Figure 4. The Four Major Platforms
2) Reform of the investment and financing systems picked up pace.
Guidelines on deepening reform of the investment and financing systems and regulations on the review and reporting of investment projects for enterprises were introduced, spurring a new round of reform throughout the investment and financing systems. We revised regulations on the management of projects for which the central government budget provides investment and loan-interest subsidies, and formulated 80 specific documents concerning the management of such projects. Significant progress was made in demonstration initiatives to attract private capital for projects such as the Ji'nan-Qingdao and Hangzhou-Shaoxing-Taizhou railway lines.
3) Price reform was deepened.
Trials to reform electricity transmission-and-distribution prices were extended to all provincial-level grids. We established a new pricing mechanism for the pipeline transportation of natural gas, and worked to ensure that the market decided citygate prices of natural gas for non-household users, who accounted for over 80% of natural-gas consumption. Markets for trading petroleum and natural gas experienced rapid development. Around 90% of cities have adopted tiered pricing for household water, electricity, and natural gas usage. Price reforms for medical services were implemented across the board and pricing for passenger rail and airline tickets became noticeably more market based. Comprehensive pricing reform on water for agricultural use registered solid progress. We improved the minimum state purchase price policy on rice and wheat and pressed on with pilot reforms for ensuring base prices for cotton and soybeans.
Box 4: Price Reform in Key Areas
4) Steady progress was made in the reform of State-owned Enterprises (SOEs) and major industries.
In putting in place a framework that consists of the Guidelines on Deepening Reform of SOEs as well as supplementary documents, we promulgated work plans to more quickly relieve SOEs of their obligations to operate social programs and help them address other longstanding issues, and steadily pressed ahead with the nine major tasks for deepening SOE reform and the 10 pilot SOE reforms*. We implemented the pilot reform to introduce mixed ownership for an initial group of SOEs and made progress in the trials to establish the first group of state capital investment companies.
We approved reform plans for the electricity industries in 31 provinces,autonomous regions, and municipalities directly under the central government, and released the first batch of 105 trial projects to increase the number of electricity distributors. Plans were formulated for reforming state forestry farms in all provinces, autonomous regions, and municipalities directly under the central government and for reforming key state forestry areas in Inner Mongolia, Jilin, and Heilongjiang. Trial reforms on state forestry farms were successfully concluded in Zhejiang, Hunan, Jiangxi, and three other provinces.
The plan for structural reform of the salt industry was issued, and all controls on producer, wholesale, and retail prices of salt were lifted. The system for purchasing and stockpiling corn was reformed, and the policy for temporary purchase and storage of corn in the northeast was replaced with a mechanism based on market-price purchases and supplementary subsidies. The work to reduce stockpiles of grain and cotton through the provision of policy support proceeded smoothly.
Box 5: Reform of SOEs
5) Work to create a fair and competitive market was accelerated.
The guidelines on improving the property rights protection system and protecting property rights in accordance with the law were published so as to ensure the rights and interests of economic entities under all forms of ownership are subject to law-based protection on an equal footing. Steady progress was made in the pilot reform for market-based allocation of land designated for industrial purposes. Guidelines on establishing a review mechanism within the market system to ensure fair competition were issued so as to impose direct controls on government departments preventing them from adopting policies or measures that eliminate or stifle competition.
New headway was made in developing a credit rating system, and guidelines on enhancing the credit standing of governments and individuals, and within the e-commerce sector, were formulated. More than 50 departments worked together in 12 sectors to take punitive actions against those who act in bad faith and in three sectors to provide incentives to those who act in good faith. Coordinated efforts to combat infringements and counterfeiting were enhanced, with over 170,000 cases of illegal and criminal activities being investigated and handled. Steady progress was achieved in the comprehensive trials to reform and develop the domestic commodity distribution system.
6) Fiscal, tax, and financial reforms proceeded in an orderly manner.
The State Council's Guidelines on Advancing Reform for the Sharing of Fiscal Authority and Spending Responsibilities between the Central and Local Governments (G.F. [2016] No. 49) were promulgated and implemented. We extended trials to replace business tax with VAT to all sectors, including the construction, real estate, financial, and consumer service industries, and ensured that VAT deductions cover all new immovable property of enterprises. Ad valorem rates were introduced for all resource taxes, and trial reforms to levy a water-resource tax were carried out. Reform of state-owned commercial banks as well as of development and policy-backed financial institutions were deepened. The deposit insurance system performed solidly. A number of measures for financial-sector opening up and innovation created by the China (Shanghai) Pilot Free Trade Zone were replicated in the pilot free trade zones in Guangdong, Tianjin, and Fujian. The Shenzhen-Hong Kong Stock Connect was launched.
7) Social reforms were accelerated.
Reform of the system for the use of official vehicles was completed in all organs of the CPC Central Committee and the State Council and its implementation was deepened in local Party and government bodies. A second group of trials to delink industry associations and chambers of commerce from the government were launched. Implementation of a unified registration system for immovable property was accelerated, with 100% of prefectures, prefecture-level cities, and autonomous prefectures and 98% of counties, county-level cities, and districts across the country issuing new certificates to replace old ones. Management reform for state science and technology initiatives was deepened, profit distribution policies were developed with the goal of strengthening the value ascribed to knowledge, and efforts to apply scientific and technological advances were intensified. Comprehensive education reform was stepped up.
The system of tiered diagnosis and treatment was further developed, and substantive progress was made in integrating the basic medical insurance schemes for rural and non-working urban residents. The proportion of health care expenses borne by individuals dropped to 28.9%. Guidelines on Fully Opening up the Elderly Care Market and Improving Elderly Care Services (G.B.F. [2016] No. 91) by the State Council's General Office were published and implemented. We made steady progress in reforming the pension system for employees of Party and government offices and public institutions.
We moved faster to develop philosophy and the social sciences with Chinese characteristics, and launched an initiative to encourage innovation in philosophy and the social sciences. We worked to speed up implementation of soccer reforms.
Box 6: Social Reforms
* They are to: ensure the power of the board of directors of SOEs; carry out competitive selection and employment of executives and managers; promote the professional management system; implement differentiated pay in SOEs; develop companies for state capital investment and operations; merge and reorganize central government enterprises; introduce mixed-ownership structures in some major sectors; allow employees of SOEs with mixed-ownership structures to hold shares in their employer company; make information on SOEs public; and relieve SOEs of their obligation to operate social programs and help them address any other longstanding issues.
8) The Belt and Road Initiative served as pacesetter to an open economy that saw continuous improvement.
The Belt and Road (the Silk Road Economic Belt and 21st Century Maritime Silk Road) Initiative saw rapid progress. Development of the Initiative's framework, which consists of six corridors and six channels serving multiple countries and ports*, made steady progress, enabling China and its partners to markedly increase cohesion between their development strategies and plans. China-Europe freight train services, which have registered a total of nearly 3,000 trips, were brought under a single unified brand.
A number of signature projects for international industrial-capacity cooperation got off the ground. The Addis Ababa-Djibouti Railway officially came into service-from investment and financing to technology, operation, and management and maintenance, Chinese standards were applied throughout the project, making it the first full-production-chain export of China's railway. Steady progress was achieved in the construction of major international projects including railways connecting Jakarta and Bandung (high-speed railway), China and Laos, China and Thailand, and Hungary and Serbia; the railway project in southern Malaysia; and the Gwadar Port in Pakistan.
Further steps were taken to facilitate foreign investment, ensuring that utilized non-financial foreign investment remained stable. The regulation system and institutions for outbound investment were improved, which enabled further growth of outbound non-financial investment. All coastal ports installed and started using the Single Window System for foreign trade, and all ports throughout China successfully integrated customs clearance procedures and inspection and quarantine procedures.China experienced a 0.9% fall in total imports and exports for the year, which was 6.1 percentage points less than the previous year's decrease. Trade in services grew rapidly. The RMB was officially included in the International Monetary Fund's special drawing rights (SDR) basket. Of particular note was China's hosting of the G20 2016 Hangzhou Summit which produced important and far-reaching outcomes.
Box 7: Major Platforms for Development and Opening up
4. We deepened implementation of the innovation-driven development strategy, spurring the growth of new drivers for economic development.
The National Strategy for Innovation-Driven Development was published and implemented. With a number of major scientific and technological advances as well as rapid growth in high-tech industries, equipment manufacturing, and strategic emerging industries, innovation has played an increasingly important role in bolstering development.
1) Innovation capacity continued to improve.
We ensured the progressive and orderly development of major science and technology innovation platforms, and deepened pilot reforms on all-around innovation in eight regions. New strides were made in setting up science and technology innovation centers in Beijing and Shanghai. Work began to establish three national demonstration zones for the transfer and commercialization of scientific and technological achievements in Hebei-southern Beijing, Zhejiang, and Ningbo. The first national technology innovation center for high-speed trains was established, and the first Chinese-standard high-speed trains for which we hold complete intellectual property rights went into service. A number of major science and technology infrastructure projects were completed such as the project to build the world's largest single-aperture radio telescope, the Five-hundred-meter Aperture Spherical Telescope (FAST). A number of significant scientific and technological advances were achieved in sectors including quantum communications, space, and aviation.
We pressed ahead with implementing major national science and technology programs, and identified major projects for the Sci-Tech Innovation 2030 Agenda. A big push was made to encourage technological innovation among enterprises, with policies being implemented in relation to extra tax deductions for R&D costs, equity-based incentives for undertaking innovation, income tax incentives for personnel who contribute their technological achievements to become company shareholders, and improvements in the methods for defining new- and high-tech enterprises.
Box 8: Major Science and Technology Innovation Platforms
2) Entrepreneurship and innovation initiatives were carried out across the board.
Work on establishing 28 national entrepreneurship and innovation demonstration centers moved forward on all fronts. Information service platforms for entrepreneurship and innovation policies began operating, and a whitepaper on entrepreneurship and innovation was published. The national seed fund for investing in emerging industries, the sub-funds of the seed fund for encouraging the application of scientific and technological advances, and the National SME Development Fund all came into operation. Trials got underway to allow banks to make combined debt-equity investments in startups and small businesses, and creative improvements were made to the system of guaranteed loans for business startups. The second National Week for Entrepreneurship and Innovation and the Innovating China Tour were a tremendous success. 128 platforms for entrepreneurship and innovation were developed by large-scale central government enterprises, guidelines on further improving the policies for managing the funding of central government-funded research programs were published and implemented, and mechanisms for encouraging entrepreneurship and innovation were gradually improved in research institutes and universities. All types of incubators and professional maker spaces saw continuous development. On average, 15,100 new enterprises were registered each day in 2016.
3) New technologies and industries as well as new forms and models of business flourished.
There was rapid development in industrial robotics, integrated circuits, satellite applications, general aviation, bio-industry, and other new industries, while growth in strategic emerging industries was stable. In 2016, enterprises with annual turnover of 20 million yuan or more in 27 key strategic emerging industries increased their revenues by 11.32% and profits by 13.96%. We pressed ahead with implementing the Internet Plus initiative and the national big data strategy. Artificial intelligence, virtual reality, genetic engineering, and other new technologies experienced more rapid development. The platform, sharing, and collaborative economies, along with other new business models, achieved far-reaching penetration. New forms of business mushroomed, including combined online-offline businesses, cross-border and social networking e-commerce, smart home technology, and intelligent transportation. Online retail sales for 2016 reached nearly 5.2 trillion yuan, a year-on-year increase of 26.2%, with online retail sales of goods accounting for 12.6% of total retail sales of consumer goods.
4) Transformation and upgrading of traditional industries accelerated.
We moved faster to put the Made in China 2025 strategy into place, and organized implementation of the three-year action plan to enhance core competitiveness of our manufacturing industries and the project packages for transformation and upgrading of the manufacturing sector. The eight plans for industrial application were implemented smoothly. Major breakthroughs were made in research and development on key railway equipment. A total of 226 programs to run comprehensive, standardized tests on smart manufacturing technologies and apply new manufacturing models proceeded as planned. We made progress in building the National Robot Test and Evaluation Center. An investment fund for advanced manufacturing was set up.
