At the same time, China also scored great achievements in foreign affairs. In 2006, China's diplomacy was more active than ever and its relationship with the United States, Japan, Russia and the European Union was further promoted. China enhanced friendly partnership with its neighbors, pushed its cooperation with other developing countries to a new high, and actively participated in the settlement of international hotspots. The year also saw increasing cultural exchanges between China and the rest of the world.

Despite great achievements, we should also notice various striking problems. A weak agricultural foundation made it difficult for farmers to increase grain production and income. Fixed assets investment was still hefty and the extensive economic growth pattern remained. The energy shortage hampered economic growth, while the target of cutting energy consumption by 4 percent failed. There was huge pressure on the appreciation of the renminbi and problems crucial to the immediate interests of the people were poorly tackled.

Internationally, while China's international influence and status on the world stage keep improving, the country began to face new challenges. Big powers have begun to take precautions against China and are demanding China to shoulder heavier international responsibilities. The "China threat" and "China's responsibility" rhetorics put China's "going-out" strategy at risk. Besides this, China is also faced with increasing competition from some developing countries. We must face up to the reality that China's aggregate economic volume only accounts for 4 percent of the world's total, which is 13 percent of the United States', 28 percent of Japan's and 70 percent of Germany's. Moreover, China's per-capita gross domestic product ranks below the 100th place worldwide with the annual per-capita figure in many provinces less than $1,000.