1. Strengthening and improving macro-control, preventing fast price rises, and achieving steady and robust economic development

We followed a proactive fiscal policy and a prudent monetary policy, and maintained a balance between ensuring steady and robust economic development, adjusting the economic structure, and managing inflation expectations. We paid greater attention to implementing policies with the proper focus, force, and pace; conducted prudent and flexible macro-control on a moderate scale and in a timely fashion; and constantly made our policies more targeted, flexible, and forward-looking. Amid worsening inflation expectations worldwide, fluctuating and high prices of major commodities on the world market, significantly higher costs of factors of production at home, and a shortage of some agricultural products, we made ensuring general price stability our top priority in macro-control, pursued policies in an integrated way, rationally used monetary policy tools to regulate the supplies of money and credit, vigorously developed production to ensure supply, boosted distribution, and strengthened supervision. As a result, increases in the consumer price index (CPI) and the producer price index (PPI) began falling in August, thus reversing the trend of rapid inflation. In the second half of the year, when the global economy faced greater instability and uncertainty and when new developments and problems occurred in China's economy, we kept the basic orientation of macro-control unchanged, maintained the basic continuity of our macroeconomic policies, and continued to curb inflation. In addition, we carried out timely and appropriate anticipatory adjustments and fine-tuning, strengthened coordination between credit and industrial policies, and increased structural tax reductions. We focused on supporting the real economy, especially small and micro businesses; improving the people's wellbeing, especially by building low-income housing projects; and ensuring funding for key projects that are under construction or expansion. These well-targeted measures were taken to solve major economic problems. We steadfastly tightened regulation of the real estate market and ensured that control policies were fully carried out and achieved real progress. Consequently, speculative or investment-driven housing demand has been significantly curbed, housing prices in most Chinese cities have fallen month on month, and the results of our control measures are beginning to show. We attached great importance to guarding against and eliminating latent risks which exist in the banking and public finance sectors. We fully audited local government debt in a timely manner, and obtained a clear picture of the total amount, due dates, geographic distribution, and causes of the debts local governments incurred over the years. These debts have played a positive role in promoting economic and social development and produced a large amount of quality assets. However, they also contained risks and hidden dangers, and some localities with poor ability to pay their debts were at risk of default. We sorted out and standardized these debts, imposed a cap on their increase, and actively yet prudently solved problems related to the repayment of such debts and additional funding for ongoing projects. Government debt in China now is at a controllable and secure level. China's economy as a whole continues to grow as we anticipated in our exercise of macro-controls and has become more resilient. Economic growth is robust, prices are stabilizing, economic returns are good, and the people's wellbeing is improving.