The 11th Five-Year Plan: Targets, Paths and Policy Orientation
Ma Kai, Minister, National Development and Reform Commission
March 19, 2006
Ladies and Gentlemen,
The Outline of the 11th Five-Year Plan has been approved by the Fourth Session of the Tenth National People's Congress that just closed. This is a significant event in China's politics and economy. The Outline fully carries out two lines of strategic thinking, namely, the Scientific Concept of Development and building a socialist harmonious society. It spells out national strategic intentions, identifies priorities of the government's agenda and reflects the common will and fundamental interests of the Chinese people. It is also an important basis on which the government will perform its functions, including economic adjustment, market regulation, social administration and public services. It is a declaration of scientific, harmonious and peaceful development, which is of great importance to China in the following five years and for the ambitious goal of building a well-off society in an all-round manner.
With the implementation of the 11th Five-Year Plan, the "cake" of the national economy will grow further. The national economy is expected to grow at an annual average rate of 7.5% during the period of the Five-Year Plan. By 2010, China's GDP will reach 26.1 trillion RMB and per capita GDP will amount to 19,270 RMB. Calculated at the current exchange rate, China's GDP will then total $3.2 trillion USD and per capita GDP will be $2400 USD by that time.
With the implementation of the 11th Five-Year Plan, the quality of economic growth will be further improved. Industrial structure will be optimized and upgraded and the proportion of the service industry will be significantly improved; enterprises will have stronger capacity of independent innovation and international competitiveness. Resources utilization efficiency will be improved considerably while energy consumption of per unit GDP will be lowered by 20%.
With the implementation of the 11th Five-Year Plan, the income level of urban and rural residents will be further raised. By 2010, the per capita disposable income of urban residents and the per capita net income of rural residents will reach 13,390 RMB and 4150 RMB respectively. The next five years will see newly added employment of 45 million people in urban areas and the transfer of another 45 million from rural areas.
With the implementation of the 11th Five-Year Plan, public services will be further improved. Public services for urban and rural residents, such as compulsory education, public health, social security, public culture, will be improved substantially both in quality and quantity. Average education for citizens will be increased to nine years. Urban citizens covered by basic pension will be increased to 233 million and the penetration rate of new rural cooperative medical care will be over 80%.
With the implementation of the 11th Five-Year Plan, urban and rural development will be more balanced. Noticeable progress will be made in building a socialist new countryside and the urbanization rate will be raised to 47%. The widening gaps of public services, per capita income and the living standard between urban and rural areas and between different regions will be curbed according to the principle of balancing urban and rural development and equalizing public services.
With the implementation of the 11th Five-Year Plan, the inhabitation environment will be further bettered. The trend of ecological and environmental degradation will be curbed preliminarily, and the total emission volume of major pollutants will be reduced by 10%. In cities, 70% of wastewater and 60% of residential garbage will be treated. The forest coverage rate is expected to reach 20%. 100 million rural residents will be provided access to safe drinking water, and 1.2 million kilometers of rural roads will be newly built and upgraded. All towns and administrative villages that have the necessary conditions will have access to highways.
With the implementation of the 11th Five-Year Plan, the market economy system will be further enhanced. Breakthroughs will be made in the reform and institutional building of areas such as administrative governance, state-owned enterprises, taxation, finance, science and technology, education, culture and public health. The government's capacity of market regulation and social administration will be enhanced remarkably. Opening up to the outside world and domestic development will be further balanced, and the open economy will arrive at a new level. By 2010, the total import and export volume of goods trade and service trade will hit $2.3 trillion USD and $400 billion USD respectively.
With the implementation of the 11th Five-Year Plan, new progress will be made in promoting democracy, the legal system and moral and culture. The legal system will be further improved in an all-round way with an aim to build a socialist legal system with Chinese characteristics. Ethical education will be strengthened so as to make fresh achievements in building a harmonious society.
To realize the above-mentioned great prospects, we should stick to the guidance of the Deng Xiaoping Theory and the important thoughts of "Three Represents", adhere to the Scientific Concept of Development for the guidance of economic and social development, maintain stable and fast economic growth, improve independent innovation capacity, accelerate the transformation of economic growth mode, promote economic restructuring and balanced development of urban and rural areas, enhance the building of a harmonious society, and continue deepening reform and opening-up.
