Report on the Work of the Government (2000)

(Delivered at the Third Session of the Ninth National People's Congress on March 5, 2000)

  Zhu Rongji
Premier of the State Council

  _____________

  Note:

  1. News dispatches are embargoed until the conclusion of today's meeting.

  2. The official version of this speech in Chinese will be released by the Xinhua News Agency.

Fellow Deputies,

  On behalf of the State Council, I now submit a report on the work of the government for your examination and approval and also for comments from members of the National Committee of the Chinese People's Political Consultative Conference.

I. Review of Domestic Work in 1999

  Under the leadership of the Communist Party of China, the people of all ethnic groups worked hard in 1999 to promote reform, opening up and modernization, making new advances in all fields of endeavor.

  The quality of national economic development improved. The objective for the growth rate of the gross domestic product was attained; there were structural adjustments in the economy; and economic performance improved noticeably. There was a good harvest, and preliminary improvements were achieved in the pattern of farming. Industrial production continued to grow while structural adjustments were being made. Some outmoded production capacity was eliminated; production of unmarketable goods decreased; and the sales rate of products rose steadily. Profits from industrial enterprises totaled 220.2 billion yuan in 1999, representing an increase of 52% over the previous year. Total profits from state-owned enterprises and enterprises with controlling share held by the state reached 96.7 billion yuan, an increase of 77.7% over the previous year, a record high for the past five years. The economic performance of most industries was noticeably improved. Industrial performance was better than the previous year in 27 provinces, autonomous regions and municipalities directly under the central government. National revenue was 150.1 billion yuan more than the 1998 figure. Total national revenue reached 1.1377 trillion yuan, exceeding one trillion yuan for the first time. There was stability in banking and financial operations, and money supply and total credit continued to increase. The volume of exports began to rise considerably in July, and total exports reached US$194.9 billion in 1999, a rise of 6.1% over the previous year. The use of direct foreign investment continued on a relatively large scale, but decreased slightly over the previous year. The exchange rates for the Renminbi remained stable. Foreign exchange reserves totaled US$154.7 billion at the end of 1999. The national economy continued to develop in a satisfactory manner.

  Major progress was made in reforming state-owned enterprises and turning around loss-generating operations. We accelerated the separation of government functions from enterprise management. We have basically accomplished the objective of cutting all business ties between the Party and central government organs on the one hand and the economic entities set up by these bodies and enterprises directly under their jurisdiction on the other. The army, the armed police, and the procuratorial, judicial and public security organs are no longer engaged in business activities. The reorganization of key state-owned enterprises progressed, resulting in the formation of a number of large enterprise groups. Efforts to effect internal reforms in enterprises and changes in the way they operate were strengthened. Through merger, bankruptcy, reorganization, association, debt-to-equity swap, improved management and other measures, the number of large and medium-sized loss-generating state-owned industrial enterprises and loss-generating enterprises with controlling share held by the state decreased significantly. The objective of turning around the economic performance of state-owned enterprises within three years has been attained one year ahead of schedule in the textile industry. Profits were increased or losses reduced encouragingly in other industries. Significant progress was made in efforts to reform state-owned enterprises and turn around their operation in the three provinces in northeast China and other old industrial bases, with significant reduction of losses and increase of profits. These achievements encouraged the cadres and the masses to continue working to overcome difficulties and demonstrated that the objectives set by the central authorities for reforming state-owned enterprises and turning around operations within three years are attainable.

  Science, technology, education and other social undertakings developed in an all-round way. Technological innovation and translation of scientific and technological advances into practical productive forces were accelerated. Basic scientific and high-tech research were strengthened. The reform of the management system for science and technology was deepened. Major progress was made in efforts to make nine-year compulsory education universal in the country and to eliminate illiteracy among young and middle-aged people. Regular university and college enrollment increased by 47.4% over the previous year, the biggest increase in years. Continued progress was made gradually in the reform of education and in the work of improving the overall quality of students. Notable advances were made in environmental protection and ecological conservation. Social sciences continued to develop. New levels of achievements were reached in literature and art, the press and publishing, radio, film and television, family planning, public health, sports and other related fields. Efforts to ground cultural and ethical values on socialist principles and to improve democracy and the legal system were reinforced. Fresh progress was made in efforts to promote democracy at the grass-roots level. A wide-reaching and powerful drive to combat all forms of criminal activity was carried out, bringing about improvement in all facets of public security and increasing social stability. Fresh steps were taken in efforts to build a clean and honest government and in the struggle against corruption. Modernization of national defense was accelerated.

