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I now wish to address the overall requirements and policy direction for economic and social development in 2018.
This year will kick off our efforts to put all the guiding principles from the Party’s 19th National Congress into action. It is the 40th anniversary of reform and opening-up, and it is a crucial year for securing a decisive victory in building a moderately prosperous society in all respects and for continuing to implement the 13th Five-Year Plan. To accomplish the government’s work for the year, we must, under the strong leadership of the Party Central Committee with Comrade Xi Jinping at its core, do the following: • follow the guidance of Marxism-Leninism, Mao Zedong Thought, Deng Xiaoping Theory, the Theory of Three Represents, the Scientific Outlook on Development, and Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era; implement fully all the guiding principles from the Party’s 19th National Congress and the second and third plenary sessions of the 19th Party Central Committee; act on the Party’s basic theory, line, and policy; adhere to and strengthen Party leadership in all of our work; remain committed to the general principle of pursuing progress while ensuring stability and to the new development philosophy; • respond to the change in the principal contradiction in Chinese society; • heed the requirement that development must be high quality; • coordinate efforts to pursue the five-sphere integrated plan and the four-pronged comprehensive strategy; • continue to regard supply-side structural reform as our main task; • coordinate all work to maintain stable growth, promote reform, make structural adjustments, improve living standards, and guard against risk; • work hard to reform and open up further; • explore new ideas on and improve macro regulation; • promote a change in quality, change in efficiency, and change in growth drivers; • work particularly for solid progress in forestalling and defusing major risks, in targeted poverty alleviation, and in addressing pollution; • guide and stabilize expectations, improve living standards, and promote sustained, healthy economic and social development.
A comprehensive analysis of how things stand at home and abroad tells us that China, in its development, faces both opportunities and challenges. We can expect continued recovery of the global economy, but there are also many factors that bring instability and uncertainty. The policy changes of the major economies and their spillover effects create uncertainty; protectionism is mounting, and geopolitical risks are on the ascent. China’s economy is now in a pivotal period in the transformation of its growth model, its structural improvement, and its shift to new growth drivers. There are still many hills to climb and gorges to cross; we will have to face risks and challenges, some foreseeable and others not. In fact, it’s always been the case that China’s achievements in development have been made whilst overcoming difficulties. Today, China’s material and technological foundations are much stronger; its industrial system is complete, its market is vast, its human resources are abundant, and its entrepreneurs and innovators are dynamic. We enjoy composite advantages, and all this means that we have the ability and the conditions to achieve higher quality, more efficient, fairer, and more sustainable development.
Based on the above considerations, we have set the following projected targets for development this year: • GDP growth of around 6.5 percent • CPI increase of around 3 percent • Over 11 million new urban jobs, the surveyed urban unemployment rate within 5.5 percent, and the registered urban jobless rate within 4.5 percent • Basic parity in personal income growth and economic growth • A steady rise in import and export volumes, and a basic equilibrium in the balance of payments • A drop of at least 3 percent in energy consumption per unit of GDP, and continued reductions in the release of major pollutants • Substantive progress in supply-side structural reform, basically stable macro leverage, and systematic and effective prevention and control of risk
The above targets take into consideration the need to secure a decisive victory in building a moderately prosperous society in all respects, and are fitting given the fact that China’s economy is transitioning from a phase of rapid growth to a stage of high-quality development. Given our economic fundamentals and capacity for job creation, GDP growth of around 6.5 percent will enable us to achieve relatively full employment. The surveyed urban unemployment rate covers rural migrant workers and other permanent urban residents. This year, for the first time we are using this indicator as a projected target; this is intended to give a fuller picture of employment and to better reflect the requirement that development that is to be shared by everyone.
This year, we will continue to develop new ways of improving macro regulation and ensure that the degree of macro regulation is right. We will maintain the continuity and consistency of macro policies, and better coordinate fiscal, monetary, industrial, regional, and other policies.