To truly move along the track of scientific development, the basic policy orientation for China's economic and social development in the 11th Five-Year Plan period will be as follows:
First, we will promote development by relying on the expansion of domestic demand, take the expansion of domestic demand, especially consumption, as a major driving force, and transform economic growth from being driven by investment and export to being driven by consumption, investment, domestic and foreign demand combined in a balanced manner. This transformation is targeted at solving the problem that China's economic growth has relied on investment and export excessively and domestic consumption does not play its due role. During the 10th Five-Year Plan period, the domestic capital formation rate increased from 36% to 44.8%, while the consumption rate decreased from 61.5% to 50.7%, and foreign trade dependency rose from 39.6% to 63.9%. If such kind of growth continues, though successful in short-term fast expansion, it will lead to a more extensive growth mode and instability of the economy. In the 11th Five-Year Plan period, we will adjust the relationship between investment and consumption, rationally control total investment, and strengthen the driving force of consumption in economic growth. We will adjust residents' income distribution, raise the income of urban and rural residents, and enhance the consumption capacity of residents, particularly rural residents and low-income population in urban areas. We will speed up the transformation of foreign trade growth mode, and promote the switch of the dominant feature of foreign trade from volume expansion to quality improvement.
Second, we will promote development by relying on optimizing industrial structure, take the adjustment of economic structure as the theme, transform economic growth from being driven by industry and quantitative expansion to being driven by the balanced development of the primary, secondary and tertiary industries and by structural optimization and upgrading. This is a solution targeting at the irrational industrial structure of China. At present China has a weak agriculture foundation, and problems such as difficulties for farmers to increasing income and underdevelopment of rural regions remain prominent. The secondary industry is large in scale but not strong, and its ratio has kept rising and currently stands at 47.3%. The service industry lags behind, with its ratio dipping from 41.7% in 2002 to current 40.3%. Such an economic mix has not only increased the pressure on resources and environment, but also affected the improvement of total economic quality and benefits. It has also impeded the easing of employment pressure and impaired the stability of the economy. During the 11th Five Year Plan period, it is imperative for us to give top priority to the issues of "agriculture, rural areas and farmers" among all strategic tasks, adhere to the balanced rural and urban development and balanced economic and social development, and make steady progress in building the socialist new countryside while promoting urbanization vigorously and prudently. According to the requirements of the new industrialization path, we regard the enhancement of independent innovation capability as the central link and will promote market-oriented and enterprise-led innovation. We will continue to give scope to the competitive edge of labor-intensive industries, readjust and upgrade the product mix, enterprises' organizational structure and industrial distribution so as to build up our industry. Priority will also be given to stepping up the development of the service industry. By following the principles of market orientation, industrialization and socialization, we will widen the scope, expand the scale, upgrade the structure, strengthen the function and standardize the market of the service industry so as to improve the proportion and level of the service industry.
Third, we will promote development by relying on resource conservation and environmental protection and focus on the fundamental change of the economic growth mode, transforming economic growth from being driven by large amount of resources consumption to being driven by the improvement of resources utilization efficiency. This transformation is targeted at solving China's problems, including resources shortage, fragile ecology and environment and increasingly prominent contradiction between economic growth and resources and environment constraints. Rapid economic growth was achieved during the 10th Five-Year Plan period, yet it was achieved at the expense of resources and environment. It is imperative to make timely change to this growth mode because we can hardly achieve sustainable development by heavily relying on resources consumption. During the 11th Five-Year Plan period, we will implement the basic national policy of resources conservation and environment protection, develop cycling economy vigorously, protect and restore ecosystem and environment, strengthen environmental protection, improve resources management, promote the balanced development of population, resources and environment to realize sustainable development, build a cycling and sustainable national economic system featuring low input, high output, low consumption and emission and a resources-conserving and environment-friendly society.