  The living standards of both urban and rural residents continued to improve. The government increased the incomes of urban dwellers with low and medium level incomes on July 1 of last year. The level of the basic cost of living allowances for laid-off state enterprise workers, the level of unemployment insurance benefits, and the level of subsistence allowances for urban residents were all increased by 30%. The salaries and wages of employees working in government departments and institutions and old-age pensions for those retired from there were increased along with the old-age pensions for workers retired from state-owned enterprises. All back pension entitlements were paid for workers retired from state-owned enterprises covered by the overall state plan. Certain allowances for disabled service men and women and family members of revolutionary martyrs and service men and women were increased. Total budgetary expenditures were increased by more than 54 billion yuan to cover these items, which benefited over 84 million people across the country. The per capita disposable income of urban residents rose by 9.3% over the previous year in real terms after adjusting for price decreases. The per capita net income of rural dwellers increased by 3.8% in real terms, and the population below the poverty line decreased by 8 million. The number of legal holidays was increased. This stimulated consumption and improved the quality of people's life.

  Last year we celebrated the 50th anniversary of the founding of the new China with great fanfare and smoothly secured the return of Macao to the motherland. These two great events immensely stimulated the ardent zeal of the people all over the country to work to rejuvenate China and strengthened the cohesion of our nation.

  These achievements are due to the CPC Central Committee with Comrade Jiang Zemin at the core grasping the overall situation and exercising correct leadership. In 1999, we resolutely opposed the barbaric US-led NATO bombing of our embassy in the Federal Republic of Yugoslavia, dealt a powerful blow to the arrogance of the Taiwan separatists represented by Lee Teng-hui, and took decisive measures against the Falungong cult. The great victories achieved in these struggles are of far-reaching political significance and have created a positive social climate for our economic development. In accordance with a decision of the CPC Central Committee, Party and government leaders at or above the county level were educated about the importance of study, political awareness and upright conduct. This notably improved their ideological standards and political awareness and ensured smooth progress for reform, opening up and the socialist modernization drive. In addition, the central authorities maintained a correct understanding of the trends in economic development so that at the critical moment when there was an economic downturn in the second quarter of 1999, they were able to resolutely make important policy decisions that stimulated domestic demand by issuing more treasury bonds and increasing personal incomes and to fully use macro-economic measures to encourage investment, consumption and exports. All these played an important role in promoting economic growth and improving economic performance. Through our work and exploration over the past few years, we have accumulated a wealth of experience in curbing inflation, and now we have some basic experience in controlling deflation as well.These achievements are also due to the hard work of the people throughout the country. In spite of many difficulties, the cadres and the general public pressed forward with great confidence as they conscientiously implemented the guiding principles and policies of the central authorities, working hard and showing a high degree of initiative. On behalf of the State Council, I would now like to pay my highest respects to the people from all walks of life, including workers, farmers, intellectuals, cadres and members of the People's Liberation Army, the armed police and the public security police. You have all been working hard on your various fronts throughout the country. Our sincere thanks also go to our compatriots in the Hong Kong Special Administrative Region, the Macao Special Administrative Region and Taiwan as well as overseas Chinese who have shown their concern and support for the development and reunification of the motherland.

  We are fully aware that there are many difficulties and problems in our path. A number of major problems still plague our economic activities, including insufficient effective demand, serious anomalies in the economic system, high unemployment and slow growth in farmers' incomes. Lax management in many fields and organizations results in poor efficiency, tremendous losses and waste, and frequent occurrence of serious accidents. Certain government functionaries are indifferent to the well-being of the people. Bureaucracy, formalism, falsification and exaggeration are rampant. Certain policies were not conscientiously implemented in some grass-roots units. The emergence and spread of certain types of corruption and undesirable practices have not been brought under control. Public order in some areas is not good. We must continue to take effective measures to solve these problems.

