan to over 100,000 yuan. Personal per capita disposable

income increased from 17,000 yuan to 26,000 yuan, faster than economic growth; the

urban-rural personal income ratio decreased from 2.88:1 to 2.71:1. And energy consumption

per unit of GDP was cut by 20.9%.

Third, the structure of the economy has changed enormously. Consumption now

outweighs investment, and the contribution of final consumption to economic growth has

increased by nearly four percentage points. The tertiary industry has contributed far more to

27

growth than the secondary industry, and the service sector has been accounting for an

increasingly larger share of the national economy. As the pattern of regional development has

been continuously improved and the new urbanization initiative has been steadily advanced,

more than 80 million people who have moved from rural to urban areas have gained

permanent urban residency.

Fourth, old drivers have been replaced by new ones at an increasingly faster pace. We have

secured solid progress in supply-side structural reform, effectively improving supply and

demand conditions in the market and the performance of enterprises. By deepening

implementation of the innovation-driven development strategy, we have seen major advances

made in science and technology, including the successful launch of Tiangong-2 space lab, the

commissioning of the deep-sea manned submersible Jiaolong and of the five-hundred-meter

aperture spherical telescope Tia'!)'an, the launch of the dark matter probe satellite Wukong and

the quantum science satellite Mozj, and the test flight of the airliner C919. New industries as

well as new forms and models of business have been constantly emerging, and traditional

industries have been re-energized through transformation and upgrading.

Fifth, the vitality .of various market entities has been unleashed. The business

environment has been steadily improved; protection of property rights has been strengthened;

and greater improvements have been made toward creating a fair and competitive market.

Over the past five years, items requiring government review by departments· under the State

Council have been cut by 44%, the number of enterprise-funded projects subject to central

government approval has been reduced by 90%, and the number of central-government set

prices has been cut by 80%. This period has also seen the flourishing of business startups and

innovations by the general public. On average, the number of new enterprises registered each

day has surged from 5,400 to 16,600, and about 70% of these are still active. This is· a

testament to the growing strength of the internal forces driving economic and social

development.

Sixth, reform and opening up have been wholly deepened. Breakthroughs have been

made in key areas, and general reform frameworks have been built in the major sectors. We

have turned the Belt and Road Initiative from a concept into a reality, strengthened our

position as a major global trader, experienced continual increases in utilized foreign investment,

and watched China's influence in global economic development grow significantly stronger.

Seventh, the wellbeing of the people has been effectively ensured. A total of over 66

million urban jobs were created over the past five years. In the fight against poverty, decisive

progress was made, as more than 68 million people have been lifted out of poverty. A social

security system for urban and rural residents was put in place and access to basic public

services became more equitable.

Eighth, efforts to improve and protect the environment have been intensified. We made

28

remarkable progress in addressing air, water, and soil pollution, and realized a drop of about 30%

in average PM,_5 concentrations in regions where air pollution is a serious problem. Work on

the system for building an ecological civilization has been accelerated and has effected

improvements in the environment

Over the past five years, the historic achievements and' changes in economic and social

development have provided an important material basis for the historic achievements and

changes in the cause of the Party and the country. These achievements have helped win the full

support of the Party and the Chinese people of all ethnic groups for Xi Jinping Thought on

Socialism with Chinese Characteristics for a New Era and, in further consolidating their

consensus, have provided a firm theoretical foundation for promoting high-quality

development.

While recognizing our achievements, we are also keenly aware that the international

environment remains complex. Despite optimism that the global economy will continue to

recover, many uncertainties and instabilities persist. The effects of policy adjustments by major

economies are likely to spill over and affect global industry patterns and the flow of capital;

protectionism in international trade and investment is mounting; and geopolitical risks are

nsmg.

Domestically, some acute problems caused by unbalanced and inadequate development

await solutions.

First, China's economic development lacks strong internal drivers. The upgrading of

consumer spending is being impeded by the limitations of supply. While rapid growth in

spending on housing and vehicles has leveled off, it is at present difficult to build up adequate

momentum in other new growth areas, which reflects the need to strengthen the stamina of

consumption growth. Meanwhile, restrictions on market access, surplus upstream capacity, and

squeezed profits for downstream enterprises have sapped investment in some areas.

Second, there are many difficulties in developing the real economy. Government-imposed

transaction costs are still too high for enterprises; pressure from raw-material and logistics

costs is great; financing being difficult and costly to obtain remains a pronounced problem; and

some enterprises, especially small and medium-sized ones, are beset by operational difficulties.

The problem of overcapacity has yet to be solved in traditional industries. The agricultural base

remains weak.

Third, the business environment needs to be enhanced. There is still an array of different

types of permits that are required for market access; unreasonable rules and regulations have

not been promptly or thoroughly rectified in some fields; and obstructions to market access

still remain in the form of "glass doors" of policy without regulation, "swing doors" of hard

and fast rules, and "revolving doors" of additional rules for would-be entrants. Government

initiative in providing services and making them more accessible needs to be strengthened:

29

People and enterprises are still strained by the amount of procedures and length of time it

takes to get things done; and they have yet to derive a stronger sense of fulfillment from

reform.

Fourth, innovation capacity needs to be raised. Basic research, especially basic research in

applied sciences, is weak, and research in special materials, key spare parts and components,

and industrial machine tools is beset by bottlenecks. Entrepreneurship and innovation

platforms call for improvement; there are still some impediments to the implementation of

policies for encouraging the application of science and technology advances; the open sharing

of public scientific and technological resources needs to be promoted; and we need to explore

and gain more experience in regulating new industries and new forms and models of business

in a more accommodating and prudent way.

Fifth, we have a long way to go in protecting the environment. River valleys in some

regions are still heavily polluted, and we need to step up efforts to address air, water, and soil

pollution. Pollution in agriculture and rural areas is pronounced; much of the work on

ecological restoration _is still outstanding; and long-term solid efforts are required to make the

needed improvements to policy systems and to address the inadequacies of institutions and

mechanisms.

Sixth, in work on the people's wellbeing there are still many areas where we fall short. The

fight against poverty remains formidable: the fact that tens of millions of people are still living

in poverty in rural areas and that the large proportion of those are battling extreme poverty

means our fight is only going to get harder. -There are still large disparities in development

between rural and urban areas, between regions, and in income distribution; and those in the

low- and middle-income categories are finding it difficult to increase their income.

People still face difficulties in education, healthcare, housing, employment, and elderly care.

Education is still developing in an unbalanced and uncoordinated fashion; preschool education,

vocational education, special needs education, online education, and continuing education are

still weak points. The structure and distribution of medical services are not rational and the

capacity of community hospitals is weak. The housing support and supply system needs to be

improved. Employment pressure is mounting for college graduates, migrant workers, and

workers laid off due to the phasing-out of overcapacity. The supply of elderly services is

insufficient, and we have yet to adequately improve care services for senior citizens.

Seventh, risks in the financial and other sectors are still pronounced. Risks, in the form of

non-performing loans, bond default risks, and volatility in capital markets, are still high, and·

there are frequent cases of illegal fund-raising and other financial crimes. Social governance

and national security are facing new challenges, and there are also other serious problems and

potential risks that cannot be ignored.

We must take these issues seriously, actively pool the strength of all sectors to respond

30

appropriately, defuse all risks and challenges in a timely manner, and strive to achieve

better-quality, more efficient, fairer, and sustainable development.

II. Considerations, Objectives, and Policies for

Economic and Social Development in 2018

2018 is the first year of putting the guiding principles from the 19th Party Congress into

action; it marks the 40th anniversary of China's reform and opening up policy, and represents a

critical point in securing a decisive victory in building a moderately prosperous society and

implementing the 13th Five-Year Plan.

To make a good job of economic and social development this year, we must follow the

strong leadership of the CPC Central Committee with Comrade Xi Jinping at its core; take as

our guide Marxism-Leninism, Mao Zedong Thought, Deng Xiaoping Theory, the Theory of

Three Represents, the Scientific Outlook on Development, and Xi Jinping Thought on

Socialism with Chinese Characteristics for a New Era; and fully implement the guiding

principles from the 19th Party Congress and the second and third plenary sessions of the 19th

CPC Central Committee. We must implement the Party's basic theory, line, and policy, and

uphold and strengthen overall Party leadership. We must remain committed to the new

development philosophy and the underlying principle of pursuing progress while ensuring

stability; keep in mind the evolution of the principal contradiction facing Chinese society; and

meet the requirement for high-quality development. We need to coordinate the implementation

of the five-sphere integrated plan and the four-pronged comprehensive strategy,* continue to

pursue supply-side structural reform as our main task, and make a coordinated push to keep

growth stable, promote reform, make structural adjustments, improve living standards, and

guard against risks. We need to devote greater energy to reform and opening up, develop new

methods and make improvements in macro regulation, and work hard to see better quality,

higher efficiency, and more robust drivers of economic growth. In particular, we need to

deliver solid progress in our efforts to forestall risks, alleviate poverty, and address pollution,

guide expectations and keep them steady, ensure and improve the people's wellbeing, and

promote economic and social development that is sustainable and sound.

1. General Considerations

We need to firmly grasp a basic characteristic of China's economy at present-its ongoing

transition to a stage of high-quality development. On this basis, with a view to applying the

new development philosophy and moving more quickly to develop a modernized economy, we

should establish an industrial system underpinned by innovation-led and coordinated

• The five-~-phere integrated plan is to promote coordinated economic, political, cultural, social, and ecological advancement; the four-pronged comprehensive strategy is to make comprehensive moves to finish building a moderately prosperous society in all respects, deepen reform, advance law-based governance, and strengthen Party self-governance.