* The six corridors refer to economic corridors, comprising the New Eurasian Continental Bridge, the China-Mongolia-Russia corridor, the China-Central Asia-West Asia corridor, the China-Indochina Peninsula corridor, the China-Pakistan corridor, and the Bangladesh-China-India-Myanmar corridor. The six channels refer to communications and distribution channels comprising highways, railways, airlines, waterways, pipelines, and information networks.
5) Solid steps were made in innovating and developing the service industry.
We implemented the guidelines on accelerating the development of producer and consumer services and published the implementation plan for relaxing controls over market access in the service sector. A new round of comprehensive pilot reforms in the service sector began. We allocated funds for guiding the development of the service industry and supported the establishment of 163 public-service platforms. The tertiary industry has continued to outgrow the secondary industry, and the value-added of the tertiary industry accounted for a higher proportion of GDP, reaching 51.6%.
6) Further improvements were made to infrastructure networks.
As a result of accelerated development of the modern comprehensive transportation system, the length of transportation infrastructure networks open to traffic exceeded five million kilometers. We unveiled and implemented the 100 Demonstration Projects to Improve Transportation Quality and Efficiency, 200 Transportation Projects to Help Reduce Poverty, and 300 Major Transportation Infrastructure Projects. We worked to stimulate development of multimodal transportation and the general aviation industry and integrated the development of transportation and logistics infrastructure.
The strategy on revolutionizing energy generation and consumption was launched, and energy supply capacity continued to grow stronger. The proportion of non-fossil energy consumption rose to an estimated 13.3% of total energy consumption while the proportion of coal consumption dropped to 62.0%. Fiber-optic networks were established in almost all prefecture-level cities, next-generation information infrastructure saw yet further enhancements, and China's 4G network, which is the world's largest, was completed.
Box 9: Major Infrastructure Construction
5. We worked to increase the capacity for sustainable agricultural development and achieved new progress in agricultural modernization.
The trend of ensuring progress while maintaining stability continued in agricultural and rural development and grain output reached 616 million metric tons, thus ensuring agriculture served as a strong pillar of economic and social development.
1) Agricultural production capacity continued to increase.
We implemented the plan to increase China's grain production capacity by 50 million metric tons, moved faster to develop high-quality farmland, and completed in full the work of designating permanent basic cropland throughout the country. As a result, our ability to guarantee national food security and the supply of major agricultural products has been further increased. New grain silos with a total capacity of 9.75 million metric tons were built. In working to optimize agricultural production while maintaining its stability, we reduced the area of land for corn kernel cultivation by 1.36 million hectares, expanded trials to cultivate feed crop or soybean crop instead of grain crop, and continued to raise overall production capacity for livestock and aquatic products.
We made steady progress in promoting green agricultural development, launching a campaign to control and prevent serious agricultural environmental pollution, establishing pilot demonstration zones for sustainable agricultural development, and securing important achievements in implementing the action plan against pollution in rural areas*. We intensified support for trials to comprehensively manage agricultural pollution from non-point sources, chernozem soils in the northeast, and former grassland now under cultivation in transition areas between cropland and grassland.
2) Agricultural and rural infrastructure continued to improve.
We successfully implemented projects to harness small and medium-sized rivers, reinforce small, dilapidated reservoirs, build key irrigation and drainage facilities as well as upgrade supporting infrastructure, and develop small-scale irrigation and water conservancy facilities. The area of cropland under efficient water-saving irrigation exceeded 1.33 million hectares. We also launched the project to consolidate and advance efforts to ensure safe drinking water in rural areas.
A new round of power-grid improvement projects began throughout the country, including key projects for upgrading power grids in rural areas, small towns, and hub villages, and for providing power supply to all electric pump sets on rural flatlands. Transportation infrastructure and services in rural areas were continuously improved, and 290,000 kilometers of rural road were newly built or upgraded. We continued to implement broadband development projects in villages, carried out nationwide trials of providing universal telecommunications services in rural areas, and further improved rural information infrastructure.
3) Integrated development of the primary, secondary, and tertiary industries in rural areas advanced smoothly.
The "100 counties, 1,000 townships, 10,000 villages" pilot demonstration project to promote rural industrial integration was implemented, with all 137 demonstration counties undertaking active explorations on how to improve development plans, promote integration between industrial development and urbanization initiatives, establish an industry system for modern agriculture, and innovate investment and financing mechanisms in the agricultural sector. We accelerated efforts to establish incubation parks for integrated development of industries in rural areas, develop diverse entities that integrate primary, secondary, and tertiary industry operations, and cultivate a group of leading enterprises in agricultural industrialization. New industries and new forms of business in rural areas experienced robust growth.
* The action plan aims to: 1) control water consumption for agricultural purposes; 2) cut the use of pesticides and chemical fertilizers; 3) use recycling as a means of handling the pollution caused by the waste of livestock and poultry farming, plastic mulch film, and straw burning.
4) Solid results were achieved in rural reform.
We issued and implemented the Measures for Separating Land Ownership Rights, Contract Rights, and Management Rights in Rural Areas, and determined, registered, and certified contracted rural land-use rights for more than 53.3 million hectares of land. The determination and registration of integrated housing ownership and land-use rights for rural housing land and rights for collectively owned land designated for construction was accelerated. We drew up the Guidelines on Reforming the Rural Collective Property Rights System, and moved ahead with pilot reforms to grant shareholder rights for rural collective assets as well as trials to permit the sale of land contract rights. We carried out trials in a prudent and orderly fashion to allow rural residents to mortgage their contracted land-use rights and residential property rights. The cases of transferring or mortgaging rural land use rights have continually increased. New types of agribusinesses thrived and their number rose to more than 2.7 million.
6. We further implemented the Three Initiatives and New Urbanization, which has helped reshape and enhance the pattern of urban and rural development.
We fostered synergy between the Three Initiatives (the Belt and Road Initiative, coordinated development of the Beijing-Tianjin-Hebei region, and development of the Yangtze Economic Belt) and the coordinated development of the western, northeastern, central, and eastern regions. We promoted coordinated and integrated regional development and urban-rural development, and increased the quality and standards of New Urbanization. New growth areas, poles, and belts experienced stronger, faster development.
1) The Three Initiatives advanced in a solid and orderly manner.
All provinces, autonomous regions, and municipalities directly under the central government actively took part in the Belt and Road Initiative, and initial results were delivered in developing Xinjiang as the core of the Silk Road Economic Belt and Fujian as the core of the 21st Century Maritime Silk Road.
In systematically promoting the coordinated development of the Beijing-Tianjin-Hebei region, we sped up planning and development of Beijing's sub-administrative center, implemented a number of demonstration projects to relieve Beijing of functions nonessential to its role as China's capital, facilitated coordination in three major areas-transportation, ecological conservation, and industrial development-and enacted a range of major reform measures. We published and implemented the Outline on Developing the Yangtze Economic Belt, continued coordinated efforts to champion environmental protection and eschew large-scale development, accelerated work on building a green, ecological corridor, and fully established a mechanism for inter-provincial consultation and cooperation covering the upper, middle, and lower reaches of the River.
Figure 5. The Belt and Road Initiative
Figure 6. Coordinated Development of the Beijing-Tianjin-Hebei Region
Figure 7. The Yangtze Economic Belt
2) Implementation of the master strategy for regional development and differentiated development policies for different regions deepened.
We increased efforts to accelerate large-scale development in the western region, with construction beginning on a number of signature projects. A relatively high-pace of economic development was maintained in the central and western regions. A new round of strategies and a number of major policies and measures for revitalizing the northeast were implemented, and reform in key areas, such as SOEs and the investment and business environment, made fresh progress. We underscored the strategic position of the central region, designating it as the country's key advanced manufacturing center, and as the priority area for New Urbanization, the core area for modern agricultural development, the demonstration area for promoting ecological progress, and the key area for comprehensive opening up. The city clusters along the middle reaches of the Yangtze River played a greater role as major growth poles. The eastern region continued to leverage its advantages in transforming and upgrading industries, in pursuing opening up and innovation, and in coordinating land and marine development to generate a constant stream of new drivers for growth and produce new highlights in development.
We introduced guidelines on promoting coordinated development between regions, and continued to improve the system of differentiated regional policies. We ensured the orderly development of major function platforms-such platforms include national experimental zones for integrated, complete reform, state-level new areas and all types of development zones, demonstration zones for industrial relocation, demonstration zones for integrating industrial and urban development, and demonstration airport economic zones. We intensified efforts to combat poverty in old revolutionary base areas, areas with concentrations of ethnic minorities, border areas, and contiguous poor areas. We improved polices and measures for promoting economic and social development and continuing stability in Xinjiang, Tibet, and the Tibetan ethnic areas in Sichuan, Yunnan, Gansu, and Qinghai provinces.
Box 10: Development of the Four Regions
3) We steadily advanced the development of New Urbanization.
We granted urban residency to more people with rural household registration living in urban areas, and issued a number of key policies in support of this work, such as the guidelines on reform of the household registration system, the policy for implementing the residence certificate system,and the policy for linking increases in the amount of land designated for urban development in a locality to the number of former rural residents granted urban residency there. A total of 16 million people with rural household registration were granted urban residency in 2016. In total, permanent urban residents now account for 57.35% of the population, while the percentage of registered urban residents has reached 41.2%. We planned and developed city clusters in an orderly way, and supported Wuhan and Zhengzhou in developing as national principal cities. We facilitated the development of emerging small- and medium-sized cities as well as small towns with unique features across the country, and extended comprehensive trials of New Urbanization programs to two provinces and 246 cities and towns. Trials for comprehensive reform of small- and medium-sized cities yielded positive results in 61 cities.
Box 11: New Urbanization
7. We intensified environmental protection and energy and resource conservation, securing early achievements in promoting green development.
Energy consumption and carbon dioxide emissions per unit of GDP fell by 5% and 6.6% respectively, both surpassing annual targets. According to estimated figures, chemical oxygen demand was reduced by 2.6%, ammonia nitrogen emissions by 2.9%, sulfur dioxide emissions by 5.6%, and nitrogen oxide emissions by 4.0%. A year-on-year increase of 2.1 percentage points occurred in the proportion of days with good or excellent air quality for cities at or above prefectural level, while the annual average PM2.5 concentrations in 74 key cities dropped by 9.1%. The proportion of surface water with a national quality rating of Grade III or above rose by 1.8 percentage points year on year, and the proportion of surface water with a rating lower than Grade V, meanwhile, fell by 1.1 percentage points. Water consumption per 10,000 yuan of GDP fell by 5.6%.
Figure 8. Ecological Progress and Green Development
1) Work to promote ecological progress moved ahead.
We promulgated and implemented the measures on evaluating performance in advancing ecological progress. We decided to build pilot zones for ecological advancement in Fujian, Jiangxi, and Guizhou provinces, and stepped up the development of pilot demonstration zones for promoting ecological progress. We issued and implemented a number of reform plans on ecological progress, including: the pilot plan on improving the national system for natural-resource asset management; the guidelines for trial reforms to establish a system to bring county- and prefecture-level environmental monitoring, inspection, and law enforcement bodies directly under the jurisdiction of provincial-level environmental bodies; the plan for implementing the emissions permit system to tighten emissions control; and the guidelines on establishing and holding firm to the red lines for ecological conservation and on fostering market entities for environmental governance and ecological conservation. Pilot reforms of the compensation system for ecological and environmental damage were carried out in seven provinces and municipalities directly under the central government including Jilin.
The guidelines on bringing the river chief system into full operation were issued, and mechanisms for compensating ecological conservation efforts were improved. We moved faster to implement a new round of projects to return marginal farmland to forest and grassland, build key forest shelterbelts, comprehensively address the expansion of stony deserts, control the sources of dust storms affecting Beijing and Tianjin, and bring soil erosion under control. A basic framework for wetland conservation was put in place. The central government carried out environmental inspections.