Fellow Deputies,

  The year 2000 marks the turn of the century, and it is the last year for attaining the strategic objectives for the second stage of China's socialist modernization drive. It is important that the government do its work well this year to ensure a smooth transition into the next century. Guided by Deng Xiaoping Theory and the basic line of the CPC, and in accordance with the general requirements of the CPC Central Committee for their work in the year 2000, governments at all levels should implement the spirit of the Fifteenth National Congress of the CPC and the third and fourth plenary sessions of the Fifteenth CPC Central Committee. They should also continue to carry out all the policies and measures adopted by the Central Committee for promoting reform, opening up and economic development; balance reform, development and stability; work to maintain sustained, rapid and sound development of the national economy; and conscientiously increase efforts to advance socialist cultural and ethical progress and improve democracy and the legal system in order to promote all-round social progress and greet the new century with outstanding achievements.

II. Adhering to the Policy of Expanding Domestic Demand

  Development is the absolute principle and the key to solving the problems we are facing. Only by sustaining rapid economic growth on the basis of better performance can we mitigate the operating problems facing enterprises, lighten unemployment pressure, make structural adjustments possible and deepen reforms. This is also essential in order to increase state revenue, prevent financial risks and maintain social stability. To achieve all this, we must unswervingly carry out a policy of expanding domestic demand and other related macroeconomic policies.

    We should continue to follow a proactive fiscal policy. This is the most direct and effective means for expanding domestic demand at present. The central authorities have been following a proactive fiscal policy over the past two years, while at the same time they have given full play to the role of monetary policy and a variety of other means to regulate the operation of the economy, constantly working to improve these policies and measures. The government issued additional treasury bonds to banks to increase investment and raised people's incomes to stimulate consumption. It improved infrastructure and supported technological upgrading in enterprises. In addition, great efforts were made to expand domestic demand and encourage exports. Experience has shown that following a proactive fiscal policy was the entirely correct thing to do because it was remarkably successful. Take the effect of treasury bonds for example. Over the past two years, the long-term bonds worth 210 billion yuan issued by the government to banks provided the impetus for over 420 billion yuan in bank loans and funds raised by enterprises, which were used to increase investment in infrastructure and finance the construction of over 5,100 projects. Among the completed projects are those which resulted in reinforcing nearly 6,100 km. of dikes on major rivers and lakes, the opening of 12,000 km. of newly built highways for traffic, including 3,358 km. of expressways, and the building of 1,423 km. of new railway lines and 643 km. of double-tracked railway lines. In addition, the development of urban infrastructure and environmental protection were significantly stepped up, leading to remarkable changes in many cities. Efforts to upgrade technology in enterprises and apply more high and new technology in production were accelerated. We added 900,000 km. of modern high- and low-voltage lines to rural power grids through extension or upgrading of the existing lines. State-owned grain depots with a total capacity of 25 billion kg. were built. All the above have not only contributed to current economic growth, but they also have laid a better foundation for long-term economic development.

    This year the main content of our sustained proactive fiscal policy is as follows. First of all, long-term treasury bonds worth 100 billion yuan will be issued, and the resulting funds will be invested mainly in water conservation, transportation and communications and other infrastructure projects, science, technology and education facilities, environmental improvement and ecological conservation projects and technological upgrading in enterprises, with more investment directed to the central and western regions of the country. The funds raised from the additional treasury bonds will be earmarked for projects under construction so that they can be completed and go into operation on schedule. We should work hard to raise the return on investments and make sure that no projects without solid funding or long drawn-out projects are launched. Control must be tightened over project quality and inspection and audit supervision must be strengthened to ensure that all projects are built well and that no project funds are misappropriated. Second, we must continue to carry out the policy measures introduced in 1999 for adjusting income distribution to ensure steady growth in the incomes of urban residents in the middle- and low-income range. Enterprises should also appropriately increase employee salaries whenever better economic performance is achieved. Government finance departments at all levels should make adjustments in their pattern of expenditures to ensure that the basic cost of living allowances for workers laid off from state-owned enterprises, basic old-age pensions for retirees, the subsistence allowances for urban residents, and salaries of public servants are paid out in full and on time. Third, we should make more use of means such as taxation and pricing, and continue to revoke policies, laws and statutes restricting consumption in order to encourage investment, promote consumption and increase exports.

