Fellow Deputies,

On behalf of the State Council, I now present to you my report on the work of the government for your deliberation and approval. I also solicit comments and suggestions on the report from the members of the National Committee of the Chinese People’s Political Consultative Conference (CPPCC).

I. Review of the Work in 2008

The year 2008 was truly eventful. Our country’s economic and social development withstood severe challenges and tests that were rarely seen before. Under the leadership of the Communist Party of China (CPC), the people of all our ethnic groups faced difficulties squarely, worked with courage and determination, surmounted all difficulties and obstacles, and made new achievements in reform, opening up and socialist modernization.

-The national economy continued to maintain steady and rapid growth. Gross Domestic Production (GDP) topped 30 trillion yuan, an increase of 9 percent over the previous year. Overall price rises were held in check. Government revenue was 6.13 trillion yuan, an increase of 19.5 percent. Grain output rose for the fifth consecutive year and totaled 528.5 million tons, a record high.

-Reform and opening up were further deepened. New breakthroughs were made in reforms in key areas and crucial links, such as the fiscal, taxation, financial and pricing systems and administration. Imports and exports totaled $2.56 trillion, an increase of 17.8 percent. Paid-in foreign direct investment reached $92.4 billion.

-Development of social programs was accelerated, and the living standards of the people continued to rise. A total of 11.13 million more urban residents entered the workforce. Urban per capita annual disposable income reached 15,781 yuan, an increase of 8.4 percent in real terms, and rural per capita net income reached 4,761 yuan, up by 8 percent in real terms.

-Great victories were won in the fight against massive natural disasters. The Beijing Olympics and Paralympics were held successfully, and the Shenzhou VII manned space mission was a complete success.

These achievements signify that we have taken new and solid steps along the path of socialism with Chinese characteristics. They have greatly fortified the courage and strength of the people of all our ethnic groups to surmount difficulties and will definitely encourage us to bravely forge ahead on the new historical course.

Last year, we accomplished the following important work:

1. Making timely and resolute adjustments to macroeconomic policies and doing everything possible to maintain steady and rapid economic development

We maintained the right direction, focus, intensity and pace of macro control, and adopted a series of policies and measures to promote steady and rapid economic development. In a complex and volatile situation, we actively responded to the severe impact of the global financial crisis and worked hard to make our macro control more proactive, targeted and effective. In the middle of the year, when energy and grain prices on the international market were high, world economic growth slowed, and exports from and economic growth in China’s coastal regions began to decline, we promptly shifted the priority of macro control to maintaining steady and rapid economic development and controlling price hikes, and adopted relevant fiscal, taxation and financial measures. In September, the international economic situation started to deteriorate sharply and its negative impact became increasingly felt in China. We again resolutely shifted the focus of macro control to preventing economic growth from slowing down too quickly. We implemented a proactive fiscal policy and a moderately easy monetary policy. We raised export rebate rates three times, lowered the benchmark interest rates on savings and loans for financial institutions on five occasions, reduced required reserve ratios four times, suspended the individual income tax on interest earnings from savings, reduced securities transaction stamp tax rates, cut taxes and fees on housing transactions, and increased credit support to small and medium-sized enterprises. In accordance with the requirement that we act fast, be forceful, take targeted measures and stress implementation, we promptly introduced 10 measures to further boost domestic demand and promote economic growth, and implemented them without delay. We adopted a succession of policies and measures to encourage financial institutions to support economic development, promote sound development of the textile and other light industries and the real estate market, expand consumption by improving distribution, maintain steady growth in foreign trade, and keep the employment situation stable. At the same time, we stepped up efforts to formulate plans for restructuring and revitalizing key industries. Together, these measures have played a crucial role in alleviating serious problems affecting economic performance, enhancing confidence, stabilizing expectations and maintaining steady and rapid economic development.

We continued to strengthen our work related to agriculture, rural areas and farmers without any letup. Central Government budgetary spending on agriculture, rural areas and farmers was 595.5 billion yuan for the whole year, a year-on-year increase of 163.7 billion yuan or 37.9 percent. This included 103 billion yuan, twice the figure for the previous year, in direct subsidies to grain producers, general subsidies for agricultural production supplies, and subsidies for superior crop varieties and the purchase of agricultural machinery and tools. We significantly raised minimum grain purchase prices three times, with the total increase exceeding 20 percent. We implemented a temporary policy for purchasing and stockpiling major agricultural products. We intensified the protection of arable land and the construction of agricultural water conservancy projects, and increased overall agricultural production capacity. We supported the production of hogs, oilseeds and dairy products. These policies and measures played an important role in maintaining and stimulating the enthusiasm of farmers, ensuring the supply of major farm products and increasing rural incomes, and provided strong support for maintaining overall stability in economic and social development.

We unswervingly promoted independent innovation and economic restructuring. We launched 16 major national science and technology projects, and established a number of new national engineering centers, key laboratories and enterprise technology centers in such fields as information technology, biotechnology and environmental protection. We successfully developed a number of key technologies and major equipment in the areas of regional aircraft, automobiles powered by new energy sources and high-speed railways. The Central Government invested 116.3 billion yuan in science and technology, an increase of 16.4 percent. Significant steps were taken in reorganization of the telecommunications and civil aviation industries. We continued to eliminate backward production facilities. Last year, we shut down small thermal power plants with a total capacity of 16.69 million kw and closed 1,054 small coalmines. Investment in infrastructure and basic industries was increased, and a number of major projects in energy, transportation and water conservancy were completed or launched. Steady progress was made in implementing the master strategy for regional development, and economic development in different regions became better coordinated.