2) The development strategy for functional zones was further implemented.
Key ecosystem service zones have been established in 676 counties and 87 forestry bureaus in key state forestry areas. A negative list for industry access to key ecosystem service zones was issued and put into force. Work got under way in 11 coastal provinces to draw up and implement plans for marine functional zones. The plan for establishing a national park system on a trial basis was implemented, with trials going ahead in national parks at the Yangtze, Yellow, and Lancang riversources, in the habitats of Siberian tigers, Far Eastern leopards, and giant pandas, in the Shennongjia area, in the Wuyi Mountains, and at the source of the Qiantang River. The mechanisms for monitoring and providing early warning on the carrying capacity of resources and the environment were basically established, with initial trials being implemented in the Beijing-Tianjin-Hebei region. The pilot project for municipal or county-level governments to integrate various types of urban plans into a single urban plan moved forward, and the plan to carry out spatial-planning trials at the provincial level was implemented. The National Land Plan (2016-2030) and the Adjustments to the General Plan for National Land Use (2006-2020) were introduced.
3) Sustained progress was made in energy conservation and emissions reduction.
The results of performance evaluations of provincial-level governments in fulfilling responsibilities for energy conservation targets during the 12th Five-Year Plan period were released to the public. The system to control both the total amount and intensity of energy and water consumption during the 13th Five-Year Plan period was established. Pilot projects to set up systems for the paid use and trade of energy consumption rights were carried out in Zhejiang, Fujian, Henan, and Sichuan provinces. We stepped up development of the circular economy, issuing the plan to create a system for extended producer responsibility and making strides in promoting circular operations within industrial parks. The plan for developing energy conservation and environmental protection industries during the 13th Five-Year Plan period was issued. The guidelines on establishing a green finance system were introduced and applied, bonds worth 229.66 billion yuan for launching eco-friendly initiatives were issued, and the energy conservation and environmental protection industries achieved robust growth in terms of both scale and strength.
4) More was done to comprehensively address environmental problems.
Stronger measures on the prevention and control of air pollution in the Beijing-Tianjin-Hebei region (2016-2017) were promulgated and implemented, and coal consumption in key areas was further cut. Coal-fired power plants were urged to swiftly upgrade their facilities and achieve ultra-low emissions. A total of 4.046 million old and high-emission vehicles were removed from roads nationwide. The action plan on environmental protection of the Yangtze Economic Belt (2016-2017) was implemented. Planning was completed on the establishment of protection zones for 319 centralized drinking water sources in 126 cities at or above prefectural level in 11 provinces and provincial-level municipalities. The national list of major drinking watersources was formulated.
We identified and cleaned up both black, malodorous water bodies and undesignated refuse dumping points in urban areas. A project to manage household refuse in rural areas got fully under way, and comprehensive measures were taken to improve the rural living environments. We issued the action plan to prevent and control soil pollution and the measures for soil environmental governance on polluted land plots, launched 14 related pilot projects aimed at prevention, control, and restoration, and also established six trial zones for comprehensively preventing and curbing soil pollution. Greater efforts were taken to comprehensively improve land in key areas contaminated by heavy metals. We continued to improve and restore the geological environment in mining areas throughout the country. We made headway in managing and controlling environmental risks and in responding effectively to environmental emergencies.
5) Our efforts to respond to climate change grew stronger.
A work plan to control greenhouse gas emissions during the 13th Five-Year Plan period was introduced. Trials and demonstrations to encourage low-carbon growth in provinces, municipalities, cities, towns, industrial parks, and communities proceeded in an orderly manner. Encouraging progress was made in establishing a national market for the trading of carbon emission rights. The Action Plan on Developing Climate Resilient Cities was promulgated.
We quickened the pace of South-South cooperation on climate change and launched cooperation projects in developing countries to set up 10 low-carbon demonstration zones, launch 100 mitigation and adaption programs, and provide 1,000 places on climate-change training programs. China was one of the first countries to sign the Paris Climate Agreement and also ratified it at a relatively early stage. The presidents of China and the United States deposited with United Nations Secretary-General Ban Ki-moon their respective country's instrument to join the Paris Agreement-the proposal to hold the ceremony, which was the first of its kind, was put forward by China, making a significant contribution toward the early entry into force of the Paris Agreement. China attended the United Nations Climate Change Conference in Marrakech, Morocco, where it played a constructive role and contributed to the overall success of the conference.
8. We moved faster to develop social programs and improve people's wellbeing, ensuring that living standards continued to rise.
We directed major efforts toward implementing targeted measures for poverty alleviation and elimination, made social policies more effective in meeting basic living needs, and ensured more equitable access to basic public services.
Box 12: Targeted Poverty Reduction Projects
1) The fight against poverty began in full swing.
The plan for poverty elimination during the 13th Five-Year Plan period was released and implemented, and over 100 billion yuan was allocated to government poverty-alleviation funds nationwide. The plan for relocating people from inhospitable areas during the 13th Five-Year Plan period was published and implemented. In line with this, related projects were launched in 22 provinces, autonomous regions, and municipalities directly under the central government, and last year's objective to provide housing for the 2.49 million people relocated from inhospitable areas was completed on time. We made great progress in reducing poverty by providing financial support and by promoting the development of locally viable industries, education, transportation, water conservancy projects, tourism, photovoltaic power facilities, e-commerce, and work-relief programs in poor areas. Coordination on poverty reduction between the western and eastern regions continued to grow. We worked to ensure the implementation of the provincial plan for promoting development and fighting poverty in contiguous poor areas during the 13th Five-Year Plan period. Greater support was given to promote revitalization and development and to reduce poverty in old revolutionary base areas such as the Sichuan-Shaanxi region and the former Central Soviet Area in southern Jiangxi. We supported extremely poor autonomous prefectures with concentrations of ethnic minorities, such as Liangshan in Sichuan, Nujiang in Yunnan, and Linxia in Gansu, to ensure they can work more quickly in building a moderately prosperous society.
2) The capacity to provide social security was constantly enhanced.
Per capita disposable personal income increased by 6.3% in real terms, and the growth rate of rural income was greater than that of urban income for the seventh year in a row. Basic pension benefits for retirees were raised by approximately 6.5%. The number of people under the basic medical insurance system exceeded 1.3 billion, and the government subsidy for basic medical insurance for rural and non-working urban residents increased from 380 yuan to 420 yuan per capita per annum. The system for granting living allowances to people with disabilities who face financial difficulties and providing a care subsidy to people with serious disabilities was put in place across the country.
3) The supply of better public services was maintained.
The gross enrollment ratio for preschool education came to 77.4%; the retention rate of nine-year compulsory education grew to 93.4%; and the gross enrollment ratio for senior secondary education reached 87.5%. The gross enrollment ratio for higher education stood at 42.7%, surpassing the average level of upper-middle-income countries. The modern vocational education system was further improved.
The system for providing basic medical care services for rural and urban residents also improved and the government subsidy for basic public health services increased to 45 yuan per capita per annum, helping to make access to services far more equitable. The Healthy China 2030 Program was issued and implemented. The number of occupational physicians and physician assistants increased to 2.31 per 1,000 people and the number of general practitioners grew to 1.53 per 10,000 people. We ensured smooth implementation of the policy to allow couples to have two children and further improved childbirth services; and China celebrated the births of 17.86 million babies over the course of the year.
The system of public cultural services was further strengthened and all provinces, autonomous regions, and municipalities directly under the central government worked out standards for providing these services. The basic elements underlying the project to develop and pass on fine Chinese cultural traditions, such as the implementation guidelines, were formulated. The Fitness for All initiative was launched, and Chinese athletes once again achieved great success at the Olympic and Paralympic Games which were held in Rio de Janeiro. Winter, water, and aviation sports, mountaineering and outdoor pursuits, as well as other sports all developed at a faster pace.
Box 13: Supply of Public Services
4) The construction of government-subsidized housing progressed steadily.
We supported government-subsidized housing projects, such as the rebuilding of run-down areas, by increasing central government budgetary investment and special funding in this area and continuing to secure direct financing through corporate bond issuance. In 2016, we rebuilt over six million housing units in run-down urban areas and renovated over 3.8 million dilapidated rural houses.
In assessing the overall situation related to the targets set out in the 2016 Plan, we can see that major targets for national and social development, such as the economic growth rate, employment levels, the consumer price index, and the balance of payments, were kept within proper range. While our performance in relation to targets reflecting the quality and benefits of development, such as those concerning scientific and technological innovation, ecological conservation and environmental protection, and people's wellbeing, was further improved. Overall, the 2016 Plan was successfully implemented.
All 19 obligatory targets were achieved as planned. Of the 43 anticipatory targets, 38 were either on target or exceeded, while performance in relation to the remaining five-targets for the primary industry, fixed-asset investment, the total import and export volume of goods, M2 money supply growth rate, and per capita disposable income of urban residents-fell short of expectations. It should be clarified that the anticipatory targets are neither mandatory nor predicted; as development objectives that the government hopes to meet, they are a reflection of the anticipated direction of national development and policy orientation. The actual performance for these targets may be higher or lower than the planned figures.
The major reasons for the discrepancies between the projected figures for these anticipatory targets and actual performance are as follows:
First, to deal with a period of supply in agricultural products outstripping demand as well as a build-up in the inventory of agricultural products and a resulting trend of depressed prices, we took the initiative to adjust what and how much we grow and breed, which caused the output of some major agricultural products to drop off. As a result, the increase in the value-added of the primary industry was slightly lower than the planned figure.
Second, a combination of insufficient market demand, a decrease in returns on investment, and low confidence among enterprises gave rise to considerable downward pressure on investment, particularly investment from private sources and in the manufacturing sector. These factors, as well as a prolonged and larger-than-expected drop in fixed-asset investment prices resulted in the increase in fixed-asset investment being lower than the anticipatory target.
Third, a range of factors, such as a stuttering global economic recovery, weak demand in the international trade market, and increasing protectionism against China, meant that, although the total import and export volume of goods began to rise steadily, it still fell short of projected figure.
Fourth, we needed to ensure that a favorable monetary and financial environment for supply-side structural reform was created. So while ensuring there was sufficient support in place for the real economy, we stayed away from strong stimulus policies affecting money supply that would have an economy-wide impact, and instead worked to deleverage, guard against risks, and prevent an asset price bubble. As a result, the growth rate of M2 money supply fell short of projected figure.
Fifth, in assessing the situation in relation to targets regarding income, we see that increases in per capita disposable personal income stayed basically in step with economic growth. The influence of downward pressure on the economy, however, caused the growth of salary-based incomes for employees in certain industries to slacken. As a result, increase in urban per capita disposable income fell short of the planned figure.
To sum up, despite complex situations both at home and abroad, we still made considerable achievements-our country's economic growth rate was still faster than most countries in the world; the quality and efficacy of development grew; the economic structure was further improved; increases in living standards were sustained; and ecosystems and the environment also saw some improvement. These achievements have not come easily. They are a result of the correct leadership of the Party Central Committee and the State Council, the collective hard work of all regions and departments,and the concerted efforts of the people of all our ethnic groups.
While recognizing our achievements, we are also keenly aware that the world economy is still undergoing profound adjustment and that impetus for economic recovery is lacking, instabilities and uncertainties are increasing, international investment and trade are inadequate, and protectionism and other inward-looking trends are on the rise. China's economy is still without a solid enough foundation for ensuring steady development and still faces a number of acute problems.
First, the real economy is beset by a structural imbalance between supply and demand. The majority of production capacity within the supply system can only meet demand for products that are at the middle-to-low end or are of a low price or poor quality. Upgrading within the consumption structure is occurring at an increasingly faster pace; by contrast, export and investment demand are decreasing. These new changes in demand are something that the supply structure has yet to properly adapt to.