31

development; a unified and open market system featuring orderly competition; an income

distribution system that is both efficient and fair; systems for urban-rural and regional

development that foster local strengths, connectivity, and coordination; a system for green

development that ensures resource conservation and environmental protection; and a system

for all-around opening up that is diverse, balanced, secure, and effective. We must work

practically to transform our economic growth model, improve our economic structure, and

foster new drivers of growth; effectively fight the three battles against potential risk, poverty,

and pollution; and work hard to navigate this critical juncture in China's economic

development and secure major increases in quality as well as effective improvements in growth,

so that we see the ever-growing needs for a better life of our people fulfilled.

First, give top prioriry to qualiry and effect in deepening supp!y-side strnctural reform

We need to make improving the quality of the supply system the main focus of our work.

We should make a major push to slash ineffective supply, .and to foster new growth areas in

medium-high end consumption, th<:! digital economy, green and low-carbon development, and

human capital services. We need to support the upgrading. of traditional industries, accelerate

the development of modern service industries, and replace old growth drivers with new ones

more quickly, in order to attain a dynamic balance between supply and demand at a higher

level.

Second, stqy focused on the right priorities and targets to speed up the building ef an industrial !)Stem that

promotes coordinated development between the real economy and technological innovation, modern finance, and

human resources

We need to enable innovation to play a stronger role in sustaining and leading the real

economy, channel capital toward the real economy, especially new- and high-tech industries and

advanced manufacturing, stimulate among all market entities a drive for innovation and

entrepreneurship, and unleash the initiative, enthusiasm, and creativity of China's scientists,

technologists, and other types of highly-skilled personnel.

Third, proper!y balance the relationship between the government and the market to speed up the

development ef an economy with effective market mechanisms, cfynamic micro-entities, and sound macro

regulation

We should let the market play the decisive role in resource allocation, make the market

environment more conducive to fair competition, and deal with all obstructions, problems, and

headaches that hinder enterprises in setting up and developing. To give better play to the role

of government, we need to develop new methods and make improvements in macro

regulation, give better play to the strategic guidance of national development plans, and

improve mechanisms for coordinating fiscal, monetary, industrial, regional, and other

economic policies.

Fourth, stqy goal- and problem-oriented when focusing on priorities, addressing inadequacies, and shoring

32

up points rf weakness

As we strive for final victory in building a moderately prosperous society in all respects,

we need to coordinate the resources and strengths of all sectors and effectively fight the three

critical battles against potential risk, poverty, and pollution. Staying keenly aware of the

evolution in the principal contradiction facing Chinese society, we need to vigorously

implement the strategies for invigorating China through science and education, developing a

quality workforce, pursuing innovation-driven development, achieving rural revitalization,

coordinating regional development, making development sustainable, and promoting

military-civilian integration.

2. Main Objectives

Keeping in mind the above requirements and considerations, we have set the following

objectives for economic and social development for 2018 on the basis of what is necessary and

what is possible:

-- Economic growth within an appropriate range

GDP is projected to grow by about 6.5%. In making this projection, we have taken the

following into account. On the one hand, given that China's economy is transitioning from a

phase of rapid growth to a stage of high-quality development, the projected growth rate is in

keeping with the current potential for economic growth and reflects our position of not

overemphasizing speed but stressing improvements in the quality and effect of development.

On the other hand, in terms of the goals for building a moderately prosperous society in all

respects and the objectives set out in the 13th Five-Year Plan, a growth rate of around 6.5%

will allow us to ensure that China's GDP in 2020 is double what it was in 2010; it will also help

to guide market expectations and keep them stable.

-- Consistent improvements in the quality an4 effect rf 4evelopment

We will make new progress in supply-side structural reform, accelerate upgrading of the

manufacturing sector, and speed up the development of strategic emerging industries. The

value-added of the service sector is projected to grow by about 7.6%, enabling services to

contribute 52.2% of GDP. The composition of consumption and investment will be improved.

Total retail sales of consumer goods are targeted to grow by about 10%, further boosting the

contribution of consumption to economic growth; and the key role of investment will be

leveraged to improve the supply structure. Total factor productivity will rise, the contribution

of scientific and technological progress to economic growth will reach 58.5%, and R&D

spending as a percentage of GDP will reach 2.16%. The macrosleverage ratio will remain

stable, and well-ordered, effective steps will be taken to prevent and control all types of risks.

Energy consumption per unit of GDP will be reduced by at least 3%, carbon dioxide

emissions per unit of GDP will be cut by 3.9%, and emissions of major pollutants will

continue to fall. Putting greater emphasis on economic indicators that concern structure,

33

quality, and efficiency reflects the requirement to promote high-quality development.

-- Overall stable emplqyment

A total of over 11 million new urban jobs will be created, the survey-based urban

unemployment rate is targeted to be less than 5.5%, and the registered urban unemployment

rate will stay within 4.5%.

In setting the target for job creation, considerations have been made for the number of

students graduating from universities and vocational colleges this year, as well as the need to

provide employment for workers laid off due to the scaling-down of overcapacity and for

demobilized military personnel and migrant rural workers; we have also taken into account

jobs opening up in urban areas as a result of retirements.

In projecting unemployment rates, we have for the first time set an anticipatory target for

the survey-based urban unemployment ·rate, which includes migrant rural workers and other

people without urban household registration. This will allow us to gain a comprehensive and

more accurate picture of the employment situation, orientate work toward resolving the

current structural problems causing unemployment and improving the quality of employment,

and better reflect the requirement that development benefit everyone. We have chosen to use

both the registered and survey-based urban unemployment rates to facilitate a smooth

transition from the former to the latter in the future.

-- Overall stable prices

The CPI is projected to increase by about 3%, which is basically the same as last year.

Keeping this target stable will help us better guide market expectations. At the same time, we

have also taken into account the carryover effect from the CPI increase in 2017 and new

factors that will contribute to price increases this year. These include the downstream

transmission of relatively sharp price rises in raw materials in the most recent period and

increases in the price of services.

--A basic balance in international pqyments

Our objectives are to achieve a steady rise in import and export volumes, keep foreign

direct investment stable overall, and maintain steady and orderly growth in outward direct

investment. These tasks are an essential element in maintaining macroeconomic stability and

an inherent part of our efforts to optimize the investment structure and trade mix, turn China

into a trader of quality, and realize high-quality opening up. This year, the global economy

looks likely to continue its recovery, general increases in international trade are expected to

continue, and the China International Import Expo will be held for the first time, all of which

will contribute to achieving steady growth in foreign trade. However, given the increasingly

fierce international industrial competition and the possibility of China experiencing increased

trade protection and friction, we still have a lot to do to maintain the positive trends in foreign

investment and trade.

34

-- Continued improvement in living standards

The number of people living in poverty in rural areas is targeted to fall by at least 10

million, and about 2.8 million people will be lifted out of poverty by relocating from

inhospitable areas. Increases in both urban and rural personal income will stay basically in step

with economic growth. The percentage of registered urban residents is expected to increase by

one percentage point. Access to basic public services such as education, health, culture, and

elderly care services will be made more equitable; social security coverage will be further

expanded in an effort to achieve access for everyone; and renovations will begin on 5.8 million

units of housing in run-down urban areas. Clearly defining these objectives reflects the

requirement to raise social security benefits and improve living standards, and helps to dovetail

our efforts in this area with the goal of finishing the building of a moderately prosperous

society in all respects.

3. Macroeconomic policies

Fiscal, monetary, industrial, and regional policies will be focused on promoting

high-quality development. With an emphasis on securing progress in the three critical battles

against potential risk, poverty, and pollution and on achieving the 2018 objectives for

economic and social development, we will continue to practice the underlying principle of

pursuing progress while ensuring stability, and will properly handle the dialectical unity

between progress and stability. We will strengthen coordination and collaboration and work on

ensuring the intensity of macro regulation is appropriate. On the basis of range-based

regulation, we will strengthen targeted, well-timed, and precision regulation and make

regulation more targeted, forward-looking, and flexible.

-- Our proactive fiscal polig, while unchanged, will focus on pooling strength and boosting e.fficag.

A debt-to0 GDP ratio of 2.6% is projected for this year, 0.4 percentage point lower than

last year; the government deficit will remain unchanged from last year at 2.38 trillion yuan; and

special bonds for local governments will total 1.35 trillion yuan, 550 billion more than last

year's budgeted figure. We will continue to cut taxes and fees to support the development of

the real economy. Taxes are projected to be cut by more than 800 billion yuan; after charges

and fees undergo further reviews and cuts, we expect to save enterprises and individuals over 1

trillion yuan. To further leverage the role of fiscal policy in promoting structural adjustments

and ensuring living standards, we will work on adjusting the structure of expenditures,

channeling more fiscal support to the three critical battles against potential risk, poverty, and

pollution, to innovation-driven development, to agriculture, rural areas, and rural residents, and

to people's wellbeing, while strictly controlling general expenditures. General transfer payments

to local governments will increase by 10.9% to strengthen their financial capacity, especially

those in the central and western regions.

-- Our monetary poliry will remain prudent and neutra4 with an appropriate level of intensity.

35

Aggregate financing and M2 money supply in 2018 are targeted to be roughly in line with

last year's real growth rates. We will manage money supply well, maintain reasonable growth in

the supply of money and credit as well as aggregate financing, ensure proper liquidity, and

speed up the turnover of funds so that they better serve the real economy. We will effectively

guide interest rates, reform and improve oversight on the cross-border flow of capital, and

keep the RMB exchange rate stable and at an appropriate and balanced level. We will broaden

channels for the ttansmission of monetary policy, and make good use of differentiated policies

for required reserve ratios and credit to guide capital toward small and micro businesses,

agriculture, rural areas, rural residents, and poor areas. We will increase financial support for

innovation-driven development and initiatives to replace old drivers of growth with new ones,

and intensify funding for major national development strategies, reform measures, and projects.