    Over the past few years deficits and the national debt have increased to some extent, but this is necessary to guarantee reform, development and stability. Because the servicing of treasury bonds is listed in this year's budget, the deficit is somewhat larger than originally expected. Nevertheless, the deficits and the issue of treasury bonds this year will roughly stand at the previous year's levels and still be kept within limits our national economy can sustain. So long as our economy continues to grow rapidly and economic performance keeps improving over a fairly long period, we will be able to repay the debt. At the same time, we must take measures to guard against financial risks.

  We should take better advantage of the role of monetary policy. Financial institutions should balance their efforts to support economic growth and prevent financial risks. In accordance with the principle of prudent operation, they should adopt a variety of measures to increase support for economic development. The People's Bank of China should regulate total money supply as necessary by using various tools of monetary policy. Financial services should be substantially improved. In state banks, internal capital allocation should be improved, and limits of authority for examining and approving loans should be rationally defined. We should promptly grant fixed asset loans to support projects financed by the issue of treasury bonds. We should guarantee floating capital loans for profitable and trustworthy enterprises whose products are readily marketable. More loans should be granted to small and medium-sized enterprises with various types of ownership, especially enterprises based on advances in science and technology. We should also make the efforts necessary to solve the problem of farmers having difficulty taking out loans. We should stop or reduce lending to enterprises that are building redundant projects or have large stocks of unsold products or whose production capacity needs to be reduced. We should vigorously expand housing loans, student loans and major commodity loans for consumers, and improve methods and simplify procedures to increase the efficiency in processing loan applications. We should further standardize and develop the securities market so that enterprises will be able to increase the proportion of direct financing. We should improve the system for issuing and listing stocks on stock markets. We should also support large state-owned enterprises and high and new technology enterprises in their efforts to seek financing by listing on the stock market. In order to expand the insurance industry we should strictly examine and approve the establishment of insurance enterprises in accordance with the law.

    In compliance with the requirements of the National Conference on Financial Work held by the central authorities in 1997, we should continue to deepen financial reform, rectify financial order, tighten financial supervision and regulation by law, prevent and reduce financial risks and improve performance in order to create favorable conditions for taking better advantage of the role of monetary policy.

  This year, in addition to sustaining the volume of investment from treasury bonds, we should appropriately increase bank fixed asset lending investment and encourage investment by enterprises themselves. We should also encourage the collective, private and self-employed sectors to increase investment and improve the investment environment to attract more direct foreign investment. At the same time, we should prohibit the development of redundant projects and increase investment returns by using a combination of economic and legal means supplemented by necessary administrative measures.

  Reform measures should be made more transparent; the general public's confidence in the future needs to be strengthened; and more immediate consumption should be encouraged. Some major reform measures closely related to the interests of the general public have already gone into effect. In implementing them, all localities should take into full consideration the general public's capacity to tolerate the changes and not shift costs formerly borne by the government and society onto the general public. We should foster new consumption growth areas such as housing and make housing construction truly a major industry. Commercial services in areas such as telecommunications, tourism, culture, entertainment, health care and sports should be expanded. Particular emphasis should be given to increasing the income of farmers and expanding rural markets. Policies aimed at reducing the burden on farmers must continue to be implemented strictly. We must promote reform of taxes and charges in rural areas to substantially lighten the burden on farmers. Experiments will be carried out in Anhui Province this year so that the work can be done in other parts of the country after the results of the experiments are analyzed. Efforts to attain the goal set in the seven-year plan to help 80 million people get out of poverty should be intensified.

III. Working Energetically to Promote Strategic Restructuringof the Economy

  Acceleration of the strategic restructuring of the economy is urgently needed to meet the current need to boost domestic demand and stimulate economic growth. This economic restructuring is also essential to adapt to changes in China's economic development as it moves from one stage to another and to cope with increasingly keen international competition. This restructuring is not only aimed at solving current pressing problems; more importantly, it is aimed at long-term development, improving the overall quality of the national economy and bringing the economy to a higher level of development. Adjustment and optimization of the economic structure should be market-oriented, rely on scientific and technological advances, and adopt new systems and methods compatible with the development of a socialist market economy. Our work this year will be focused on the following areas.