Second, growth in effective demand is weak. Effective investment is growing slowly, particularly investment from private sources and in manufacturing. The delayed impact of downward economic pressure on employment, income, and consumption is now starting to show. The increasingly complex and challenging situation relating to China's foreign trade development is marked by persistently weak international demand, rising costs for multiple factors of production at home, and an increase in the pace at which industries and orders for goods are shifting to other countries.
Third, some regions, industries, and enterprises are confronted with serious difficulties. Resource-dependent areas and strongholds of traditional industry are experiencing severe downward pressure and great difficulties in development. There is a possibility that the effects of divergent growth trends and adjustments, which some industries are experiencing, will end up being transmitted throughout the industry chain. Having been pressed by insufficient market demand and comparatively high operational costs, the ability of enterprises to make a profit has decreased and a greater number of enterprises are suffering losses.
Fourth, risks are mounting in some sectors. Notable imbalances exist between government revenue and expenditures in some localities; greater efforts need to be made to guard against and control financial risks; and the real estate market is still facing serious structural challenges on two fronts, with exorbitant housing prices in some cities and overabundant inventory in others.
Fifth, environmental problems such as smog are still grave. Frequent and prolonged periods of heavy smog extending across large areas have greatly affected the work and lives of our people. At the same time, new problems in relation to workplace safety, food and medicine quality, and the people's wellbeing are also emerging.
We must give top priority to these issues, carry out studies and analysis to correctly assess the domestic and international situations, increase our awareness of potential dangers and of the lines that are not to be crossed, and maintain strategic resolve so as to ensure we produce a more effective response.
II. Requirements, Objectives, and Policies for Economic and Social Development in 2017
2017 is an important year in implementing the 13th Five-Year Plan (2016-2020) and in carrying out further supply-side structural reform. 2017 will also witness the convocation of the 19th National Congress of the CPC, an event of far-reaching significance. So it is of paramount importance for us to effectively carry out our economic work over the coming year.
1. General Requirements
The requirements for 2017 are as follows:
-- uphold the leadership of the CPC Central Committee with Comrade Xi Jinping at its core
-- hold high the great banner of socialism with Chinese characteristics
-- fully implement the guidelines from the 18th National Party Congress and from the third, fourth, fifth, and sixth plenary sessions of the 18th Party Central Committee
-- follow the guidance of Deng Xiaoping Theory, the Theory of Three Represents, and the Scientific Outlook on Development
-- put into practice the guiding principles from General Secretary Xi Jinping's major addresses and his new concepts, thoughts, and strategies on the governance of China
-- promote coordinated economic, political, cultural, social,and ecological progress and balanced implementation of the Four-Pronged Comprehensive Strategy*
-- seek progress while keeping performance stable
-- build a strong understanding of and put into practice China's new development philosophy
-- adapt to, approach in the right way, and steer the new normal in economic development
-- take strengthening the quality and benefits of development as a core priority
-- ensure macro policies are stable, industrial policies are targeted, micro policies are flexible, reform policies are practical, and that social policies ensure basic needs are met
-- focus on supply-side structural reform
-- expand aggregate demand as appropriate
-- better guide expectations
-- ensure development is increasingly innovation-driven
-- work to keep growth stable, promote reform, make structural adjustments, improve living standards, and guard against risks
-- maintain stable and sound economic development as well as social harmony and stability
Fulfilling these requirements should ensure that we greet the 19th National Party Congress with outstanding achievements.
2. Main Objectives
Keeping the above requirements in mind and fully considering both what is necessary and what is possible, we have set the following objectives for economic and social development in 2017:
-- Economic growth within an appropriate range
GDP is projected to grow by 6.5% approximately; however in practice, we will strive for better. In setting this objective, we have taken the following into account:
First, the projected GDP growth rate is in keeping with conditions in China. Our country is in a new normal in economic development, having shifted from a high to a medium-high growth rate. In 2016 China's aggregate economic output exceeded 74 trillion yuan; and this year's projected growth rate of around 6.5% will result in a larger increase in economic output than last year's increase resulting from a 6.7% growth rate. Moreover, a growth rate of 6.5% is much higher than most major economies.
Second, the projected growth rate is in line with the goal of finishing building a moderately prosperous society in all respects. China's economy grew by 6.7% in 2016, so an average growth rate of around 6.5% over the next four years would be sufficient to accomplish the objective set out in the 13th Five-Year Plan to ensure that China's GDP in 2020 is double what it was in 2010.
* To make comprehensive moves to finish building a moderately prosperous society in all respects, deepen reform, advance the law-based governance of China, and strengthen Party self-governance.
Third, a 6.5% growth rate is needed to achieve the employment objective. All efforts to keep the economy growing at an appropriate rate and to promote economic development are for nothing more than to address the problems which are of most concern to the public.
Fourth, this rate of growth is conducive to fostering healthy public expectations. Facing complex and volatile situations at home and abroad in 2017, we need to provide guidance to all sectors of society so as to focus efforts on improving the quality and benefits of development and promoting structural improvement and upgrading, ensure a proactive response to the impact arising from various uncertainties, and create a favorable environment for supply-side structural reform.
Figure 9. GDP and Growth Rate
-- Overall stable employment
Over 11 million new urban jobs will be created, 1 million more than the projection for 2016, and the registered urban unemployment rate should stay within 4.5%. In setting these objectives, we have taken the following into account:
First, employment pressure is mounting. About 15 million new workers will enter the job market in 2017, and there will also be a slightly larger number of laid-off workers that need to be reemployed in other industries due to the scaling-down of overcapacity; on the other hand, we will see jobs opening up in urban areas as a result of retirements. Taking these factors into consideration, we need to create around 11 million new urban jobs this year.
Second, employment capacity continues to increase. Due to adjustments in the structure of industry, particularly in terms of entrepreneurship and innovation and the development of the service sector, China's employment elasticity has risen considerably. A growth rate of around 6.5% should ensure that we fulfill our employment target and will allow us to work toward exceeding it.
Third, we need to ensure increases in personal income are basically in step with economic growth. These objectives are a reflection of the Party and government's vision of people-centered development as well as the governance principle that the people's wellbeing comes first and ensuring employment is a top priority. They are also conducive to ensuring stable public expectations and strengthening people's confidence in development.
-- Overall stable prices
The CPI is projected to increase by around 3%. In setting this objective, we have taken the following into account:
First, the carryover effect from the CPI increase in 2016 will be 0.6%, which is basically the same as that of the year before.
Second, the producer price index (PPI) shifted from negative to positive territory in September 2016 and has remained there ever since, and the deflationary pressure on manufacturing has eased to some extent. However, as the effects of the PPI increase are transmitted to downstream industries and toward end consumption, and as the prices of imported goods and international commodity prices rise, new factors will emerge to push up prices.
Third, such a CPI increase leaves us with room to undertake price reform.
-- A basic balance in international payments
We will continue to promote a steady rise in the trade of goods, rapid growth in the trade of services, stability in the use of foreign investment, and the healthy development of outbound investment. In setting these objectives, we have taken the following into account:
First, a turnaround in global economic and trade growth is unlikely in the short term. However, as the policy for promoting steady growth and structural adjustment in foreign trade continues to have an effect, the volume of trade in goods is expected to pick up again.
Second, as the export of high-value-added services such as telecommunications, computers, and information continues to increase rapidly, the structure of trade in services will improve.
Third, significant efforts will be made to create a fair, transparent, and predictable law-based market environment so as to ensure foreign investment remains stable and improves in quality.
Fourth, outbound investment will be robust. In order to avoid irrational investment which may give rise to operational or debt risks, growth in this area should be promoted in an orderly and prudent manner.
-- Improved quality and benefits in development
The contribution of consumption to economic growth will increase. The foundation of agriculture will be further strengthened; solid progress will be made in cutting overcapacity; the development of emerging strategic industries will be accelerated; and increases in the contribution of the value-added of the service sector to GDP will be sustained. More will be spent on research and development and there will be an increase in the contribution of scientific and technological progress to economic growth. Energy consumption per unit of GDP will be reduced by at least 3.4%, carbon dioxide emissions per unit of GDP will be cut by 4.0%, reductions in the emissions of major pollutants will continue, and air and water quality will be further improved. In setting these objectives, we have taken the following into account:
We need to put into practice the philosophy of innovative, coordinated, green, open, and shared development; see that industries are transformed and upgraded, that their quality and performance improves, and that the quality of all products and services increases; and ensure that energy conservation, environmental protection, and ecological improvement efforts are strengthened. These objectives are in line with the efforts to advance supply-side structural reform, and can help to create new growth areas, increase the potential for economic growth, and ensure the economy maintains a medium-high growth rate and moves toward the medium-high end.
Figure 10. Contribution to GDP by the Primary, Secondary, and Tertiary Industries
-- Improvements in living standards
The number of people living in poverty in rural areas will be reduced by at least 10 million, and 3.4 million people will be relocated from inhospitable areas so as to help them shake off poverty. The percentage of registered urban residents will increase by more than 1 percentage point. Urban residency will be granted to an additional 13 million people with rural household registration living in urban areas and other permanent urban residents. Access to basic public services such as education, health, and culture will become more equitable. The retention rate of compulsory education and the gross enrollment ratio for senior secondary education will continue to rise. The social security system will be further improved with more beneficiaries receiving coverage and an appropriate increase in benefits. Per capita government subsidies for basic medical insurance for rural and non-working urban residents will increase to 450 yuan, while the level of financing for the major disease insurance scheme will also be raised. The natural population growth rate will be about 7.5 thousandths. In setting these objectives, we have taken the following into account:
We must fully implement our vision of people-centered development and work for further progress in ensuring that the Chinese people enjoy the rights to education, employment, medical treatment, old-age care, and housing.
Figure 11. Urban and Rural Personal Income: Increases and Comparisons
3. Macroeconomic policies
At the recent Central Economic Work Conference, it was noted that seeking progress while keeping performance stable was not only an important governance principle but also an effective method for carrying out economic work. It is particularly important to uphold this principle in 2017. Stability is of primary and overarching significance: under the condition of keeping performance stable, we will work for progress in key sectors, and under the condition of maintaining a well-balanced pace of work, we will strive to deliver better results. To attain the objectives for economic and social development in 2017, we must seek progress while keeping performance stable, maintain the continuity and stability of macroeconomic policies, and continue to implement a proactive fiscal policy and a prudent monetary policy. We must ensure that fiscal policy is more proactive and effective; a debt-GDP ratio of 3% is projected for this year and the government deficit will be 2.38 trillion yuan, an increase of 200 billion yuan over last year. We must also ensure that prudency and neutrality is maintained in monetary policy; both the M2 money supply and aggregate financing in the economy are expected to grow by around 12% in 2017.
At the same time, we will strengthen coordination and support between policies, make effective use of macroeconomic policies with Chinese characteristics, and see that fiscal, monetary, reform, industrial, innovation, employment, regional, investment, consumption, trade, pricing, land, and environmental protection policies work together more effectively and that their precision and efficacy increase.
-- Addressing structural conflicts between supply and demand
With fiscal and monetary policies as main pillars, and with the support of investment, consumption, and trade policies, we will work to exert the role of supply-side structural reform policy.
-- Alleviating the difficulties in the real economy
We will take strong measures to cut taxes and fees, fully utilize central government investment to guide and attract investment from private sources; continue to promote reforms on SOEs, on pricing, and on streamlining administration, delegating more powers, improving regulation, and providing better services; and provide more targeted policy guidance.
-- Promoting coordinated and integrated development between regions
We will increase fiscal and financial policy support, implement differentiated regional policies, and ensure that employment and social security policies meet basic needs.
-- Solving problems related to agriculture, rural areas, and farmers
We will fully carry out supply-side structural reform in agriculture, improve agriculture-related subsidy, investment, credit, insurance, and land-use policies, and support technological innovation in agriculture.
-- Preventing investment from being diverted out of the real economy and controlling real estate fluctuations
By utilizing prudent monetary policy and targeted industrial and land policies, we will deepen financial reforms, strengthen market oversight, and prevent and defuse fiscal and financial risks.