The regulatory framework underpinned by monetary and macro-prudential policy will be

improved, and financial regulation will be enhanced.

-- S tmctural policies will plqy a bigger role.

With a focus on serving national strategies and remedying market failures, we will

underscore the guiding function of our industrial policies, intensify policy support for

improving human capital, protecting intellectual property rights, and incentivizing innovation

in science and technology, and raise energy conservation, environmental protection, safety, and

quality standards that help promote the upgrading of industries and push them toward the

medium-high end. The focus of regional policies will be on addressing unbalanced

development and facilitating the formation of new mechanisms for coordinating development

between regions. This will see policies giving scope to the comparative strengths of each

region, ensuring a well-ordered flow in the factors of production between regions, facilitating

more rapid development in underdeveloped regions, and promoting industrial transformation

and upgrading in developed ones. In addition, we will intensify structural reforms in

production, circulation, distribution, and consumption, make better use of the basic role of

consumption in driving economic growth and the key role of investment in optimizing the

supply structure, and promote rational growth of effective investment, particularly from

private sources.

-- Social policies will be jot11sed on issues concerning the people's wellbeing.

We will stay committed to pursuing a people-centered vision of development and to

ensuring and improving living standards through development. We will do everything in our

capacity to actively respond to the concerns of the people and strive for fresh progress in

ensuring people's access to childcare, education, employment, medical services; elderly care,

housing, and social assistance. We will make social policies more effective in meeting basic

living needs and work hard to see that our people enjoy a greater sense of fulfillment,

happiness, and security.

36

-- New breakthroughs will be made in refonn and opening up.

With overall economic and social stability as a prerequisite, and while working to fully

implement reform measures already issued, we will strive for new breakthroughs in reforms on

SOEs and state capital, monopoly industries, property rights protection, the fiscal, tax, and

financial systems, social security, and other important sectors, placing a strong focus on

improving the property rights system and making the allocation of factors of production more

market-based. Giving consideration to our domestic and international imperatives, we will

move to open the economy even wider and significantly ease market access. We will actively

utilize foreign capital, guide and standardize outward investment, take an active part in

international communication and coordination on macroeconomic policies, work diligently on

adjusting and formulating international economic rules, and move quickly to make new ground

in pursuing opening up on all fronts.

III. Proposed Plans for Major Economic and Social Development Tasks in 2018

This year we will earnestly apply Xi Jinping Thought on Socialism with Chinese

Characteristics for a New Era and fully carry out major guidelines, policies, measures, and tasks

put forward at the 19th National Party Congress. In accordance with the requirements of the

Central Economic Work Conference, we will focus our work on the following ten areas.

1. Consistentfy deepening suppfy-side structural refonn

With our focus on growing the real economy, we will spur China's shift from a country

that makes to one that creates, from one that pursues high-speed growth to one that enjoys

good-quality growth, and from one that turns out quantity to one that manufactures quality.

1) We will transfonn and upgrade· the real economy, enhancing both its quality and efficienq.

To deepen implementation of the strategy on building China into a manufacturer of

quality, we will develop Made in China 2025 national demonstration zones, and speed up the

development of service-oriented manufacturing sectors such as innovative design. We will

launch a new round of major technological transformation and upgrading initiatives for

manufacturing, issue a new three-year action plan on enhancing core competitiveness in the

manufacturing industry, and promote. the industrial application of key technologies in nine

critical areas, including rail transit equipment, intelligent robots, and high-end medical

appliances and pharmaceuticals. As part of the push to make China strong on quality, we will

carry forward quality enhancement and standard enforcement programs, promote the

development of new standards in industry, and expand the supply of high-quality products,

engineering, and services. The number of industrial products requiting manufacturing permits

will be slashed, the practice of issuing one permit for enterprises manufacturing different types

37

of products will be applied nationwide, and all products listed on a permit will undergo

verification together. We will accelerate the building of generic technology platforms for smart

manufacturing, and carry out demonstration projects for integrated industry-internet

applications in key sectors. An industry development fund for Made in China 2025 will be set

up. We will formulate guidelines on promoting the demonstration and application of

newly-developed major technological equipment, and speed up the development of

new-energy vehicles and intelligent connected vehicles.

Chinese Brands Day will be held again this year. And in the services sector, we will launch

campaigns to raise quality and promote standardized development, and will encourage the

development of new business models as well as integration across different segments of the

sector. The newly amended Law on Promoting Small and Medium-Sized Enterprises will be

comprehensively enforced.

2) We will take strong measures to foster new drivers of growth.

To promote in-depth integration of the internet, big data, and artificial intelligence (AI)

into the real economy, we will advance the Internet Plus action plan in sectors such as medical

services, elderly care, education, culture, transportation, distribution, and logistics, and

implement the plan for developing next-generation AI. We will build next-generation

information infrastructure, speed up the application of cutting-edge network technologies like

5G mobile and quantum communications, do more to boost broadband speeds and lower rates

for internet services, guide and regulate the sharing economy so that it develops in a positive

and healthy way, and set up a number of demonstration platforms for the sharing economy.

We will launch a campaign to foster innovation-driven development in BeiDou industrial parks,

and continue to build general aviation demonstration zones. We will draw up and roll out

guidelines on developing the digital economy and a policy paper on promoting the

bio-economy, and organize the implementation of major pilot projects on the digital economy.

We will set up a national development fund for strategic emerging industries, and carry out

major projects to promote integrated circuits, new display technology, bio-tech industry, and

intelligent perception of spatial information.

3) We will continue working on the five priori!)! tasks of cutting overcapaci!J, reducing excess inventory,

deleveraging, lowering costs, and strengthening areas of weakness.

We will take stronger steps in relation to the bankruptcy liquidation and restructuring of

"zombie enterprises." We will use a combination of market- and law-based methods to strictly

enforce standards on energy conservation, environmental protection, quality, and safety to

continue cutting overcapacity in the steel, coal, and coal-fired power industries and shutting

down outdated production facilities. This year, we will cut production capacity by around 30

million metric tons of steel and about 150 million metric tons of coal, and shut down coal-fired

power plants with a capacity of less than 300,000 kilowatts that fail to meet standards. We will

38

make explorations on raising steel standards for construction, concentrate on merging and

restructuring steel enterprises, and guard against already-eliminated capacity being brought

back on line. We will strike a balance between the need to cut overcapacity and guarantee

supply, and will strive toward achieving a dynamic equilibrium of supply and demand for coal.

We will support enterprises in using a diverse range of channels to resettle laid-off workers,

and put forward policies and measures on effectively managing enterprise debt Further,

enterprises will face more stringent constraints on debt-to-asset ratios and capital funds, and

market- and law-based debt-to-equity swaps will be stepped up to secure solid progress in

deleveraging SOEs. Tailored measures will be adopted at a local level to encourage new urban

residents such as people from rural areas with newly granted urban residency to buy and rent

homes. In line with the policy to reduce the number of tax brackets from three to two, we will

adjust VAT rates, cut tax rates related to manufacturing and transportation in particular, and

expand the scope of the tax relief policy for small and micro businesses. We will strengthen

measures for regulatiug and overhauling fees that violate laws and regulations. We will step up

efforts to bolster weaknesses in key areas and links in need of attention and take targeted and

effective steps to improve supply with a view toward making growth more sustainable.

4) We will strengthen the development of water, transportation, energy, and other in.frastmcture facilities.

A new package of major water conservancy projects will be launched to see more being

done to bolster weak links, such as management on small and medium-sized rivers and work

on reinforcing dilapidated small reservoirs.

We will speed up construction on the Beijing-Shenyang, Shangqiu-Hefei-Hangzhou, and

Zhengzhou-Wanzhou high-speed railway lines, and begin work on the Beijing-Xiongan and

Hotan-Ruoqiang railways. We will proceed with the building of expressways in an orderly

manner, and support the improvement and renovation of ordinary national and provincial

trunk highways. We will go further in upgrading the river-to-ocean waterway network

comprising trunk and branch routes, making trunk waterways more navigable and raising the

standard of branch waterways. We will make strong progress in the construction of new

airports in Beijing, Chengdu, and Qingdao, and move forward with expanding and renovating

hub airports and building regional airports. For cities where it is feasible, we will back the

well-planned development of urban rail transit The Internet Plus initiative will be leveraged to

make transportation more convenient and raise the overall quality of transportation services.

We will speed up the development of a network of backbone infrastructure for logistics that is

convenient, efficient, green, and safe.

Implementing the Strategy on Revolutionizing Energy Generation and Consumption, we

will move forward pilots on transforming how we generate and use energy, launch a campaign

to make game-changing advances in the field of non-fossil fuels, establish a long-term

mechanism to promote the absorption of clean energy into power grids, and move quickly to

39

make traditional energy clean and efficient. Additionally, we will improve the layout of power

grids and oil and gas pipelines to enhance their connectivity, and bolster natural gas supplies

and emergency reserves of oil and gas.

2. Movingfaster to make China a country ef innovators

We will fully implement the innovation-driven development strategy, further improve

incentive mechanisms for innovation, and keep on building the innovation capacity and

industrial competitiveness of our enterprises.

1) We will improve the national innovation DJ Siem.

We will push forward pilot reforms for all-around innovation, and move as quickly as

possible to assemble a second batch of reform outcomes that can be replicated. We will make

solid progress in building science and technology innovation centers and comprehensive

national science centers, and speed up the building of national laboratories and major national

infrastructure projects for science and technology. We will do exploratory work on establishing

comprehensive national innovation centers for emerging industries, build a number of national

engineering research centers to service strategically important sectors, and continue with

construction on the national manufacturing innovation centers and the state-level enterprise

technology centers. Key enterprises will be encouraged to take the lead in implementing major

scientific and technological projects; research institutes, universities, and businesses will receive

support in pursing integrated innovation; and new types of R&D institutions based on

in-depth integration between enterprises, universities, and research institutes will be fostered.