  We should further stabilize and strengthen agriculture as the foundation of the economy. Because of good harvests in the past several years running and the relative surplus of farm produce, it is particularly important that we guard against the tendency to neglect agricultural development. China has entered a new stage of agricultural development and strategic adjustment of agricultural production is an important task at this stage. Farmers should be actively encouraged to transform agricultural production by developing livestock breeding, forestry, aquaculture and production of highly processed grain and other agricultural products. The varieties of crops cultivated and breeds of livestock raised should be improved and great efforts should be made to spread the use of applied agricultural scientific and technological achievements so that high-quality products are developed to meet the demand of the market. We should adjust the patterns of agricultural production in different regions, taking into account their relative abundance of resources and other local relative advantages. We should develop high-efficiency, ecological and export-oriented agriculture where conditions permit. In restructuring agriculture, we should fully respect the farmer's right to independence in production and operation, avoiding coercion and commands. We should develop specialized cooperative economic organizations and industrial operations in which farmers work with companies, linking household farm operations with large markets and bringing about agricultural restructuring. We should provide guidance and support for town and township enterprises in their efforts to restructure to meet the demand of the market and improve their managerial and technical levels. Plans should be worked out and effective policy measures should be taken to accelerate the development of small towns. Arable land should be effectively protected. We should step up agricultural infrastructure development, focusing on water conservancy projects to improve production and living conditions in rural areas.We need to intensify industrial restructuring efforts. To improve the industrial structure, product quality and economic performance, and become more competitive internationally, we should adopt the following measures. First, following the laws governing the market economy, we should employ a variety of means to limit the production of non-marketable products. More small and technologically backward plants and mines that produce shoddy products, waste resources and cause serious pollution should be closed down. More outmoded equipment, technology and production processes should be abandoned and the surplus production capacity in certain industries should be reduced. Second, we should take effective measures to speed up technological upgrading in enterprises, giving preferences to old industrial bases. We should continue to put quality above everything else, introduce advanced standards and restructure and optimize the pattern of production. Efforts to develop new technology, production processes and products that are in great demand on the market need to be intensified. Production of more readily marketable products, especially famous, quality products, should be encouraged. Third, vigorous efforts should be made to develop high technology and emerging industries, particularly in the field of information, bioengineering, new energy sources, new materials and environmental protection. In addition, we should develop more labor-intensive industries. Fourth, industrial reorganization efforts should be continued to help key industries improve their economy of scale and optimize their distribution. We should work hard to upgrade the technology used in the major equipment manufacturing and basic materials industries. The relevant departments under the State Council should expeditiously work out plans and adopt measures to stimulate industrial restructuring and technological upgrading.

    Developing tertiary industry is of great importance to our efforts to optimize the economic structure, create jobs and increase consumption. While continuing to develop transport, commerce and trade, we need to make great efforts to develop information, banking and financial services, tourism, community services and intermediary services to gradually raise the proportion of tertiary industry in the national economy.

  The large-scale development strategy to speed up development of the central and western regions of the country is a major policy decision made by the CPC Central Committee for the new century in accordance with Deng Xiaoping's strategy for China's modernization drive, which encompasses the development of both the coastal areas and the interior. This is crucial to our efforts to boost domestic demand, promote sustained national economic growth and bring about coordinated development of regional economies for eventual common prosperity as well as to strengthen national unity, safeguard social stability and consolidate border defense. Implementing this great policy decision is a long-term systems engineering project. We need not only a sense of urgency, but also a comprehensive plan focusing on key areas. We must carry out the plan step by step and refrain from rushing headlong into action.