-- Providing guidance to ensure positive public expectations
We will do more to explain government policies and to release information to the public and will further improve the property rights protection system.
In relation to specific work, we will focus on the following six areas so as to advance overall development.
First, carrying on institutional innovation to revitalize the market
We will deepen reform in major areas and key sectors, step up innovation in systems and mechanisms, increase institutional supply, take targeted steps to solve prominent conflicts and problems holding back economic and social development, improve the overall effectiveness of reform, and strive for further breakthroughs.
Second, revitalizing the real economy to provide better products
We will intensify efforts to cut overcapacity, reduce excess inventory, deleverage, lower costs, and strengthen areas of weakness; move faster to create new industrial policies and upgrade old ones, and improve the distribution of productive forces, in a bid to bring about a shift from a supply of predominantly medium-low end products to mainly supplying medium-high end ones that conform to changes in demand.
Third, advancing innovation-driven development to foster and strengthen new driving forces
We will fully implement the innovation-driven development strategy, improve policies in support of innovation, increase the supply of innovative resources, provide greater encouragement for business startups and innovations by the general public, promote the replacement of old drivers of development with new ones, and ensure total-factor productivity increases.
Fourth, increasing effective demand to keep the macro environment stable
As the upgrade in demand continues, we will work to increase the supply of quality goods and services and the efficiency of government investment, inject vigor into private investment and private capital, and work to create a balance between supply and demand and a healthy interaction between upgraded consumption and effective investment, so as to ensure development becomes better in quality, more efficient, more equitable, and more sustainable.
Fifth, effectively preventing and defusing risks in key sectors and regions
We will become more aware of potential dangers and keep in mind worst-case scenarios. With a focus on preventing financial risks, excessive corporate leverage, an accumulation of property bubbles, inflated local government debt, and financial difficulties among county and township governments as well as other risks, we will create new and better ways of dealing with risk and never allow the line to be crossed on these risks so as to safeguard social stability.
Sixth, improving people's lives to promote social harmony
Guided by the vision of people-centered development, we will work to solve the structural problems related to employment, use targeted measures to tackle poverty, provide better basic public services, speed up the development of social programs such as education, elderly care, health and family planning, culture, and sports, and take stronger, more effective measures to improve the environment so as to ensure our people have a greater sense of benefit and a higher level of happiness.
III. Major Tasks for Economic and Social Development in 2017
In 2017, we will continue to uphold the general principle of seeking progress while keeping performance stable, take supply-side structural reform as our main task, and apply the new development philosophy, so as to steer the new normal in the economy. Our efforts will focus on the following nine areas.
1. Promoting substantive progress in the priority tasks of cutting overcapacity, reducing excess inventory, deleveraging, lowering costs, and strengthening points of weakness.
In line with the CPC Central Committee and the State Council's overall arrangements for supply-side structural reform, we will intensify efforts to fulfill the five priority tasks, reduce ineffective and inefficient supply while increasing effective supply, and improve the profit-making ability of enterprises.
1) We will make concrete efforts to scale down overcapacity.
This year, we will cut production capacity by around 50 million metric tons of steel and over 150 million metric tons of coal. At the same, we will shut down, stop, or suspend the construction of coal-fired power plants with a capacity of more than 50 million kilowatts, so as to guard against and defuse overcapacity risks in the coal-fired power industry and enhance its efficiency, while also improving the energy mix and creating space for the development of clean energy. Making full use of market-oriented and law-based means, we will work to strike an overall balance between the efforts to scale down overcapacity, ensure stable supply, improve the industrial structure, and transform and upgrade industries.
Our efforts to address the issue of "zombie enterprises" will constitute a key approach in cutting overcapacity. By strictly enforcing laws, regulations, and standards with regard to environmental protection, energy consumption, quality, and safety, we will intensify efforts to control the expansion of production capacity, shut down outdated production facilities, and crack down on violations of laws and regulations in this regard. Proper conditions will be created for promoting the merging and restructuring of enterprises, and proper arrangements will be put in place to handle debts and resettle laid-off workers. We will continue to make government funds available for rewards and subsidies in this regard.
2) We will continue to cut excess inventory by implementing policies tailored to local conditions.
We will take multiple, locally practicable measures to grant direct monetary housing compensation rather than housing to more people displaced by the redevelopment of run-down urban areas, move faster to implement the plan for granting urban residency to 100 million people without urban household registration living in urban areas, support the demand of urban residents for buying a second home if their first homes are inadequate, and ensure well-regulated development of the housing rental market.
In line with the principle that "houses are for habitation not speculation," we will exercise regulation on a per-category basis, implement place-based policies in different cities, and fully utilize financial, land, fiscal, tax, and investment policies as well as legislation, so as to accelerate efforts to establish a sound permanent mechanism for ensuring the steady and healthy development of the real estate industry and keep housing prices from rising too quickly in popular cities. In working toward establishing policy-backed financial institutions specializing in housing, we will carry out research on reforming the housing provident fund system; and we will support people's demand for housing for personal use.
3) We will lower leverage ratios of enterprises in a proactive yet prudent manner.
By means of merger, restructuring, and bankruptcy, we will promote a clearing out of zombie enterprises. We will encourage banks, relevant institutions, and enterprises to carry out market-based debt-to-equity swaps on the basis of negotiations between themselves. We will develop equity financing, broaden its financing channels, and place tighter constraints on the leveraging activities of enterprises.
4) We will continue to implement a full range of measures for reducing costs in the real economy.
We will further simplify approval procedures, overhaul or abolish irregular fees charged by administrative review intermediaries, and reduce unreasonably high intermediary and evaluation fees so as to lower the transaction costs of enterprises imposed by the government. Efforts will be enhanced to cut taxes, fees, and the costs of factors of production;greatly reduce non-tax burdens; lower financing costs, enterprise energy and land-use costs, and logistics costs; increase the flexibility of the labor market; and encourage enterprises to tap internal potential for reducing costs and increasing efficiency.
We will intensify efforts to review and regulate fees and charges related to enterprises; implement preferential policies to reduce taxes and fees levied on them; cut the number of service fees for which pricing is set by the government; further review and regulate government-managed funds, administrative charges, and business service fees; and work to lower fees and charges related to financial and railway freight services levied on enterprises. In addition, we will create new oversight systems for fees and charges related to enterprises and tighten oversight over those business service fees for which pricing is market-based. We will redouble efforts to review security deposits in the construction industry.
5) We will bolster points of weakness in a more targeted and effective fashion.
We will moderately increase investment from the central government budget and improve its structure, channeling it toward key areas such as poverty alleviation, agriculture, weak links in post-disaster water conservancy recovery and reconstruction, hard and soft infrastructure, and the enhancement of innovation capacity. We will comprehensively advance the 165 major projects set out in the 13th Five-Year Plan.
2. We will intensify supply-side structural reform in the agricultural sector.
We will improve the industrial, production, and operational systems in the agricultural sector, step up efforts to foster new drivers for agricultural and rural development, and take serious measures to facilitate standardized production, brand building, and supervision over the quality and safety of agricultural products, with a view to raising the quality and performance of the agricultural sector and to ensuring its sustainable development. In 2017, total grain output will stand at over 550 million metric tons.
1) We will work toward a sound, smooth, and optimal agricultural structure.
We will facilitate the development of production centers for major agricultural products such as grain, cotton, oilseed, sugar crops, and natural rubber, support standardized, large-scale livestock and aquaculture farming, and step up the construction of national seed cultivation and production centers and the development of projects for breeding superior varieties within crop, livestock, and aquaculture farming.
In addition to comprehensively implementing policies for providing special protection to permanent basic cropland, we will establish and develop functional zones for grain production and protective areas for the production of major agricultural products. We will formulate the plan for boosting the production of local agricultural products in areas with unique advantages, and continue with the trials to replace grain crop cultivation with feed crop cultivation and soybean cultivation. The production of corn kernel in inferior production areas will continue to be reduced and the production of high-quality forage crops, such as corn silage and alfalfa, will be expanded. We will stabilize the production of hogs and push for an optimal layout in this regard, and will increase the quality of dairy products. Production for aquaculture products will be reduced while the efficiency will be increased, and conservation efforts will be made on the Yangtze River and other key water bodies to protect aquatic organism resources.
For agricultural products, we will promote standardized production and brand development and protection, and will work to ensure quality and safety. We will carry forward crop-rotation and fallow-land trials, and promote the adoption of fallow periods for cropland and grassland and fishing moratoriums for rivers and lakes. We will carry out the initiative to achieve zero growth in the use of chemical fertilizers and pesticides, and advance safe disposal and recycling of waste from livestock and poultry farming. We will undertake trials for creating a circular economy in the agricultural sector, develop hybrid industry-agriculture circular economy demonstration zones and centers, and establish pilot and demonstration zones for sustainable agricultural development.
2) We will continue to enhance agricultural and rural infrastructure.
We will move ahead with the development of 172 major water conservancy projects, and work to make a start on 15 more. Accelerated efforts will be made to develop high-grade cropland, farmland irrigation and water conservancy, and the modern seed industry, as well as large-scale livestock farms, storage and logistics facilities for grain and edible oil, and public-welfare wholesale markets for agricultural products. We will also work faster to consolidate and build on the achievements made in ensuring safe drinking water in rural areas.
Trials will be launched to apply the PPP model to the farming and forestry industries. We will carry out initiatives to promote the use of new energy in rural areas, support the development of information infrastructure and efficient water-saving irrigation facilities in rural areas with weak infrastructure in the central and western regions, and accelerate efforts to improve logistics networks for counties, townships, and villages.
3) We will step up innovations in agricultural science and technology.
We will promote the raising of better quality, specific, and healthy crop varieties and livestock breeds, strive to develop and apply green and efficient technologies for farming and breeding, and support technological transformation of the food and other processing industries. A number of major agricultural laboratories and national agricultural science research stations will be developed. We will improve incentive mechanisms for innovations in agricultural science and technology, and move ahead with trial reforms for allowing agricultural scientists to receive greater benefits for their scientific achievements. We will further reform the system for applying agricultural technology in villages, explore new mechanisms for allowing public institutions and agricultural technicians to engage in for-profit services, and facilitate the reduction of costs and energy consumption and the enhancement of efficiency to bolster agricultural growth.
We will launch initiatives that ensure intelligent agriculture leads China's agricultural modernization, fully implement the project to bring information technology to villages and rural households, and expand trials and demonstrations for the application of the Internet of Things in the agricultural sector.
4) We will develop new industries and new forms of business in rural areas.
We will advance pilot and demonstration projects for integrating rural industries, channel secondary and tertiary industries toward county seats, key towns and townships, and industrial parks, and begin building modern agricultural industrial parks that integrate production, processing, and science and technology. We will support eligible agricultural enterprises in issuing corporate bonds and launching projects for integrated development of rural industries.
We will implement the three-year action plan for Internet Plus modern agriculture, and establish comprehensive demonstrations for introducing e-commerce into rural areas. We will promote in-depth integration of agriculture with the tourism, cultural, fitness, and elderly-care industries. Development will be pursued in a host of towns and villages that brings together industry, culture, and tourism, secures simultaneous improvements in working, living, and ecological conditions, and fully integrates the primary, secondary, and tertiary industries.
5) We will press ahead with agricultural and rural reform.
A proactive yet prudent approach will be adopted in promoting reforms of the price-setting mechanism for grain and other important agricultural products as well as the system for their purchase and storage. We will continue to implement and improve the policy for setting minimum state-purchase prices for rice and wheat, and make appropriate adjustments to minimum purchase prices, so as to ensure a rational ratio of minimum purchase prices to market prices. We will enhance the price-setting mechanism for corn in the northeast that combines market-based purchase prices and supplementary government subsidies, and reduce excess stockpiles of policy-supported grain in a steady and orderly manner. We will improve the policy for guaranteeing base prices for cotton and adjust the pricing policy for soybeans. Improvements will be made to the system of agricultural subsidies, ensuring that relevant reforms are oriented toward green development and ecological progress. Comprehensive reform of pricing for water used in agriculture will be advanced across the board.