We will do more to support innovation in small and medium-sized enterprises, implement

policies that provide stocks, options, dividends, and other incentives to scientists and engineers,

and move faster to achieve open sharing of scientific and technological resources like major

national facilities for scientific research and large-scale, costly research equipment.

2) We will see faster breakthroughs in science and technology innovation.

Plans on strengthening basic research, applied sciences, and technology innovation

projects will be formulated. And plans on the replacement and transitioning of major science

and technology programs will also be drawn up, along with policies for the commercialization

and industrial application of major scientific and technological advances. As we expand the

implementation of national science and technology programs, we will underscore innovation

in key generic technologies, cutting-edge frontier technologies, modern engineering

technologies, . and disruptive technologies, and promote faster breakthroughs in studying the

causes of smog and its remedies and the prevention and cure of major diseases like cancer.

Implementing the strategy on developing a quality workforce, we will foster greater numbers

of scientists and technologists in strategically important fields, scientific and technological

leaders, and young scientists and engineers, as well as high-performing innovation teams, and

we will also recruit greater numbers of talented personnel from overseas.

40

3) We will encourage higher-levels of entrepreneurship and innovation across the country.

We will leverage the leading role of large enterprises, research institutes, and universities.

Resource sharing platforms for entrepreneurship and innovation will be established, and the

project to develop 10 & 100 top national demonstration centers for entrepreneurship and

innovation and the project to set up 10 venture capital (VC) alliances, invest in 100 VC funds,

and support 1,000 VC projects will be launched. We will also move forward the initiative of

selecting demonstration cities to serve as entrepreneurship and innovation hubs for small and

micro businesses to encourage the development of innovation-oriented start-ups. We will work

to develop strong links between the commercialization and application of scientific and

technological achievements and start-ups and other innovative ventures by supporting

enterprises, research institutes, and universities in setting up specialized maker-spaces. We will

carry out programs piloting tax relief policies for venture capital and angel investment across

the country, support and guide local governments in improving the financing environment for

small and micro businesses, and develop regulatory systems that cater for innovation. We will

ensure the success of the National Week for Entrepreneurship and Innovation, the Innovating

China Tour, and other events and contests for entrepreneurship and innovation, in order to

continue strengthening the climate of entrepreneurship and innovation throughout the

country.

4) We will farther promote military-civilian integration.

Major demonstration projects for military-civilian integration will be launched across the

board. We will move forward the building of a general public service platform for promoting

this integration and launch a dedicated website. We will establish demonstration zones to

develop new ways of integrating the two sectors, and carry out pilots to enforce national

defense requirements for economic projects, manage demand in military-civilian development,

and commercialize and apply intellectual property rights related to national defense. We will

put into operation the national industrial investment fund for military-civilian integration in

defense-related science, technology, and industry. Additionally, to promote military-civilian

integration in these three areas, we will establish a system for promoting collaboration on

science and technology innovation. We will put in place a system of standards for statistically

measuring and assessing military-civilian integration; support the building of production

capacity in the defense industry; and continue the reform of the airspace management system.

3. Deepening reform in fandamental and critical areas

We will move faster to build an economy that gives full play to the role of the market and

better leverages the role of government in order to unleash the vitality of market entities of all

types.

1) We will continue to amplijj, the benefits from reforms to streamline administration, delegate powers, and

imp.rove regulation and services.

41

With a view to further streamlining administration and delegating powers, we will

undertake exploratory work on formulating lists of powers and responsibilities for

departments under the State Council. We will roll out across the country reforms to separate

operating permits and business licenses, and greatly reduce, across all categories, the number

of permits businesses need to apply for after obtaining a license. We will move forward the

comprehensive reform on coordinated law enforcement, apply to all business activities the

oversight model of inspections of randomly selected entities by randomly selected inspectors

and the public release of inspection results, and promote· joint inter-departmental random

inspections. We will move faster to set up a new type of oversight mechanism featuring

credibility commitments and information disclosure. Government services will be improved

and review and approval processes for construction projects will be optimized. Furthermore,

we will work actively to promote the Internet Plus government services model, integrate

information on the operations of departments under the State Council and upload it to a

national sharing platform, conduct pilot programs on public data services, and offer online

services for more approval processes across more sectors. We will speed up the building of a

system for assessing the business environment and apply it across the country in due course.

2) We will focus on improving the fYStem of proper('y rights.

To ensure equal protection of the property rights of economic entities under all forms of

ownership in accordance with the law, we will work on amending and abolishing laws and

regulations that hinder the equal protection of property rights, identify and investigate in

accordance with the law property disputes, and, with a focus on property rights protection,

promote government integrity-building. These efforts will help to ensure private enterprises

can develop in a supportive and positive atmosphere. Furthermore, we will adopt targeted

measures to encourage and protect the entrepreneurial spirit, improve mechanisms for getting

entrepreneurs involved in policy-making for issues that concern them, and set up law-based

compensation and remedy mechanisms to deal with situations where changes in government

plans or policies impinge on enterprises' lawful rights and interests. Reforms on the integrated

management of intellectual property rights will also be piloted.

3) We will speed up reforms to promote the market-based allocation of production factors.

We will move forward with the reform of the household registration system and other

related reforms such as public service reform. Work to improve the secondary land market will

be accelerated. We will carry out comprehensive reform of the investment and financing

systems, deepen the reform of the review and approval system for enterprise-funded projects,

advance pilot mechanisms that allow for the approval of enterprise-funded projects on the

basis of an undertaking, and set up a sound law enforcement system for enterprise investment

oversight and an inspection system for government investment projects. Moving forward with

reforms to promote market-based trading of public resources, we will establish a system of

42

platforms for sharing tracling data. We will pilot the spot tracling of electric power and reforms

related to natural gas distribution and sales, advance the reform of mining rights transactions,

improve the system for petroleum and natural-gas exploration and exploitation and relax

relevant controls in an orderly manner, and draw up implementation plans for reforming

systems and institutions in key areas such as the operation of oil and natural gas pipelines. We

will strengthen cost monitoring and inspection for government-set prices, and deepen price

reforms of monopolized Jinks in sectors such as electricity, natural gas, urban and agricultural

water supply, medical services, and railway transportation, as well as the reform of pricing for

public services.

4) We will build a market {/Stem that ensures fair and orderfy competition.

We will fully implement and keep improving the negative list system for market access in

order to clear away discriminative restrictions and hidden barriers and expand market access

for private investors. We will review all regulations and practices and abolish those that disrupt

the unified market and fair competition, fully implement the fair competition review system,

and enhance law enforcement to counter monopolistic pricing. We will formulate a sound

system of credibility-related regulations and standards, improve mechanisms for provicling

joint incentives to those who act in good faith and taking joint punitive action against those

who act in bad faith, and move faster in builcling the social credit system.

5) We will deepen the reform of SOEs and state capital

We will improve the system for managing state-owned assets of all types, work faster to

shift the focus of state-owned asset supervisory and management authorities to the oversight

of state capital, and reform the system for authorized operation of state capital. We will speed

up work to improve the layout of, make structural adjustments to, and strategically reorganize

the state-owned sector of the economy, promote complementarity among enterprises with

different ownership structures with a focus on the role of capital, and raise the competitiveness,

quality, and scale of state capital. We will advance the reforms to diversify SOE shareholders

and introduce mixed ownership for SOEs in a prudent manner, with pilots on mixed

ownership being deepened in key sectors; and we will strive to foster world-class, globally

competitive enterprises.

Management of

State-Owned

Assets

Authorized

Operation of

State Capital

Box 10: Comprehensive Reform of SOEs and State Capital

•

•

We will improve the systems for managing state-owned assets, and encourage

relevant agencies to shift their focus onto how state capital is used. We will improve_ the budgeting system for state capital operations.

We will deepen trials on investment and operation of state capital, begin trials on

investment and operation of state capital with the State Council's authorization,

and support and encourage local governments in reforming the system for

authorized operation of state capital according to actual conditions.

43

Raising the Competitiveness,

Quality, and Scale of State .

Capital

Mixed-Ownership

Reform of SOEs

· • · We will set up sound. ·market-based· exit mechanisms that ensure only the

strongest survive, and· move faster to deaL :with inefficient · and. ineffective

state-.owned assets. Market-based m"""1s will be used to transform theJormation

of St/'te capital. ,We will work. to cb"/lllel state capital to impqrtant sectors and crucial fields that concern national security, the lifeblood of the economy, our

coun:try's stability, and our pe~ple's wellbeing; and. to key infrastructure, to

pioneering and strategic industries, and to well-devel~ped enterprises that have

core competiiiveness. We will steadily move forward with strategically

· reorganizing central government enterprises in selected sectors where conditions

allow.

• We will carry out equity diversification at the parent-company level in selected

suitable central government enterprises, and actively and prudently advance

mixed ownership reform of commercial SOEs in industries and sectors that are

fully competitive. We will enhance the corporate governance for enterprises

under mixed ownership, and carry out explorations on systems of special right

stock. We will systematically summarize the experiences from programs to pilot

the granting of equity stakes to employees in mixed-ownership, state-controlled

enterprises,,expand the coverage of these pil?t programs, and set up long-term

incentive and restraint mechanisms.

6) We will prudentfy move fonvard reform of the fiscal tax, and financial !)'Stems.