The proactive direction of our fiscal policy will remain the same, and we will concentrate efforts to increase efficiency. This year’s deficit as a percentage of GDP is projected to be 2.6 percent, 0.4 percentage point lower than last year. The government deficit is projected to be 2.38 trillion yuan, with a central government deficit of 1.55 trillion yuan and local government deficit of 0.83 trillion yuan. The reduction in the deficit-to-GDP ratio is mainly due to China’s economic growth being steady and the foundation being there for an increase in revenue; it also keeps policy options open for macro regulation. Government expenditure is budgeted at 21 trillion yuan, representing a further increase in the scale of spending. The central government will increase general transfer payments to local governments by 10.9 percent, to strengthen local finances, especially in the central and western regions. We will improve the structure of budgetary spending, making sure that more financial allocations are used for the public good and universal benefit, increasing support for the three critical battles against potential risk, poverty, and pollution, and weighting spending toward innovation-driven development, agriculture, rural areas, and rural residents, and the improvement of living standards. Although the government finances are improving, government at all levels must keep its belt tightened, keep things as simple as possible, abstain from all excess, and strictly control general expenditures, so that these precious funds are used to add growth drivers for sustaining development and meet people’s most urgent needs.
Our prudent monetary policy will remain neutral, with easing or tightening only as appropriate. We need to make sure that the valve of aggregate monetary supply is well controlled, maintain moderate growth in M2 money supply, credit, and aggregate financing, ensure a reasonable, stable level of liquidity, and increase the proportion of direct finance, particularly equity finance. We will improve the transmission mechanism of monetary policy, make better use of differentiated reserve ratio and credit policies, and encourage more funds to flow toward small and micro businesses, agriculture, rural areas, and rural residents, and poor areas, and to better serve the real economy.
For government to deliver this year, we must act on Xi Jinping’s economic thinking for new-era socialism with Chinese characteristics, continue following the general principle of pursuing progress while ensuring stability, and regard stability and progress as being indivisible. Specifically, we will do the following: First, we will strongly promote high-quality development. Development is the underpinning and the key for solving all our country’s problems. We will devote attention to addressing unbalanced and insufficient development. Centering on developing a modernized economy, we will put quality first and give priority to performance, and promote economic structural improvement and upgrading. We must respect objective economic laws, consider both long- and near-term needs, ensure the economy performs within a reasonable range, and achieve a situation in which steady economic growth and improvement in quality and performance reinforce each other. Second, we will be bolder in reform and opening-up. Reform and opening was a game-changing move in making China what it is today; it now remains a game-changing move for us to achieve China’s Two Centenary Goals*. Standing at a new historic starting point, we must go further in freeing our minds, in deepening reform, and in opening-up. We need to give full play to the pioneering drive of the people, and encourage all localities, based on their own conditions, to dare to explore, dare to try things out, and dare to confront the toughest of issues, to keep reform and opening-up constantly moving forward. (* The Two Centenary Goals are to finish building a moderately prosperous society in all respects by the time the Communist Party of China marks its centenary and to build China into a great modern socialist country that is prosperous, strong, democratic, culturally advanced, harmonious, and beautiful by the time the People’s Republic of China celebrates its centenary.) Third, we will ensure success in the three critical battles against potential risk, poverty, and pollution, battles that are important for decisively bringing to completion the building of a moderately prosperous society in all respects. We need to adopt targeted approaches and specific measures, draw up timetables and roadmaps, and set well-defined priorities. We will make sure risks and potential dangers are effectively controlled, make sure poverty alleviation is fully accomplished, and make sure there is an overall improvement in the quality of the environment. All of our work is work for the people. We will stay true to the vision of people-centered development, start by considering China’s own situation, and do everything within our capacity to resolve each and every one of the issues that most affect and worry our people, promote social fairness and justice and well-rounded human development, and see that the people’s lives, along with our country’s development, keep getting better year after year.