Full Text: Report on the Work of the Government

The following are the main work we accomplished over the past five years and its main features:

1. Effectively responding to the global financial crisis and promoting steady and rapid economic development

In the past five years, we averted the grievous consequences of the global financial crisis, whose abruptness, rapid spread and profound impact were rarely seen in the past century. We responded to the crisis calmly, made timely and decisive adjustments to the focus of macro-control, adopted ten measures to increase domestic demand and promote steady and rapid economic growth, and implemented a comprehensive package plan. In a two-year period, an additional four trillion yuan of government investment was made, with 1.26 trillion yuan from the central government, mainly for building government-subsidized housing, improving rural people's wellbeing, building infrastructure, developing social programs, improving the environment, promoting innovation, and carrying out post-disaster recovery and reconstruction.

Over the past five years:

-- More than 18 million government-subsidized housing units of various types were built, and over 12 million housing units in run-down areas were upgraded.

-- A total of 18,000 large and medium-sized and key small reservoirs were reinforced, 24,500 kilometers of key small and medium-length rivers were harnessed, and water-saving irrigated farmland was increased by 7.7 million hectares.

-- A total of 19,700 kilometers of new rail lines were built, 8,951 kilometers of which are high-speed railways.

-- The high-speed Beijing-Shanghai, Beijing-Guangzhou and Harbin-Dalian railways and a number of intercity railways were opened to traffic.

-- A total of 609,000 kilometers of new roads were built, 42,000 kilometers of which are expressways, increasing the total length of expressways in service to 95,600 kilometers.

-- Thirty-one airports and 602 shipping berths for 10,000-ton ships were built.

-- A number of bridges over rivers and bays and linking islands with other islands and the mainland were completed.

-- Smooth progress was made in major projects such as those for transporting natural gas and electricity from the west to the east and diverting water from the south to the north, and some of the projects have been completed.

-- Non-fossil energy production developed rapidly, and China now ranks first in the world in the installed capacity of both hydropower and wind power.

-- Reconstruction of the Wenchuan, Yushu and Zhugqu disaster areas transformed them completely.

These impressive achievements played a vital role in our effective response to the severe impact of the global financial crisis, and laid a solid foundation for sustaining China's economic and social development. They have benefited and will continue to benefit hundreds of millions of people.

We always strove to maintain a balance between ensuring steady and rapid economic development, adjusting the economic structure, and managing inflation expectations. We made government macro policies more forward-looking, scientific and effective and implemented them with proper orientation, force and focus.

When the impact of the global financial crisis was at its worst, we resolutely implemented a proactive fiscal policy and a moderately easy monetary policy, employed a full range of financial policy tools, increased government spending and made structural tax reductions. We effectively employed monetary policy instruments such as adjusting required reserve ratios and interest rates to maintain proper growth in the money and credit supply.

In response to changing macroeconomic trends, we promptly adjusted the intensity of policy implementation, reduced the force of stimulus policies at an appropriate time, and implemented a proactive fiscal policy and a prudent monetary policy.

We took a holistic and balanced approach in employing fiscal policy. As a result, the government deficit dropped from 2.8 percent of GDP in 2009 to about 1.5 percent last year, and both deficit-to-GDP and debt-to-GDP ratios remained at a safe level. We strengthened comprehensive auditing of local governments' debt and management of their financing platforms, thus effectively controlling latent economic risks.

In employing monetary policy, we maintained a balance between ensuring steady growth, maintaining price stability and warding off risks. The financial system functioned soundly. The banking sector became better able to avert risks. Its capital adequacy rate increased from 8.4 percent at the end of 2007 to 13.3 percent by the end of last year, and its non-performing loans dropped from 6.1 percent to 0.95 percent.

We kept a firm grip on the real estate market and kept housing prices from rising too quickly.

In 2012, when other major economies in the world were experiencing a slowdown in growth and constantly encountered new risks, we maintained a proper intensity in policy implementation, kept budgetary spending unchanged, improved the spending mix, and reversed the decline in economic growth. As a result, we attained all the main targets set at the beginning of the year: GDP grew by 7.8 percent, 12.66 million urban jobs were created, and the rise in the CPI fell to 2.6 percent. All this laid a good foundation for China's economic development this year.

Over the past five years:

-- China's economy as a whole maintained steady and rapid growth.

-- Prices remained fairly stable.

-- Employment steadily increased.

-- The balance of payments moved toward equilibrium.

-- GDP grew at an average annual rate of 9.3 percent, considerably higher than the average global rate and the average rate of other emerging economies for the same period.

-- China's inflation rate was also much lower than that of other emerging economies.

The Chinese economy is stable and full of vitality.

In the last five years, faced with severe challenges posed by a complex and volatile international economic environment and a sluggish global economy, the central leadership, on the basis of a scientific judgment of the situation, made resolute decisions that steered China's modernization drive clear of major pitfalls created by huge external shocks. Experience fully proves these decisions and implementing steps were entirely correct.