We will advance the reform on defining the respective financial powers and expenditure

responsibilities of the central and local governments, and formulate a reform plan for revenue

sharing. We will deepen reform of the budget management system so that a bigger share of

the budget for state capital operations is transferred into the general public , budget,

performance-based management is in place across the board, and government funds are used

more efficie_ntly. We will reform the personal income tax system so it is based on adjusted

gross income and specific types of income. We will improve local tax systems and help

progress legislation on real estate tax. Accelerating financial system reform, we will improve

the corporate governance of financial institutions, deepen market-based reforms of interest

rates on deposits and exchange rates, set up mechanisms for setting target interest rates and

rate corridors, promote the sound development of the multilevel capital market, and increase

the share of ditect financing, particularly equity financing.

4. Delivering solid progress in the critical battles against potential risk, pover()I, and pollution

We will marshal the strength of all sectors, put in place strong measures, and focus on

boosting our ability to prevent and withstand risks, meet higher standards in eradicating

poverty, and resolve prominent envitonmental problems.

1) We will focus on guarding against and defusing major risks.

In strengthening financial risk prevention and control, the role of the State Council

Financial Stability and Development Committee will be fully leveraged and sound systems and 44

a policy framework for macro-prudential regulation will be established. We will effectively

guard against and deal with non-performing bank loans, strengthen regulation of weak links

such as shadow banking, and steadily push forward with the campaign to deal with risks posed

by internet financing. We will crack down hard on illegal fundraising, financial fraud, and other

activities that violate regulations and laws, regulate student loans and cash loans, and ensure

consumers' rights and interests are protected.

We will effectively strengthen local-government debt management, reduce the debt

overhang in an active yet prudent fashion, curb debt increases, and forbid any kind of bond

issuance or undertaking that violates regulations and laws. We will speed up the work to

improve the national strategic goods reserve system. We will establish sound systems for

identifying, monitoring, and issuing early warnings on risk, improve our emergency response

mechanisms, and provide stronger interpretations for major policies, in order to appropriately

guide market behavior and public expectations.

2) We will make solid strides in targeted pover!Ji alleviation.

We will formulate guidelines on the three-year initiative for winning the battle against

poverty through targeted measures, and fully implement the action plan for increasing support

for areas of extreme poverty and eliminating poverty in all poor counties and regions. We will

advance poverty-alleviation initiatives for local-industry development, education and health,

and environmental improvement. And we will target infrastructure construction and the

development of public service systems in poor villages.

We are committed to ensuring that, as well as lifting people out of poverty, our help also

encourages them to pursue ambitions and develop skills. In line with this, we will establish

effective long-term mechanisms that deliver steady progress and prevent people from relapsing

into poverty, work with people and areas struggling with poverty to boost their capacity for

self-sufficient development, and provide stronger targeted assistance for specific groups

affected by poverty such as senior citizens, people with disabilities, and people with serious

diseases.

We will amplify work-relief programs in extremely impoverished areas. In doing so, we

will focus on supporting the construction of small and medium-sized public benefit

infrastructure in poor villages in Tibet; in the four prefectures of southern Xinjiang--Kashi,

Hotan, Kirgiz Autonomous Prefecture of Kizilsu, and Aksu; in Tibetan ethnic areas in the

provinces of Sichuan, Yunnan, Gansu, and Qinghai; and in Linxia Prefecture in Gansu,

Llangshan Prefecture in Sichuan, and Nujiang Prefecture in Yunnan. We will encourage eastern

and western regions to deepen their collaboration on poverty reduction. In addition, we will

strengthen assessment and supervision of poverty alleviation work, and take tough steps to

investigate and punish anyone who misappropriates or diverts funds, commits fraud, massages

the figures, or does anything else to violate regulations and laws.

45

3) We will continue to intensijj pollution prevention and control.

We will formulate and implement plans for winning the battle against pollution and an

action plan for making our skies blue again, in an effort to sustain the forward momentum in

preventing and controlling air, water, and soil pollution. We will increase the supply of clean

power; steadily advance major projects aimed at cutting coal consumption, such as those to

promote the use of shallow geothermal energy, the upgrading of coal-fired steam boilers to

make them energy efficient, and the recovery of waste heat for household heating; and steadily

move forward with adopting clean energy sources for winter heating in northern China based

on local circumstances. We will make structural adjustments in the transportation sector to

accelerate the development of multimodal transportation and increase the proportion of

railway transportation. We will strengthen coordination on preventing and controlling pollution

between regions and within regions like the Beijing-Tianjin-Hebei region where pollution is a

key concern. We will take strong measures to lower PM25 concentrations and cut the number

of days with heavy air pollution.

· As part of our focus on clean water initiatives, we will conduct a full inspection of

protected zones with centralized drinking water sources, deal with black, malodorous water

bodies in urban districts, speed up construction on sewage treatment facilities, and do more to

prevent and control agricultural pollution from non-point sources. We will step up control of

soil pollution and restoration of polluted land, and identify and address risks on farmland

contaminated by heavy metals from mines and industrial enterprises in key areas. We will

improve the treatment of solid waste and refuse and resolutely prohibit foreign garbage from

entering China. We will continue to reform the emissions permit system, put into action the

plan to ensure that all emissions from industrial sources are within standards, and strengthen

the accountability of polluters. We will improve systems for credibility assessment in relation to

environmental protection, for mandatory release of environmental information, and for

imposing severe punishments for environmental violations. We will focus on resolving

pronounced environmental problems which affect people's health and cause strong public

dissatisfaction.

5. Implementing mqjor measures for the mral revitalization strategy

We will continue to prioritize the development of agriculture and rural areas,

simultaneously promote new urbanization and rural revitalization, and speed up the

development of a new type of relations between industry and agriculture and between urban

and rural areas in which industry and agriculture promote each other, urban and rural areas

reinforce each other, and all-around integrated development and common prosperity is

achieved.

1) We will improve top-level planningfor integrated urban-mral development.

We will formulate and implement the National Strategic Plan for Rural Revitalization, and

46

guide localities in developing corresponding plans, with a focus on ensuring formulation and

implementation at county level. We will formulate guidelines on establishing sound systems,

mechanisms, and policies for integrated urban-rural development, actively promote unified

planning to achieve a rational industrial layout and effective infrastructure connectivity, and

channel a flow of urban capital, technology, talent, and other factors for promoting

modernization into agriculture and rural areas.

2) We will deepen reforms across the board in f'llral areas.

We will consolidate and improve the basic rural operation system, advance reform of the

rural land system, basically complete the work to determine, register, and certify contracted

land rights, and unveil detailed measures for extending rural land contracts for another 30 years

when the second round of contracts expire. We will improve policies on idle land designated

for housing and vacant dwellings in rural areas, and explore reforms to separate ownership,

qualification, and use rights for residential land. We will enhance measures for ensuring that

cultivated land given over to nonagricultural use is replaced with land of an equivalent amount

and quality. With a view to improving our agricultural protection and support systems, we will

look to build on trials on catastrophe insurance under way in 200 major-grain producing

counties by selecting a number of these counties to pilot full cost insurance for rice, wheat,

and com. We will deepen the reform of rural collective property rights, collective forest tenure,

state forestry regions and farms, state farms on reclaimed land, and rural supply and marketing

cooperatives, so that farmers' property rights are protected and the collective economy is

developed.

3) We will guarantee national food see11rity.

We will work faster to establish and develop grain-producing functional zones and

protected areas for the production of major agricultural products, and advance agricultural

infrastructure construction with a focus on developing high-quality farmland. We will step up

implementation of the high-quality grain project, construct more facilities for ensuring security

and responding to emergencies, and enhance systems for monitoring and giving early warnings

about food production and reserves and for ensuring food supplies during emergencies. We

will move forward reform of the system for purchasing and stockpiling agricultural products,

improve the policy for setting minimum state-purchase prices for rice and wheat, move faster

to reduce excess stockpiles of policy-supported grain, and refine price-setting mechanisms for

sugar. We will reform and improve the system for managing central government grain reserves,

work on formulating legislation to guarantee food security, and strengthen supervision over all

dimensions of grain distribution. We will improve the system for stockpiling agricultural

supplies and make it more integrated.

4) We will establish modern industria~ production, and business operation !]Stems far agrie11/ture.

We will move forward agricultural supply-side structural reform and speed up the

47

transition from high-output to quality-oriented agriculture. We will carry out the rural industrial

revitalization initiative, make a major push to develop modernized farming, forestry, livestock,

and fishing industries, develop a number of state-level regions with strengths in producing

specialty agricultural products, and take steps to boost. the export of these kinds of products.

We will encourage the recycling of agricultural waste and step up efforts to build national pilot

demonstration zones for sustainable agricultural development. We will support the research,

development, and application of technologies for growing environmentally friendly crop

breeds, implement initiatives to make the modern seed industry more competitive and boost

the quality and safety of agricultural products, and expand trials to rotate crops and keep land

fallow. We will accelerate research and manufacturing for large combine harvesters, new-type

high-performing tractor models, and other advanced practical agricultural equipment.

To deepen integration of primary, secondary, and tertiary industrial development in rural

areas, we will take strong steps to promote the digital agriculture, Internet Plus agriculture, and

the application of remote sensing technology and build national demonstration parks for

integrated industrial development in rural areas. Further, we will launch projects to foster new

types of agribusiness and develop a diverse range of appropriately scaled agricultural

operations.

5) We will work on making the countryside more beauttfol and conifortable to live in.

We will speed up improvements to rural infrastructure for water conservancy,

transportation, communications, power, environmental protection, and logistics; organize

demonstrations to install 1 00M fiber optic networks in rural areas; and work harder to

guarantee safe drinking water in rural areas. We will steadily implement the three-year action

plan to improve rural living environments, and carry out the project to protect agricultural

resources and the environment. The "toilet revolution" will continue, and we will ensure river

basins in rural areas are clean and adopt a step-by-step approach toward realizing overall

improvements in mountains, rivers and lakes, forests, farmland, roads, and housing in rural

areas. We will build or update 200,000 kilometers of rural roads, and pave the main roads to

another 5,000 villages. The rural public service system will be improved. We will boost

protection for ancient towns, traditional villages, and traditional architecture, improve the plans

for developing the countryside, and stop the large-scale demolition and construction of

buildings.