Fourth, we will promote development by relying on enhancing independent innovation capability, take it as a national strategy and shift economic growth from relying on the input of capital and substance factor to relying on science and technology advancement and human resources. This is a solution put forward to address the bottlenecks of science and technology and human resources China encounters in economic and social development. China's economic growth largely relies on substance input and its competitive edge is to a great extent based on cheap labor, cheap water and land resources and expensive environment pollution. Such a competitive edge will be weakened along with the rising price of raw materials and the enhancement of environmental protection. Therefore, we should enhance independent innovation capability vigorously and increase the contribution of science and technology advancement to economic growth notably. In the 11th Five-Year Plan period, we will implement the strategy of rejuvenating our nation through science and education and take science and technology advancement and innovation as a major driving force of economic and social development. We will give more strategic importance to developing education and fostering high-quality talented people who are endowed with capability and integrity, deepen system reforms, increase input, accelerate the development of science, technology and education, and make great efforts to build an innovation-oriented nation and a strong nation with abundant human resources.
Fifth, we will promote development by relying on deepening reform, take reform and opening up as an impetus of growth, and shift economic growth from relying on administrative intervention largely in some areas to giving more play to the fundamental role of the market in allocating resources under guidance of macro regulation and control. This shift is targeted at addressing the existing systematic bottlenecks. The socialist market economy system has been put in place by and large, but systematic and institutional obstacles are still restricting development to various degrees, which is the deep-rooted reason for the repeated occurrence of unhealthy and unstable factors in economic development, lagging transformation of the economic growth mode, and irrational economic structure. During the 11th Five-Year Plan period, priority will be given to the transformation of government functions and deepening reforms of enterprises, fiscal and tax system as well as the financial sector. We will speed up the improvement of the socialist market economic system in order to establish a mechanism that can facilitate implementing the Scientific Concept of Development, transforming economic growth mode and promoting all-round, balanced and sustainable development. The progress of reform should be regarded as a top priority of the government's agenda, and we will strengthen the general guidance and coordination of reform, and institutionalize effective reform measures timely in the form of laws, regulations and systems. Meanwhile, in view of the new situation of opening up in a new era, we will stick to the national policy of opening up, implement an opening up strategy of mutually benefits and win-win, and participate in international economic and technological cooperation and competition with a broader scope, in a wider range and at a higher level, so as to better promote domestic development and reform, and safeguard the national economy.
Sixth, we will promote development by relying on the people-centered approach, take the improvement of the living standard as the starting point as well as the ultimate goal of our work, and transform the development pattern from excessively emphasizing the accumulation of material wealth to focusing more on the overall development of the people as well as the balanced economic and social development. This solution is raised in view of past development that gave excessive emphasis on the expansion of economic aggregates, and imbalanced development among regions, between urban and rural areas, and between economic and social dimensions. In the 11th Five-Year Plan period, we will promote balanced development among regions on the basis of the bearing capacity of resources and environment, development foundation and potential, and gradually form a pattern of balanced regional development that features clear functional positioning of each region, sound interaction among the Eastern, Central and Western Regions, and shrinking regional gaps of public services and the living standard. We will promote urbanization actively and soundly, change the urban-rural dual structure gradually, and endeavor to reduce the gaps of public services and the living standard between urban and rural areas. We will build a socialist harmonious society by bearing the overall development concept that combines economic, political, cultural and social construction, and starting from solving the most concerned, most direct and most practical issues to the interest of the people. We will take every possible measure to increase employment, enhance income distribution and reallocation, improve the social security system, reinforce poverty reduction, resolve the issue of limited healthcare resources and expensive medical care, strengthen capacity building related to public security. We will stick to the overall development of political, material, cultural and ethical progress, promote democracy, improve the legal system, enrich cultural life, so as to provide political guarantee and spiritual drives to the modernization progress.
Ladies and Gentlemen, the prospect of China's economic and social development is promising, while the obstacles, problems and conflicts on our way forward remain abundant. However, as what has been pointed out by Premier Wen Jiabao in the closing remark of his government report to the National People's Congress just closed, any difficulties and obstacles cannot prevent us from progressing. Our goals must be achieved, and would be achieved without any doubt!