Reform of the rural collective property-rights system will be deepened to clearly identify rural collective property rights and to grant rural residents more adequate property rights. We will reform the mechanism for ensuring budgetary support for agriculture and work to merge rural-development funds. We will implement measures for separating land ownership rights, contract rights, and management rights for contracted rural land. We will make overall arrangements to carry out trial reforms with regard to rural land requisition, the marketization of rural collective land designated for commercial construction, and the system for rural residential land. We will cultivate new types of agribusiness and agricultural service providers, and promote the development of suitably scaled-up operations of land in diversified forms.
A catastrophe insurance scheme will be introduced in some regions for farmers whose operations are suitably scaled-up. We will improve the agricultural reinsurance system and ensure sustainable and sound agricultural insurance schemes provide strong support for the development of modern agriculture.
3. We will continue to tap the potential of domestic demand.
We will lay emphasis on tapping demand through innovative forms of supply and consolidating the foundation of domestic demand.
On the one hand, we will work to expand and upgrade consumer spending.
We will continue to advance the Ten Initiatives for Boosting Consumer Spending; respond to new trends in consumer demand; promote reform and innovation so as to increase effective supply to consumers, especially in service and green industries; and keep consumption growing steadily. Total retail sales of consumer goods are expected to increase by around 10% in 2017.
Restrictions on entry into service industries will be loosened and regulation over investment in the social domain will be relaxed. We will work to develop emerging areas of consumption such as combined medical and care services for the elderly, cultural & creative industries, and all-for-one tourism, and support nongovernmental participants in providing educational,cultural, elderly care, and medical services. Efforts will be made to promote consumption of information goods and services in areas such as digital homes, online education, and virtual reality. We will launch campaigns to speed up innovations in domestic commodity distribution, promote supply-side structural reform, and boost consumer spending. We will promote the integrated development of brick-and-mortar stores and online shopping.
China time-honored brands will be protected and carried forward. We will ensure that more domestically sold products come off the same production lines, meet the same standards, and are of the same quality as export products. We will work to achieve robust development in cold-chain logistics. Sound systems will be established to ensure the quality and safety standards of food and medicine and to allow for product traceability. Pricing oversight will be intensified and law enforcement will be stepped up to tackle monopolistic pricing so as to safeguard the legitimate rights and interests of consumers.
We will enhance incentive-based income distribution reform, implement incentive plans for key groups, and carry out trials for comprehensive and coordinated policies on increasing urban and rural incomes.
Box 14: Upgrading Consumer Spending
On the other hand, we will make targeted efforts to increase effective investment.
We will enhance efforts to bolster weaknesses in key areas and links in need of attention, so as to increase effective investment and effective supply. Total fixed-asset investment is projected to increase by around 9.0% in 2017. Investment from the central government budget is expected to be 507.6 billion yuan for the year; these funds will be channeled toward major strategic initiatives, major projects, and key construction tasks.
We will also work to stimulate private investment, earnestly implementing policies to provide encouragement and support, and further relaxing restrictions on the entry of private capital into competitive operations of basic telecommunications, exploration and exploitation of oil and gas, and defense-related science and technology. New modes of investment and financing will be created. In addition, we will continue to standardize and apply the PPP model, selecting and going ahead with projects that have adequate cash flow and expectations of steady returns. With a view to enhancing regulation over investment, we will develop new inspection and regulation methods, carry out comprehensive online monitoring, and intensify field inspections.
4. Continuing to deepen reforms in major areas and key sectors
We will work to ensure that reform measures which have been already issued are fully implemented so as to give better expression to the leading role of reform.
1) We will press ahead with reforms to streamline administration, delegate more powers, improve regulation, and provide better services.
We will cancel the requirement for government review for another group of matters, and thoroughly review and accordingly adjust manufacturing and operating permits. We will target related or similar matters and simultaneously delegate the power or cancel the government-review requirement for all of them. We will draw up a pre-business registration list for items requiring government approval and a post-business registration list for permitted operations, roll all licenses and certificates which must not be cancelled into one unified business license, and expand trial reforms to separate operating permits and business licenses.
The oversight model drawing on inspections of randomly selected entities by randomly selected inspectors and the public release of inspection results will be implemented across the board, and the reform for coordinated law enforcement will be advanced. We will strive to implement the Internet Plus government services model, and carry out a campaign to cut down on requirements for administrative certification so as to ensure greater convenience for the people. In line with the requirements for unified registration agencies, register books, bases for registration, and information platforms, we will expand the scope of the unified system for determining and registering immovable property rights, and will work to put in place a corresponding nationwide information platform.
2) We will deepen reform of SOEs, state capital, and key industries.
The reform to introduce corporate system in SOEs will be basically completed. A corporate governance structure that ensures effective checks and balances and a market operation mechanism that is highly efficient and flexible will be put in place. We will quicken the pace of trials to establish state capital investment and management companies, advance the pilot reforms to introduce a mixed ownership structure in electricity, petroleum, natural gas, railway, civil aviation, telecommunications, defense, and other sectors, and support private enterprises in participating in the reform of SOEs.
We will step up efforts to advance structural reforms in the electricity, petroleum,and natural gas sectors, adopting a methodical approach to lifting restrictions on the generation and industrial consumption of electricity and increasing the level of market-based transactions. We will proceed in an orderly manner with appropriately relaxing controls over competitive operations such as petroleum and natural-gas exploration and exploitation, and improve the petroleum and natural-gas import and export management system. Mechanisms regarding the reserve and oversight of salt will be improved.
3) We will deepen reform of the investment and financing systems.
We will implement the guidelines on deepening reform of the investment and financing systems, the regulations for managing the approval and recording of enterprise-funded projects, and the catalog of investment projects requiring government review (2016). The regulations on government investment and the measures for managing the approval and recording of enterprise-funded projects will be issued.
We will support certain localities and sectors in piloting mechanisms which allow investment projects to proceed on the basis of an undertaking submitted by enterprises to government. We will carry out trials for financial institutions to become enterprise shareholders, and improve the mechanisms whereby institutional funds, such as insurance funds, invest in projects.
4) We will deepen price reform.
We will basically complete nationwide reform of electricity-transmission and -distribution prices on provincial-level grids, with all prices being made available to the public. We will initiate trial price reforms for electricity transmission and distribution through regional power grids in the northeast and northwest, set prices for electricity distribution through local and newly-built power grids, and promote market-based pricing for the generation and supply of electricity where conditions allow. Improvements will be made to the pricing mechanisms and subsidy measures for new energy. We will set prices for natural gas transmission through trans-provincial pipelines. We will press ahead with price reform of medical services, advancing across the board price reforms of medical care and medicine in urban public hospitals and charging for medical treatment according to illness type.
5) We will develop a market based on fair competition.
In implementing the guidelines on improving the property rights protection system and ensuring law-based protection of property rights, we will redouble efforts to strengthen systems in this regard. We will enhance the vitality of the private sector, and work to develop a new relationship between government and business. We will issue and implement guidelines on nurturing and protecting entrepreneurialism. We will fully implement the review system to ensure fair competition, and resolutely prevent the promulgation of any policies and measures that eliminate or stifle competition. We will strictly investigate and prosecute major and typical antitrust cases, and work to prevent and curb monopolistic practices. Work on establishing the social credit system will be moved forward. We will put in place a nationally unified system for sharing information on credit, and extend to more areas the mechanism to provide joint incentives to those who act in good faith and to take joint punitive actions against those who act in bad faith.
Box 15: Protection of Property Rights and Entrepreneurialism
6) We will steadily advance reform of the fiscal, tax, and financial systems.
We will work faster to carry forward the reform to appropriately divide fiscal authority and spending responsibilities between the central and local governments. We will also draw up an overall plan for revenue sharing between the central and local governments. We will improve local tax systems and regulate the debt financing activities of local governments.
We will prudently advance reform of the financial oversight system, and improve the macro-prudential regulation system for the financial sector. The market-based mechanism for setting the RMB exchange rate will be further improved. We will refine the governance structure of state-owned commercial banks, deepen reform of the multilevel capital market system, move ahead with revising the Securities Law, and improve reform of the stock issuance system. We will accelerate development of modern insurance services.
5. Focusing on revitalizing the real economy
We will remain committed to ensuring innovation drives development forward, prioritize improving quality and core competitiveness, and ensure brand development leads the way in industrial upgrading. We will enhance overall capacity for making innovations and accelerate the development of new drivers of growth, the growth of new industries, the transformation and upgrading of traditional industries, and the replacement of old drivers of growth with new ones.
1) We will work faster to foster and develop new drivers for economic growth.
We will work to deliver decisive progress in pilot reforms for all-around innovation in eight areas. Policies will be introduced to foster and develop new drivers of growth and regulate internet market access. We will support and guide the development of the sharing economy to enable greater efficiency in the use of resources. We will establish a consultation system for national decisions on science and technology, reform the evaluation systems for science and technology, coordinate efforts to advance reform of the management of central government-funded science and technology initiatives and their funding, and pilot profit distribution policies oriented toward strengthening the value ascribed to knowledge.
We will increase investment for the construction of information, civil-space, and major science-and-technology infrastructure; support the establishment of comprehensive national science centers in Huairou in Beijing, Zhangjiang in Shanghai, and Hefei in Anhui; finish building a group of industrial innovation centers; and promote the establishment of a nationally unified system of big data centers. We will continue developing national innovation demonstration areas, intensify efforts to promote collaborative innovation, expand regional trials and demonstrations for the commercialization and application of scientific and technological advances, and build innovation demonstration zones for the National Agenda for Sustainable Development.
Major national science and technology projects will continue, and major projects of the Sci-Tech Innovation 2030 Agenda will be launched. National laboratories for major fields of innovation and a group of national technological innovation centers will be built. We will support the establishment of science and technology innovation centers in Beijing and Shanghai. Additional demonstration centers for entrepreneurship and innovation as well as maker spaces for specialized crowd innovation will also be opened.
We will undertake activities to encourage entrepreneurship and innovation among research institutes, enterprises, and social organizations, and will roll out a range of strong measures that focus on tackling those bottlenecks that are stifling the market-based operation of platforms for entrepreneurship and innovation and that are hindering the cultivation of entrepreneurial personnel. We will make good use of government funds for guiding venture capital to promote its sustained and sound development. We will work to further strengthen the brands of the National Week for Entrepreneurship and Innovation and the Innovating China Tour so as to build a sustainable, positive environment for entrepreneurship and innovation.
2) We will work to promote the continued and sound development of emerging industries.
In order to strengthen strategic emerging industries, we will set up the National Strategic Industry Development Fund, and utilize market-based means to carry out a group of systemic projects that give full play to the principal role of enterprises in cutting-edge and strategically important fields, such as new materials, new energy, artificial intelligence, integrated circuits, biomedicine, and 5G mobile networks. We will press ahead with the "Internet Plus" and big data initiatives, and integrate the development of the internet, the Internet of Things, and cloud computing with economic and social development. We will further boost broadband speeds and lower rates for internet services so as to reduce the costs of innovation and business startup and support industrial upgrading. We will strengthen the innovation-driven, integrated development of the military and civilian sectors by advancing the development of major demonstration programs for military-civilian integration in space, marine, cyberspace, and other fields.
3) We will help accelerate the transformation and upgrading of traditional industries.
The Made in China 2025 initiative will be further implemented. We will launch campaigns to improve product quality and branding within the equipment manufacturing industry, to enhance product variety and quality and create name brands in the consumer goods industry, to strengthen service-embedded manufacturing, and to further integrate the internet into the manufacturing industry. We will work to ensure quality standards for manufacturing improve, carrying out extensive quality improvement activities and ensuring stronger all-around quality management.