6. Implementing the coordinated regional development strategy

We will strengthen tailored guidance, develop more detailed regional policies, step up

support and assistance to key areas, and work to narrow the development disparities between

regions.

1) We will promote coordinated development between regions.

We will increase support for old revolutionary base areas, areas with concentrations of

48

ethnic minorities, border areas, and poor areas, to boost construction on transportation, water

conservancy, energy, communications, logistics, and other major infrastructute projects. We will improve and implement policies and measures for supporting development in Xinjiang, Tibet,

and the Tibetan ethnic areas in the provinces of Sichuan, Yunnan, Gansu, and Qinghai, and

deepen one-to-one assistance programs for these regions and areas. We will step up support

for people in border areas with a view to ensuring our frontier is strong and secure.

We will open the western region wider to the outside world, formulate new guidelines for

its large-scale development, and advance the construction of experimental zones for

development and opening up in major border areas as well as experimental zones for an open

inland economy in the provinces of Guizhou and Ningxia.

We will deepen reforms to accelerate the revitalization of old industrial bases in the

northeast and other parts of the country, promote a comprehensive cooperative partnership

between the northeast and the eastern region, and guide resource-dependent cities in fostering

new growth drivers.

Leveraging local strengths, we will drive the rise of the central region, and speed up its

development as the country's key advanced manufacturing center and as a priority area for new

urbanization, a core area for modern agricultutal development, a demonstration area for

ecological progress, and a key area for comprehensive opening up. We will formulate and

implement the plans for developing eco-economy belts along the Huai and Han rivers.

We will support the eastern region in leading the way in optimizing development through

innovation, and promote integrated development in the Yangtze River Delta and regional

cooperation and development in the pan-Pearl River Delta. We will unveil an overall

development plan for the Grand Canal cultutal belt.

We will formulate guidelines and an implementation plan on pursuing coordinated land

and marine development and accelerating the drive to build China into a strong maritime

country, and advance the development of marine economy demonstration zones. We will take

comprehensive measures to improve the environment in river basins and offshore areas, move

forward projects for the desalinization of seawater, and issue guidelines on strengthening

regulation and control to ensure appropriate and effective land reclamation in coastal areas.

We will promote the sustainable and sound development of state-level new areas, and take

strong, sequenced steps to develop demonstration airport economic zones, demonstration

zones for industrial relocation, and demonstration zones for integrating industrial and urban

development, in order to give full play to the role of new engines, new models, and new

patterns.

2) We will pursue coordinated development for the Beijing-Tia,yin-Hebei region, with the focus on relieving

Beijing of .functions non-essential to its role as China} capital.

In keeping with the principle that forward-looking plans and high standards be applied in

49

building the Xiongan New Area, we will formulate and implement a development plan and

guidelines on deepening reform and opening up and break ground in the construction of a

number of key projects. We will move faster in developing Beijing's sub-administrative center

and proceed with relocating municipal-level government agencies and administrative

departments there in an orderly and prudent manner. With a focus on· relieving Beijing of

functions non-essential to its role as China's capital, we will carry out work on relocating

people in a well-ordered way, while ensuring the city's occupational structures remain rational

In optimizing resource allocation· in the Beijing-Tianjin-Hebei region, we will promote

cooperation in building industry parks catering to local advantages, strengthen regional

cooperation on pollution prevention and control, consolidate and build on the initial

breakthroughs made in the three major areas of transportation, ecological conservation, and

industrial development; and strive . for substantive progress in social programs, resource

guarantees, and other areas.

3) We will advance the development of the Yangtze Economic Belt, giving priority to ecological

conservation and green development.

We will move faster to adopt a coordinated three-fold approach of controlling water

pollution, restoring water ecosystems, and conserving water resources. We will step up the

campaigns to curb illegal ports, illegal sand mining, and chemical industry pollution, and

coordinate efforts in improving major tributary basins. · We will improve systems for

cross-section water quality monitoring and early warning, for ecological compensation in

drainage basins, and for negative-list management. We will execute key projects for ecological

restoration and environmental protection, take strong measures on restoring the ecosystems of

forests and wetlands and protecting aquatic biodiversity, and put an end to all forms of fishing

in the aquatic life protection zones in the Yangtze valley. Pilot demonstration programs for

green development will also be implemented. We will accelerate the development of combined

river-ocean shipping, improve the system for multimodal transportation, and implement

programs to free up bottleneck sections of road and complete any unfinished sections of

expressways.

4) We will activefy promote the development of the G11angdong-Hong Kong-Macao Greater BqyArea.

We will formulate and implement the Development Plan for the Guangdong-Hong

Kong-Macao Greater Bay Area, and work faster to put in place mechanisms for coordinating

development. We will promote infrastructure connectivity, and develop a network of major

cities serving as drivers and trunk transportation lines serving as pillars for overall development.

We will establish international centers for science and technology innovation and globally

competitive modern industrial systems, and build co=unities that are comfortable to live,

work, and travel in. We will move forward with opening up and developing Qianhai, Nansha,

and Hengqin, and see that they fulfill their role as the three major platforms for piloting and

50

leading development in the greater bay area.

5) We will advance the new, people-centered urvanization model

We will accelerate the implementation of the plan to grant urban household registration to

100 million people, lift restrictions on granting urban residency, and fully implement supportive

policies for linking the increase in transfer payments and the amount of land designated for

urban development to a local government with the number of residents who have been newly

granted urban residency. We will implement the residence card system nationwide, and

encourage localities with suitable conditions to expand the scope of public services available to

card holders and improve service standards. We will enhance the mechanisms which allow

former rural residents who have been granted urban residency to voluntarily transfer certain

rights in return for compensation, including contract rights for rural land and rights to share in

proceeds from rural collective undertakings, and carry out exploratory work on allowing rural

residential land to be given up voluntarily for compensation.

In developing city clusters, we will implement all plans, raise quality standards, and move

forward with the development of networks of different-sized cities; we will see that steady

progress is made in upgrading counties into cities and pursuing sound development for small

cities and towns with unique features. We will speed up the development of urban drainage

and rainwater control facilities and utility tunnels, and take strong steps to see the development

of green cities, smart cities, eco-friendly garden cities, and cities of culture.

7. Ensuring ronsumption and investment play effective roles

We will expand consumer spending and promote effective investment to create a

beneficial cycle of improvements to the supply composition and appropriate expansions in

aggregate demand.

1) We will improve !)Stems and mechanisms for promoting ronsumption.

We will continue the Ten Initiatives for Boosting Consumer Spending, support

nongovernmental participants in providing medical, elderly care, educational, cultural, and

sports services, and promote the integration of the internet into service sectors such as elderly

care, medical services, housekeeping, and express delivery. We will provide strong support to

the health industry and develop a high-quality supply system for elderly care services. We will

work to improve the quality and expand the size of the domestic services sector, and

encourage greater levels of professionalism among those working in the sectot

2) We will active/y expand new growth areas in consumer spending.

To support the consumption of new-energy vehicles, we will encourage local governments

to make it easier for consumers to purchase and use new-energy vehicles. We. will expand the

trials for parallel import of vehicles, and encourage and guide consumption in products that

are energy-saving, environmentally friendly, and low-carbon. We will promote consumption for

smart-home products, wearable devices, and other emerging information goods and services,

51

and drive growth in other new areas of consumption like digital homes, online custom

tailoring, and experience sharing services. We will promote digital consumption, and accelerate

the integrated development of e-commerce and physical store sales. To boost tourism

consumption, we will introduce a promotion plan for inbound tourism, lower ticket prices at

major state-owned scenic attractions, strongly promote all-for-one tourism, and develop

cruise-liner tourism.

3) We will farther improve the consumer environment.

We will regulate and guide the rational, orderly development of bike-sharing services and

other new forms of consumption, and abolish policies restricting the transfer of second-hand

cars between different regions. We will work to ensure that products sold domestically are

produced on the same production lines, meet ·the same standards, and are of the same quality

as exported ones, and that China's time-honored brands are developed and kept alive. We will

set up mechanisms to allow consumers participate in work on setting standards. We will speed

up the development of a system for tracing important products, and take stronger steps to

investigate infringements of consumer rights in key industries and sectors and hold those

involved accountable. To strengthen market regulation, we will launch joint cross-industry and

trans-regional campaigns to combat counterfeiting and create an environment in which

consumers can shop with peace of mind.

4) We will improve the composition of investment, with the fact1s on key areas xx.

Government investment will continue to play a leading role, with investment from the

central government budget totaling 53 7 .6 billion yuan for the year, an increase of 30 billion

yuan over last year. Greater support will be provided to agriculture, rural areas, and rural

residents, to promoting innovation-driven growth, environmental protection, and

improvements in people's wellbeing, and to building security capacity. We will take stronger

steps to develop infrastructure networks for water conservancy, railways, highways, waterways,

aviation, pipelines, power grids, information, and logistics. Regulations on government

investment will beissued. We will fully implement policies and measures in support of private

investment, create a stable, transparent, and fair investment environment, and support the

entry of private capital into oil; natural gas, telecommunications, and other sectors; We will

regulate and promote the application of the PPP model in an orderly fashion to encourage the

participation of private capital, put idle assets to use through a variety of channels, and

leverage the recovered funds to shore up areas of weaknesses, so as to create a sound

investment cycle.

8. Making new advances in opening up on all .fronts

Continuing to place equal emphasis on "bringing in" and "going global," we will move

faster to cultivate new strengths in international economic cooperation and competition.