We will consolidate the technological foundations for ensuring product quality and tighten quality supervision. We will promote workmanship, foster a culture of workmanship, and refine related incentive mechanisms. We will strive to see Chinese workers exemplify workmanship and Chinese brands enjoy international recognition.
We will press ahead with development of national demonstration zones for smart manufacturing as well as manufacturing innovation centers. We will continue to implement projects to promote green manufacturing, strengthen the foundations of industry, and spur innovation in high-end equipment manufacturing. We will strengthen the foundations of industry and continue to help implement the packages of major projects aimed at promoting transformation and upgrading of the manufacturing industry, with a focus on supporting 10 major projects, including those to promote smart-technology upgrades by enterprises, improve basic capacity, advance green manufacturing, and develop high-end equipment. We will work to promote transformation and upgrading of the automobile industry. The plan to upgrade national demonstration centers for new industrialization will be put into action. We will promote the transformation and upgrading of raw materials, transportation, energy, and other basic industries with a view to expediting the development of modern comprehensive transportation systems, and implementing the strategy for revolutionizing energy generation and consumption.
4) We will advance innovation-driven development of the service economy.
Guidelines on the innovation-driven development of the service economy will be worked out, and a new round of comprehensive trial reforms will be undertaken to accelerate the development of new types and models of business in the service sector. We will carry out dedicated campaigns to bolster points of weakness in the service sector with a focus on improving quality, promoting standardized development, and providing better IPR services. We will continue to implement projects to promote innovation in high-tech services.
6. Utilizing the Three Initiatives to pursue coordinated and integrated development between regions.
Making full use of the comparative strengths of each region, we will adopt differentiated policies to promote their development, and accelerate efforts to cultivate new growth axes and growth belts.
1) We will effectively carry out the Three Initiatives.
We will put into practice the guiding principles from General Secretary Xi Jinping's important speech at the conference on developing the Silk Road Economic Belt and the 21st Century Maritime Silk Road. Focusing on key areas, pivotal countries, and signature projects, we will proactively engage in practical collaboration and implement cooperation agreements and plans.
A combination of relocations and restrictions will be used in working to relieve Beijing of functions non-essential to its role as capital. We will work to coordinate and accelerate the planning and building of Beijing's sub-administrative center as well as other platforms for accommodating relocated functions. We will continue to strive for breakthroughs in the three key areas of transportation, ecological conservation, and industry, while also strengthening the three key pillars of innovation, reform, and pilot projects. We will promote the joint development and sharing of basic public services, and support comprehensive trials for deeper reform and greater opening up of Beijing's service sector.
With a continued focus on ecological conservation and green development, we will move ahead with projects to improve the water environment, restore water ecosystems, and conserve water resources in building the Yangtze Economic Belt. We will work to ensure ease of navigation on waterways, connectivity between transportation hubs, integrated river-ocean transportation, and simplified customs clearance procedures. We will advance major projects for the Yangtze golden watercourse initiative and establish a negative-list management system.
2) We will work to improve the layout of regional development.
We will fully carry out the plan for the large-scale development of the western region during the 13th Five-Year Plan period, shoring up weak links in infrastructure, promoting ecological conservation, and accelerating the transformation and upgrading of competitive industries that draw on local strengths.
We will fully implement a new round of major policies and plans aimed at revitalizing the northeast and other old industrial bases. We will also put into action the plan for the revitalization of the northeast during the 13th Five-Year Plan period, establish cooperative partnerships between provinces and municipalities in the northeast and in the eastern region, and step up support for the relocation or rebuilding of old industrial areas within cities and independent industrial and mining areas as well as for comprehensive efforts to improve the conditions of areas affected by mining-induced subsidence.
We will ensure full implementation of the plan for the rise of the central region during the 13th Five-Year Plan period, accelerate the development of the eco-economic belts along the Han and Huai rivers, and ensure smooth operation of the experimental zone for comprehensive reform to promote sustainable development in Shanxi.
We will support the eastern region in increasing the pace as it spearheads economic transformation and development, and work to further leverage its role as a model and leader of reform and innovation.
We will enhance domestic and international regional cooperation in a coordinated way, support the development of major function platforms, and work hard to coordinate land and marine development.
We will accelerate the building of infrastructure and public service facilities in old revolutionary base areas, ethnic minority areas, border areas, and contiguous poor areas; all these efforts will be incorporated into major national development strategies. We will continue to support the development of Tibet and Xinjiang, and the Tibetan ethnic areas in the provinces of Sichuan, Yunnan, Gansu, and Qinghai, providing greater central government support as well as paired assistance.
Box 16: Better Layout of Regional Development
3) We will steadily drive forward New Urbanization.
With a focus on increasing the number of urban residents, we will deepen reform of the household registration system, work to achieve full coverage of the residence certification system, and bring people with rural household registration living in cities under the housing provident scheme in a well-ordered way, so as to raise the overall quality of urbanization. We will move faster to formulate city-cluster development plans for the Guangdong-Hong Kong-Macao greater bay area, the western shore of the Taiwan Straits, the Guanzhong Plains region, and the Hohhot-Baotou-Ordos-Yulin region. In addition, we will launch the national initiative to develop principal cities and elevate eligible counties and very large towns into cities in an orderly manner. Efforts will be made to integrate various types of local urban plans into a single master plan to ensure better urban planning and design. We will accelerate the upgrading and building of municipal infrastructure, step up work relating to urban geological surveys, steadily move ahead with the construction of urban utility tunnels and the comprehensive management of underground pipelines and cables, and take effective measures to deal with traffic congestion and other urban maladies.
We will do more to see that beautiful small towns and cities with unique features and beautiful villages are developed. We will leverage the leading role of New Urbanization to spur on the building of a new countryside and the integrated development of the primary, secondary, and tertiary industries in rural areas and will coordinate efforts to relocate people from inhospitable areas with the advancement of New Urbanization.
Figure 12. Permanent Urban Residents as a Percentage of Total Population
7. Promoting deeper, higher-level bidirectional opening up
We will enhance overall coordination and planning, particularly between efforts at home and abroad; integrate efforts to further open up, improve services, and enhance regulation; and strive to carve out new competitive edges in international markets.
1) We will deliver more concrete results in developing the Belt and Road.
We will accelerate the development of the six major international economic cooperation corridors, ensure the smooth construction and operation of important ports such as Gwadar, Piraeus, and Hambantota, steadily push ahead with the high-speed railway projects to connect Jakarta and Bandung in Indonesia and Moscow and Kazan in Russia, as well as the railway projects to connect China and Laos, China and Thailand, Malaysia and Singapore, and Hungary and Serbia, and further strengthen the brand of China-Europe freight train services. We will strive to make a great success of the Belt and Road Forum for International Cooperation.
We will actively advance concrete international cooperation on industrial capacity, build up a reserve of projects, and establish demonstration zones, so as to promote Chinese equipment, technology, standards, and services in going global. Efforts will be stepped up to develop the China-Belarus Industrial Park, the China-Egypt Suez Economic and Trade Cooperation Zone, Malaysia-China Kuantan Industrial Park, and other overseas economic-trade and industrial parks. We will continue to build cross-border (border-area) economic cooperation zones and promote cooperation on developing the Online Silk Road. We will increase personal and cultural exchange and cooperation in education, science and technology, culture, health, and tourism.
2) We will work to sustain the steady recovery and growth of foreign trade.
We will implement and improve policies for promoting foreign trade, give full play to the role of export-credit insurance, and ensure export financing insurance is provided for all complete sets of equipment that are insurable. A seed fund will be set up to encourage innovation in the development of services trade. We will proceed with trials in market purchases trade and in the development of enterprises that provide comprehensive foreign trade services, and promote the export of competitive agricultural products. We will work faster to build demonstration centers for transformation and upgrading of foreign trade. We will encourage the processing trade to extend toward the high end of the industrial chain and to gradually relocate to the central and western regions.
We will increase trade facilitation by ensuring that both the Single Window System for international trade is implemented and customs clearance procedures are integrated nationwide. The import of advanced technology and equipment and key spare parts and components will be increased. We will advance negotiations on establishing the Regional Comprehensive Economic Partnership and continue to advance the building of the Free Trade Area of the Asia-Pacific. We will properly handle trade frictions and safeguard China's legitimate rights and interests.
3) We will further improve the business environment for foreign investment.
We will issue and implement the measures for greater opening up to and dynamic use of foreign capital, the revised Catalog of Industries for Foreign Investment, and the Catalog of Industries with Local Strengths in the Central and Western Regions for Foreign Investment, so as to ensure more areas are opened up and procedures are streamlined. We will take a more proactive approach to building pilot free trade zones; focusing on priority tasks and weak links, we will continue to explore ways to deepen reform and work to produce more institutional innovations that can be replicated. We will improve the system for managing the foreign debt of foreign-funded enterprises. China's non-financial foreign direct investment for 2017 is projected to be similar to that of last year.
4) We will guide healthy and orderly development of outbound investment.
We will make the reviews for verifying the authenticity of outbound investment more stringent, draw up a blacklist in this regard, introduce a system of capital contribution requirements for SOEs' outward investment, and work to prevent outward investment from rising excessively fast. We will refine the service system and policies for promoting outward investment, and provide guidance to ensure Chinese businesses go global in a well-regulated and orderly manner. China's non-financial outward direct investment in 2017 is projected to be roughly the same as last year.
Figure 13. Non-Financial Inward and Outward Foreign Direct Investment
8. Working faster to advance green development
We will intensify efforts to deliver ecological progress, take comprehensive measures to promote resource conservation, increase the supply of green products, and bring about an all-around improvement in the quality of the environment, so as to ensure the building of a Beautiful China proceeds at a faster pace.
1) We will deepen structural reform for promoting ecological progress.
We will work proactively to establish national pilot zones for ecological progress. Trials will be carried out to improve the national natural resource asset management system. All-around efforts will be made to establish and strictly enforce red lines for ecological conservation. We will push ahead with reform of the system for payment-based use of state-owned natural resource assets, and formulate provisional measures for auditing outgoing officials' management of these assets.
Evaluations will be conducted to assess performance in relation to ecological conservation targets, and provincial-level green growth indicators for 2016 will be published. We will strive to achieve nationwide coverage of central government environmental inspections, and advance trials for reforming the system that places the monitoring, supervision, and law enforcement activities of environmental bodies below the provincial level directly under the leadership of provincial-level environmental bodies. We will move forward with the efforts to reform the compensation system for ecological and environmental damage, improve the green finance system, and issue more bonds for launching eco-friendly initiatives.
2) We will improve the functional zoning system.
Guidelines will be formulated to improve the functional zoning strategy and system. Work will begin on revising both the national plan for functional zoning and the corresponding plans of provinces, autonomous regions, and municipalities directly under the central government. We will move faster to promote trials on provincial-level spatial planning, and also issue guidelines on the formulation of prefecture- and county-level spatial plans. We will draw up technical standards for enforcing red lines for ecological conservation, setting the threshold for environmental quality, imposing a ceiling on resource utilization, and implementing a negative list of environmental standards for market access, and will see that environmental impact assessments for strategies and plans are put in place.
We will draw up an overall plan for establishing a national park system. We will work out guidelines on creating long-term monitoring and early-warning mechanisms for environmental and resource carrying capacity, and begin monitoring and early-warning work along the Yangtze Economic Belt. Negative lists of industries will be strictly implemented for key ecosystem service zones. Supporting policies for establishing marine functional zones will be produced. We will also begin work on formulating provincial-level land plans.
3) We will ensure more effective use of resources.
The overall work plan for energy conservation and emissions reduction during the 13th Five-Year Plan period will be put into effect. We will work to curb the total amount and intensity of energy, water, and land consumption; launch the Nation of Energy Savers Initiative, the "100-1,000-10,000" energy conservation program*, and the Frontrunner Program for Energy Conservation; drive forward trials on paying for and trading energy-use rights; and implement the project to promote the integration and optimization of the energy mix, so as to ensure less water, wind, and solar power lies idle.
We will get everyone saving water, put in place a water efficiency labeling scheme, and redouble our efforts to utilize alternative water resources. We will launch an initiative to guide circular development, formulate the Internet Plus Resource Recycling Action Plan, promote circular operations within industrial parks, and support the establishment of demonstration centers for the resource recycling industry and centers for the comprehensive use of waste.
4) We will strengthen environmental governance and ecological conservation.
We will fully implement the major action plans for addressing air, water, and soil pollution. Every effort will be made to tackle air pollution; we will strengthen early-warning mechanisms for severe air pollution and ensure that tougher measures are implemented to prevent and control air pollution in the Beijing-Tianjin-Hebei region, that efforts to cut coal consumption, replace it with alternative energy, and prevent and control its pollution are made in key areas and cities - including in and around the Beijing-Tianjin-Hebei region, the Yangtze River Delta, and the Pearl River Delta - that more clean energy sources are used for winter heating across northern China, and that comprehensive measures are taken to ensure cleaner use of coal in non-industrial sectors and to substitute coal with electricity or natural gas in more than 3 million households.
We will put in place an early-warning and integrated-oversight system for the prevention and control of water pollution, formulate the plan for the prevention and control of water pollution in key water basins during the 13th Five-Year Plan period, and implement the program to advance ecological conservation and environmental protection along the Yangtze Economic Belt. New systems and mechanisms to manage and protect rivers and lakes will be established and the river chief system will be implemented across the board.
Pilot and demonstration projects will be carried out to move ahead with all-around ecological restoration in cities. We will make greater efforts to improve black, malodorous water bodies in cities, and increase the overall effectiveness of urban sewage treatment and recycling facilities. We will encourage key cities to carry out mandatory household waste classification and to move faster in building facilities for sorting, collecting, transporting, and disposing of waste. We will steadily advance the emissions permit system, and carry out demonstrations for sorting and recycling rural household waste in about 100 counties. We will establish an environmental management system for fixed pollution sources which is based on emissions permits, and strictly control the total amount of sewage dumped into rivers.
* The 100-1,000-10,000 energy conservation program aims to put the top 100 energy consuming enterprises in China under regulation of the central government, the top 1,000 energy consuming enterprises under the regulation of their respective provincial-level governments, and a further 10,000 plus high-energy consuming enterprises under the regulation of lower-level governments.
We will actively promote third-party participation in pollution control. An in-depth survey will be carried out throughout the country to assess the situation in relation to soil contamination, legislative work on the Law on Prevention and Control of Soil Pollution will be sped up, and standards for the quality of soil environments on agricultural land and construction land will be formulated or revised. We will ensure that emissions of all industrial polluters stay within emissions standards.
We will build national ecological security shields, push ahead with large-scale afforestation, and implement projects for ecological conservation and restoration in mountains, water bodies, and forests, and on farmland as well as major biodiversity protection projects. We will move ahead with the projects to return marginal farmland to forest or grassland and return grazing land to grassland, develop forest shelterbelts, protect natural forests, and comprehensively tackle soil erosion.
We will put in place pilot and demonstration programs to advance the comprehensive governance and sustainable development of the water environment in water basins, and will promote the return of cultivated land to wetland and the reduction of mudflat aquaculture so as to restore mudflat ecosystems. Strict control and oversight will be imposed over coastal reclamation activities. Remote sensing systems will be established in nature reserves to strengthen oversight.
5) We will proactively respond to climate change.
A national market for carbon emissions rights will be put into operation. We will move quicker to carry out the low-carbon pilot and demonstration programs as well as the trials for developing climate resilient cities. We will actively participate and play a guiding role in the follow-up negotiations of the Paris Agreement, make every effort to promote climate diplomacy, and ensure efforts are carried out at home to fulfill our promises in the Agreement. We will continue to promote international dialogue and effective cooperation, and strengthen South-South cooperation on climate change.
9. Doing more to safeguard and improve people's wellbeing
Better coordination will be achieved between the efforts to improve people's wellbeing and those to develop the economy. We will strive to make the social safety net tighter and sturdier, and to improve the standard and quality of public services, so that our people's sense of benefit continues to grow.
1) We will put every effort into fighting poverty.
We will consolidate and build on our achievements made in the fight against poverty so far and speed up implementation of key poverty alleviation projects, such as relocating people from inhospitable areas, supporting the development of local industries, and providing job-seeking assistance. We will boost efforts to carry out work-relief programs, and will support the development in poor areas of infrastructure and basic public services, such as transportation, water conservancy, education, health care and family planning, cultural services, and social security.
We will work on policies and measures to help people in border regions eliminate poverty and achieve moderate prosperity with a view to stabilizing and consolidating our frontier. We will support development and poverty relief work in old revolutionary base areas, such as the Sichuan-Shaanxi region and the former Central Soviet areas in southern Jiangxi, Fujian, and Guangdong. We will prudently carry out the pilot poverty-relief reform which enables people in poor areas to share in the proceeds from the exploitation of local hydropower and mineral resources. We will make further efforts to fight poverty by providing access to and improving financial services, health care, education, transportation, and e-commerce, and by developing the tourism industry in local areas; in addition, we will provide support and assistance to people who have been driven into, or have fallen back into, poverty because of medical expenses. Provincial-level trials to use internet-based initiatives to alleviate poverty will be carried out.
2) We will fully implement the strategy of prioritizing employment.
Priority groups will continue to receive support in starting businesses and finding jobs. Initiatives will be implemented to promote employment for college graduates, to guide them in starting businesses, and to encourage them to work at community level; and efforts will be made to see that demobilized military personnel are resettled in new jobs. We will further expand trials to provide support for migrant workers and others who return to their hometown to set up businesses, with a focus on creating industrial clusters in local areas for these returnees, promoting rural e-commerce, and reducing overcapacity and developing alternative industries. We will properly resettle and provide reemployment services for people laid off due to the scaling down of overcapacity in the coal and steel industries. We will develop and improve community-based employment service facilities and public vocational training centers, and strengthen employment assistance, thereby boosting the capacity of public employment services.
3) We will strengthen social security so as to better meet people's basic needs.
We will work to reform and improve the basic old-age insurance system. Integration of the medical insurance schemes for rural and non-working urban residents will be stepped up. Pilot programs on long-term care insurance and the integration of maternity insurance with the basic medical insurance for urban workers will come into operation. We will coordinate the development of social assistance systems.
The housing system will be improved to encourage both buying and renting and to ensure the continuous improvement of housing conditions for both low- and middle-income groups and people facing difficulties. In 2017, we will begin renovations on six million units of housing in run-down urban areas and continue to rebuild dilapidated houses in rural areas, with a focus on supporting subsistence allowance beneficiaries; rural residents who receive assistance because of extreme poverty and do not live in a nursing home; families of people with disabilities living in poverty; and registered poor households. We will continue to develop government-subsidized housing including public rental housing.
4) We will improve the system of basic public services.
We will implement the plan for ensuring equitable access to basic public services during the 13th Five-Year Plan period. The system for a list of basic public services will be established. We will reform the management of the higher education admission scheme. In 2017, regular institutions of higher learning are projected to enroll 7.35 million undergraduate students and 844,000 graduate students. We will strengthen efforts to develop more world-class universities and first-class fields of discipline.
We will press ahead with the comprehensive reform of public hospitals nationwide, fully launch the trials to establish diverse forms of medical consortiums, and set up assessment and incentive mechanisms for ensuring quality medical resources are shared between different levels of medical institutions. We will ensure governments' responsibility of ensuring basic health care is fulfilled. We will implement the program to ensure a healthy population, and boost the capacity of counties in the central and western regions to offer comprehensive medical and health care services, as well as the capacity of institutions for disease prevention and control and for maternal and child care. As the policy of allowing couples to have two children has come into effect, we will provide better medical and health services related to childbirth. We will support the law-based development of traditional Chinese medicine.
We will introduce and implement the plan for developing elderly services and building the elderly care system during the 13th Five-Year Plan period. We will improve the system for elderly services, and implement the plan to train elderly-care workers. We will introduce and carry out the national population development plan, and work to ensure the implementation of the policy of allowing couples to have two children. We will, more effectively, safeguard the rights and interests of women, minors, people with disabilities, and other social groups.
We will ensure more equitable access to basic public cultural services and help localities to implement the national standards for guiding the provision of basic public cultural services. We will encourage innovation in the ways of delivering public cultural services as well as private-sector participation in developing the system of public cultural services. We will ensure that philosophy and the social sciences flourish.
We will promote public fitness programs, and boost the popularity of community sports. We will move ahead with the plan for the long- and medium-term development of soccer in China as well as the plan for the construction of soccer fields and facilities.
We will deepen cooperation with Hong Kong and Macao in the areas of investment, the economy, and trade, and work to upgrade the Closer Economic Partnership Arrangement (CEPA) between the mainland and the two regions. We will support Hong Kong and Macao in participating in and contributing to the Belt and Road Initiative as well as regional economic cooperation. We will carry out work involving Hong Kong and Macao as part of the 13th Five-Year Plan. We will press ahead with the construction of the Hong Kong-Zhuhai-Macao Bridge so as to more quickly achieve a greater level of interconnectivity in infrastructure between Guangdong Province, Hong Kong, and Macao. Development of the Qianhai, Nansha, and Hengqin platforms for cooperation between Guangdong, Hong Kong, and Macao will be accelerated, and regional cooperation in the pan-Pearl River Delta will be pushed to a higher level and made more substantive. We will support Hong Kong in its efforts to pursue innovation and develop science and technology, to consolidate and elevate its position as an international financial, shipping, and trade center, and to cultivate new strengths. We will provide further support for Macao in becoming a world tourism and leisure center and in building a platform to facilitate business and trade cooperation between China and Portuguese-speaking countries. We will also support Macao in developing industries such as convention and exhibition, specialized financial services, cultural & creative industries as well as cross-border e-commerce, so as to promote an appropriate level of diversity in its economy. We will ensure platforms for cooperation with Taiwan are successfully established, including the Pingtan Comprehensive Experimental Area, Fuzhou New Area, and the China (Fujian) Pilot Free Trade Zone, so as to deepen cross-Straits economic exchange and cooperation.
Esteemed Deputies,
Accomplishing the work for economic and social development in 2017 is both a demanding and important 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, take Deng Xiaoping Theory, the Theory of Three Represents, and the Scientific Outlook on Development as our guide, and fully implement the guidelines from General Secretary Xi Jinping's major political addresses as well as his new concepts, thoughts, and strategies on the governance of China. We will willingly accept the oversight of the NPC, and seek comments and suggestions from the CPPCC National Committee with an open mind. Let us pool our will and strength to promote reform and innovation, work hard to deliver a sound performance to overcome the difficulties ahead, and foster steady and sound economic and social development, so as to welcome the convocation of the 19th CPC National Congress with outstanding achievements.
Performance of the Main Targets in the 2016 Plan for National Economic and Social Development
Notes:
1. The 2016 Plan for National Economic and Social Development deliberated and passed at the Fourth Session of the Twelfth National People's Congress lists a total of 62 targets, of which 43 are anticipatory and 19 are obligatory. The 15 targets marked with a star mark are obligatory targets set forth in the Thirteenth 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 of obligatory targets is assessed on the basis of whether or not they have been accomplished. A deviation of 10% from the projected figure is the standard used to assess the performance of anticipatory targets: if the actual figure exceeds the anticipatory figure by 10% or more, it is assessed as better than projected; if the actual figure falls short of the anticipatory figure by 10% or more, it is assessed as 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. However, these assessment standards are not applicable to targets that have a minimum or maximum limit. For example, the actual registered urban unemployment rate in 2016 was 4.02%, 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 2016; the actual figures will be confirmed following the final review and adjustments by relevant departments. Influenced by the adjustment of the base figures for 2015, the actual performance of some targets in 2016 may change somewhat.
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