1) We will activefy push fanvard the Belt and Road Initiative.

52

We will establish a sound long-term mechanism to ensure the agreements and plans made

at the Belt and Road Forum for International Cooperation are fully carried out. We will

continue to promote international cooperation on the Belt and Road Initiative and

complementarity between the development strategies and plans of participating countries. We

will speed up the construction of railways, highways, telecommunications networks, power

grids, ports, industrial cooperation parks, and energy infrastructure, and strengthen the

connectivity of policies, rules, and standards of countries involved in the Initiative. We will

promote the healthy and orderly development of China-Europe freight train services. We will

continue to develop the Digital (Online) Silk Road and set up space information corridors and

see they are put to good use. We will deepen cultural exchange and cooperation and strengthen

security risk prevention and control.

2) We will take solid steps to make China a trader of quality.

To more quickly increase the quality and added value of exports, we will encourage the

export of new- and high-technology, equipment manufacturing, and Chinese-brand products.

We will promote a balance in foreign trade by actively expanding imports and lowering import

tariffs on certain products such as automobiles and some non-durable consumer goods. Trials

will be expanded to develop the services trade through innovation, and cities that are

trendsetters in providing outsourcing services for foreign clients will play a stronger role in

driving the development of their surrounding areas. We will promote the development of

demonstration centers for the transformation and upgrading of foreign trade, as well as trade

platforms and international marketing service networks, support the central and western

regions and northeast China in receiving processing industries that · are relocating, and

encourage the development of "enclave economies." We will foster new forms and new

models of trade and support the healthy development of new sectors such as cross-border

e-commerce.

3) We will promote steatfy growth in the use qf foreign investment and improve its composition.

We will apply the management model of pre-establishment national treatment plus a

negative list in all sectors. We will relax restrictions on market access in an orderly fashion,

expanding the scale of opening up in finance, telecommunications, education, and other

sectors,. while fully opening up the general manufacturing sector. We will improve laws

concerning foreign investment and protect the legitimate rights and interests of foreign

investors. Promoting the development of pilot free trade zones in accordance with high

standards and quality requirements, we will hand over greater decision-making power in reform

to these zones and carry out exploratory work on setting up free trade ports with Chinese

features. We will take active and prudent measures to promote bidirectional opening up in the

capital market, and improve unified, macro-prudential management of cross-border financing.

We will set up a sound system for unified monitoring and management of all foreign debt as

53

part of our efforts to earnestly and effectively guard against foreign debt risks.

4) We will guide the steaefy and order/y development of outward investment.

We will create new patterns of outward investment, deepen international

industrial-capacity cooperation, promote the building of overseas economic and trade

cooperation zones, and let investment drive the growth of foreign trade and industries. We will

make new improvements to investment and financing mechanisms, make it easier to use the

RMB in trade and investment, and explore new ground in the internationalization of the RMB.

We will improve laws and regulations as well as monitoring and service platforms for outward

investment. Furthermore, we will enhance recording and reporting of outward investment,

ensure supervision over all stages of the outward investment process, and strengthen services

for outward investment.

5) We will active/y participate in and promote economic globaliZf1tiOn.

We will do our utmost to ensure China successfully hosts the annual meeting of the Boao

Forum for Asia, the Shanghai Cooperation Organization 2018 Summit, the 2018 Summit of

the Forum on China-Africa Cooperation, the First China International Import Expo, and

other diplomatic events. We will support the United Nations and the G20 in playing their roles

as the main platforms for global governance, and see that· APEC, BRICS, an:d other

cooperation mechanisms also play their part. We will continue to deepen cooperation in

bilateral and multilateral investment and trade, support the multilateral trade system, and work

to promote high-standard facilitation of trade and investment.

9. Ensuring and improving Jiving standards

We will take strong measures to promote supply-side structural reform in society, bolster

areas ·of weakness in public service provision, and strive to meet the people's ever-growing

needs for a better life.

1) We will improve emplqyment qualify and income levels.

With a continuing commitment to prioritizing employment, we will implement a proactive

employment policy. We will carry out a national plan to cultivate highly-skilled personnel and

roll out vocational skills training on a large scale in an effort to ensure that improvements in

the caliber of the workforce take place alongside structural adjustments in industry. We will

encourage the development of startups that create employment, and implement new policies

to support people, such as migrant workers, in returning or moving to the countryside to start

businesses. We will provide comprehensive public employment services, and continue

programs that help college graduates gain employment, guide them in starting businesses, and

encourage them to work at the community level. We will take steady and well-ordered measures

to resettle workers laid off due to the phasing-out of excess production capacity, and help

those experiencing employment difficulties and demobilized military personnel find jobs. We

will take active measures to alleviate structural problems related to employment, and address

54

and speed up the development of a housing system in which housing is provided by multiple

entities, supply is guaranteed through various channels, and both rental and purchase are

encouraged. To develop the housing rental market and particularly long-term leasing, we will

ensure protection of the legitimate rights and interests of all parties involved in rentals. We will

make sure that public rental housing projects are finished on time and allocated to entitled

households, and strengthen efforts to provide public rental housing for new urban residents.

We will support Beijing, Shanghai, and other cities in carrying out trials on joint-ownership

housing.

10. Taking stronger measures to build an ecological civilization

Continuing our commitment to the sustainable development strategy, we will work to

promote positive interplay between economic growth and ecological improvement and move

faster to implement the Beautiful China initiative.

1) We will promote a sound economic structure that facilitates green, low-carbon, and circular development.

We will formulate policies and measures that are conducive to promoting green

development in industry and build up , energy conserving, environmentally friendly, clean

production, and clean energy industries. Efforts will continue to control the total amount and

intensity when it comes to the use of energy, water, and land for development, and, in line with

this, we will launch a nationwide water conservation campaign and the "100-1000-10000"

energy conservation program: We will finish establishing the system for the initial allocation

and trading of rights for energy and water use and carbon emissions, and deepen

implementation of the system for extended producer responsibility. We will promote the

construction of resource recycling centers, the comprehensive use of massive solid waste, the

development of a circular economy in the agricultural sector, and circular operations in

industrial parks. We will improve price policy systems to facilitate green development and see

that the Environmental Protection Tax Law is enforced.

2) We will strengthen protection ef the ecological DJStem.

We will adopt a holistic approach to conserving China's mountains, rivers, forests,

farmland, lakes, and grassland, and carry out large-scale programs to protect and restore major

ecosystems. We will speed up work to draw redlines for protecting ecosystems, designate

permanent basic cropland, and delineate boundaries for urban development; and we will also

work faster to demarcate spaces to be used for urban development, agriculture, and ecological

conservation. We will launch large-scale afforestation and comprehensively tackle soil erosion.

We will expand the projects to return marginal farmland to forest or grassland, continue to

return grazing land to grassland, and enhance the system for rehabilitation of cropland,

grassland, forests, rivers, and lakes; and, in line with an appropriate timetable, we will begin

• The 100-1000-10000 energy conservation program will see the top 100 energy consuming enterprises in China being regulated by central government, a further 1,000 being regulated by their respective provincial-level governments, and over 10,000 more coming under the regulation of lower-level governments.

57

relocating industries and residents from core areas of the Qilian Mountains to preserve the

environment there. We will deepen our efforts to comprehensively .improve land conditions,

and .improve and restore geological environments in mining areas.

3) We will deepen sfrllctural reform for promoting ecological civilization.

We will encourage national ecological civilization pilot zones and demonstration zones to

move faster in making institutional innovations. We will reform the environmental oversight

system, .improve the property rights system for natural ·resource assets, and speed up the

establishment of regulatory agencies to manage state-owned natural resource assets and

monitor natural ecosystems. We will refine the system for developing and protecting territorial

space, take strong steps to .implement land plans and comprehensive programs to .improve land

conditions, and carry out monitoring and early-warning for environmental and resource

carrying capacity. We will enhance supporting policies for functional zones, and conduct value

realization trials for ecological products in Zhejiang, Jiangxi, Guizhou, and Qinghai. We will

fully establish the river and lake chief systems. We will develop supporting institutions for the

national parks system and build a nature reserve system centered on national parks. We will

explore the establishment of diversified market-based mechanisms for ecological

compensation.

4) We will active/y promote an eco-ftiend/y lifesryle.

We will promote green technologies that benefit the public and expand green

consumption. We will launch a series of events including National Energy-Saving Week and

National Low-Carbon Day, make Party and government offices do better when-it comes to

conservation, and develop eco-friendly families, schools, shopping malls, buildings,

co=unities, and transport services.

5) We will proactive/y address climate change.

We will step up efforts to develop a management system for the national carbon market,

put in place the relevant infrastructure, and enhance its capacity. We will continue to strengthen

work on controlling greenhouse gas emissions and take forward pilot and demonstration

programs on low-carbon development as well as pilots on developing climate resilient cities.

On the issue of addressing climate change, we will play a constructive role in guiding

international talks and continue to promote South-South cooperation.

We will support Hong Kong and Macao in integrating into the overall development of the

country. With a focus on development in the Guangdong-Hong Kong-Macao Greater Bay

Area, on Guangdong-Hong Kong-Macao cooperation, and on regional cooperation in the

pan-Pearl River Delta, we will deepen investment, economic, and trade cooperation between

the mainland and Hong Kong and Macao, and .improve policies and measures to make it easier

for Hong Kong and Macao residents to pursue development on the mainland. We will support

58

Hong Kong in its efforts to raise its standing as an international financial, shipping, and trade

center and to enhance its position as a global hub for offshore RMB services. We will promote

further cooperation between the mainland and Hong Kong in the construction of information

infrastructure, highways, railways, ports, and airports. We will give more support to Macao's

endeavor to become a world tourism and leisure center and to serve as a platform for

facilitating business and trade cooperation between China and Portuguese-speaking countries.

We will support Macao in hosting the Macao International Trade and Investment Fair and the

International Infrastructure Investment and Construction Forum. We will continue to promote

economic and trade relations between the two sides of the Straits, and expand cross-Straits

economic and cultural cooperation and exchange. We will work to see that Taiwan compatriots

enjoy the. same treatment as local residents when studying, starting a business, working, or

living on the mainland, thus bringing greater benefits to them.

Esteemed Deputies,

Accomplishing the work for economic and social development in 2018 is an important

and demanding task. We will unite even closer around the CPC Central Committee with

Comrade Xi Jinping at its core, hold high the great banner of socialism with Chinese

characteristics, and take Xi Jinping Thought on Socialism with Chinese Characteristics for a

New Era as our guide. We willingly accept the oversight of the NPC and welcome comments

and suggestions from the CPPCC National Committee. Let us all join in a concerted effort to

promote reform and innovation, work practically to overcome difficulties, and strive to

promote sustainable and sound economic and social development, in order to provide a solid

foundation as we move toward a decisive victory in building a moderately prosperous society

in all respects and begin on a new journey to fully build a modem socialist China.

59

No.

1

2

3

4

5

6

7

8

9

10

11

12

Performance for the Main Targets in the 2017 Plan for National Economic and Social Development

Targets Type Unit Projected Actual

Figure Figure .

I. Economic Development

GDP Anticipatory % Up 6.5 approx. Up6.9

Primary Industry Anticipatocy % Up 3.3 approx. Up3.9

Includes: grain output Anticipatory Million

OvcrSS0.00 617.91 metric tons.

Secondary Industry Anticipatory % Up 6.1 approx. Up6.1

Industrial sector Anticipatory % Up 6.0 approx. Up6.4

Includes: electricity generated Anticipatory Trillion

6.3270 6.4951 kWh

Tertiary Industry Anticipatocy % Up 7.4 approx. Up8.0

Domestic Demand

Total fixed.asset investment Anticipatory % Up 9.0 approx. Up7.0

Total retail sales of consumer goods Anticipatory % Up 10.0 Up 10.2 approx.

External Economy

Total import and export volume of % Steady Anticipatocy (Billion recovery ,nd Up 14.2

goods Yuan) growth

Total import and export volume of % Anticipatoi:y (Billion Up 9.5 approx. Up6.8

services Yuan)

Foreign direct investment Anticipatory Billion US$ 126.0 131.0

60

Performance

As projected

Better than projected

Better than projected

As projected

As projected

As projected

As projected

Lower than projected

As projected

As projected

Lower than projected

As projected

13 Long- and medium-term foreign Anticip:uory Dillion USS 210.0 189.1 As projected

debt

14 Outbound direct investment Anticipatory Billion USS 170.0 120.t As projected

Urbanization Levels

15 Percentage of permanent urban Anticipatory % 58.25 58.52 As projected

residents

16 Percentage of registered urban Anticipatory % Ovec4220 4235 As projected

residents

Price Levels

17 CPI (2016=100) Anticipatory 103.0 approx. 101.6 As projected

Fiscal & Financial Targets

18 General government revenue Anticipatory % Up5.0 7.4 Better than projected

19 General government expenditures Anticipatory % Up65 7.7 Better than projected

.

20 Fiscal deficit Anticipatory Trillion yuan -2.38 -238 As projected

21 M:z money supply growth rate Anticipatory % 120 approx. 8.2 As projected

22 Aggregate financing growth rate Anticipatory % 120approx. 12.0 As projected

II. Innovation as growth driver

Science & Technology

23 Spending on R&D as a percentage

Anticipatocy % 2.13 2.12 As projected of GDP

24 Number of patents per 10,000 Anticipatory 9.4 9.8 As projected

people

Contribution of scientific and 25 technological advances to Anticipatocy % 57.0 57.5# As projected

economic n-rowth

26 Percentage of mobile broadband Anticipatory % 75 81.4 As projected

users

61

27 Percentage of households with fixed

Anticipatoiy broadband internet access

% 63 74 Better than projected

Education

28 Retention rate of nine-year % 93.8 93.8 As projected

compulsory education Anticipatory

29 Gross enrollment ratio for senior

Anticipatory % 88.0 88.3 As projected secondary education

30 Regular undergraduate enrollment Anticipatory Million 7.350 7.615 As projected students

31 Graduate enrollment Anticipatory Million

0.844 0.805 As projected students

III. Resotll'ce Conservation and Environmental Protection

Resource conservation

Billion tons

32 Total energy consumption Anticipatory of standard Within 4.50 4.49 As projected coal

33 *Reduction in energy consumption Obligatory % Over3.-4 3.7 Accomplished per unit of GDP

34 *Reduction in carbon dioxide Obligatory % 4.0 5.1 Accomplished emissions per unit of GDP

35 *Share of non-fossil fuels in Obligatoty % 14.4 13.8 Unaccomplished primary energy consumption

36 *Reduction in water consumption Obligatoty per 10,000 yuan of GDP

% 5.4 5.6 Accomplished

37 *Land newly designated for Obligatoty

1,000 400.00 400.00# Accomplished construction hecta=

38 Includes: agricultural land Obligatory 1,000

340.00 340.00# Accomplished hecta=

39 Includes: cultivated land Obligatory 1,000

226.67 226.67# Accomplished hectares

40 Increase in total cultivated land Obligatory 1,000

226.67 221,,67# Accomplished hccta=

41 Land reclaimed from the sea ObUgatoty 1,000

18.67 0.0027 Accomplished hectares

Environmental Protection

62

42 Afforestation of land Anticipatory 1,000

Over 14,666.67 15,664.00# As projected hectares

*Percentage of days with good or 43 excellent air quality in cities at Obligatory % 79.0 78.0 Unaccomplished

and above nrefectural level *Reduction in PM2.s

44 concentrations in cities at or Oblig:ttocy above prefectural level that fell

% 3.0 7.7 Accomplished

short of the national standards *Proportion of surface water with

45 a Grade III or higher water Obligatory % 68.3 67.9 Unaccomplished

nualitv ratinD'

46 *Proportion of surface water with Oblig:ltory

a Grade V rating or lower % 8,4 83 Accomplished

47 *Reduction in chemical oxygen Obligatory demand

% 2.0 3.1 Accomplished

48 *Reduction in ammonia nitrogen Obligatory % 2.0 3.6 Accomplished

49 *Reduction in sulfur dioxide Obligatory emissions

% 3.0 8.0 Accomplished

50 *Reduction in nitrogen oxide Obligatocy % 3.0 4.9 Accomplished emissions

51 Percentage of urban sewage treated Anticipatory % 92.6 93.8# As projected

52 Percentage of urban household Anticip11.cory % 95.0 97.5# As projected

refuse safely treated

IV. Social Development and People's Wellbeing

Employment and Income

53 Urban jobs newly created Anticipatory Million Over 11.00 13.51 Better than projected

54 Registered urban unemployment Anticipatory % Within 45 3.9 As projected

rate

Personal per capita disposable In step with 55 Anticipatory % the economic Up7.3 As projected

income growth

In step with 56 Rural per capita disposable income Anticipatory % the economic Up7.3 As projected

growth

In step with 57 Urban per capita disposable income Anticipatory % the economic Up6.S As projected

growth

Poverty Reduction

63

58 *Reduction in number of rural Obligato.cy Million Over10.00 12.89 Accomplished

residents living in poverty

Population and Public Health

59 Year-end national population Anticipatory Billion 1.39312 1.39008 As projected

60 Number of hospital and health

Anticipato.cy clinic beds per 1,000 people

552 5.66 As projected

Number of occupational physicians 61 and physician assistants per 1,000 Anticipatoty 2.33 2.41 As projected

oeoole

62 Number of service facilities for

A11ticip:1toty 4,033 3,822 As projected people with disabilities

Social Security

Number of urban workers covered 63 by the basic old-age insurance Anticipat0ty Million 383.30 401.99 As projected

svstem

Number of participants in basic

64 old-age insurance schemes for

Anticipatory rural and non-working urban

Million 508.80 512.55 As projected

residents

*Number of housing units 65 renovated in run-down urban Obligatory Million units 6.00 6.09 Accomplished

areas

Notes: 1. The 2017 Plan for National Economic and Social Development deliberated and passed at the Fifth Session of the

12th National People's Congress lists a total of 65 targets, 46 of which are anticipatory and 19 obligatory. The 15 targets marked with * are obligatory targets set forth in the 13th Five-year Plan for National Economic and Social Development of the People's Republic of China.

2 Anticipatory targets are development objectives that the government hopes to achieve and figures it expects to reach; however they are not compulsory targets, nor are they predicted figures. The actual figures may be higher or lower than projected. Obligatory targets are mandatory and binding; they represent the government's macro regulatory intentions, and must be achieved.

3. The performance for obligatory targets is assessed on the basis of whether or not targets have been accomplished. The performance for anticipatory targets is assessed on the basis of a deviation of 10% from the projected figure: if the actual figure exceeds the anticipatory figure by 10% or more, it is rated "better than projected"; if it falls short by 10% or more, it is rated "lower than projected"; if the actual figure is higher or lower than the anticipatory figure by less than 10%, it is deemed to be "as projected." These assessment standards are not applicable to targets that have a minimum or maximum limit. For example, the actual registered urban unemployment rate in 2017 was 3.9%, which falls short of the anticipatory target by more than 10%, but the assessment is still deemed to be as projected.

4. The figures marked with # are estimated figures for 2017; the actual figures will be confirmed following final review and adjustment by relevant departments. Owing to the adjustment of the base figures for 2016, the actual performance for some targets in 2017 may change somewhat

64