  For the present and some time to come, we have to focus on the following objectives. First, we need to accelerate infrastructure development. While mainly concentrating on highways, efforts should also be made to build more railways, airports and gas trunk pipelines. We need to intensify the development of power grids and communications, radio and television facilities as well as infrastructure development in large and medium-sized cities. It is particularly important that close attention is paid to the rational exploitation of water resources and to water conservation. We should lose no time in conducting feasibility studies for certain key projects and make preparations to launch them as soon as possible. Second, we need to conserve and improve the ecological environment. Great efforts should be made to plant trees and grass, control soil erosion and prevent and control desertification. Greater efforts need to be made to complete the projects to protect the natural forests along the upper reaches of the Yangtze River and the upper and middle reaches of the Yellow River. Terraced fields on steep slopes should be returned to forests or pastures in a planned and systematic way. In light of our relatively ample supply of grain and other farm produce, forests and pastures should be developed at the expense of grain production in accordance with the comprehensive measures for returning cultivated land to forests or pastures, closing off hillsides to facilitate afforestation, giving relief to local residents in the form of grain, and encouraging individual contractors to manage concerned areas, so as to exchange grain for forests and pastures. We need to work out plans and provide effective policy guidance for this work, respect the wishes of farmers and carry out experiments, gradually spreading successful new practices. Any further effort to clear forests and pastures to reclaim land should be resolutely stopped. Third, in light of local geography, climate, resources and other conditions, different regions should focus on developing strong industries with local characteristics as well as high and new technology industries where conditions permit. Fourth, science, technology and education should be vigorously developed. The translation of scientific and technological advances into productive forces should be accelerated; people should be trained in different fields at different levels of expertise; and the overall quality of the workforce should be improved. Fifth, we should open China wider to the outside world, improve the investment environment and do all we can to attract overseas funds and import foreign technology and managerial expertise.

    The eastern region should continue to take advantage of its strong points to constantly improve the performance of the local economy and its competitiveness so as to facilitate its own development. Areas where conditions permit should take the lead in modernizing and continue to give more support to the central and western regions in various ways, such as joint development, cooperation for mutual benefit, providing coordinated assistance and exchange of cadres. The central and western regions must seize opportunities and quicken the pace of reform and opening up. They should rely on their own hard work to develop themselves, stress practical results and work in a down-to-earth manner to succeed in all fields of endeavor.

IV. Continuing to Advance Reforms and Bringing
About Comprehensive Improvement in Management

  To meet the objective set by the CPC Central Committee to establish and improve a socialist market economy, we should continue to implement reforms which provide a powerful driving force for pushing forward structural adjustment, improving economic performance and bringing about sustained, rapid and sound development of the national economy.

  Reform of state-owned enterprises is a key link in our efforts to deepen economic restructuring. The top priority for this year's government work is to implement the decision made at the Fourth Plenary Session of the Fifteenth CPC Central Committee in September 1999 to attain the goal set for a three-year period, that is, to turn around most of the large and medium-sized state-owned enterprises operating at a loss and implement a preliminary modern enterprise system in most key large and medium-sized state-owned enterprises. No time should be lost in setting standards for a modern enterprise system suited to China's conditions, which all enterprises should follow. The enterprise management system should be reformed; the way enterprises are operated should be changed; and corporate management structure should be optimized. Inspection and supervision over large and medium-sized state-owned enterprises should be improved, and the board of supervisors system should be gradually consolidated and standardized. Boards of supervisors should be assigned to state-owned enterprises according to law to examine the financial dealings of enterprises, exercise supervision over the members of the boards of directors and managers performing their duties, and safeguard the rights and interests of the owners of state assets. The senior managerial staffs in key state-owned enterprises need to be strengthened. The way enterprise groups manage their subsidiary companies needs to be further improved to make the system of a parent company and its subsidiaries meet the standards of a modern enterprise system. Restructuring of the labor, personnel and income distribution systems of enterprises needs to be deepened to establish incentive and restraint mechanisms. A number of enterprises with good economic performance should experiment with the annual salary system, stock options and other methods of income distribution for managers and factory directors. Measures for increasing the amount of capital reserves available to write off non-performing loans and bad debts in banks, carrying out debt-to-equity swap programs in enterprises where conditions permit, and increasing the proportion of capital raised by enterprises through direct financing should be carefully implemented. The asset-liability ratios of state-owned enterprises should be improved to help firms operating at a loss get out of the red. Strategic restructuring of the state sector of the economy should proceed steadily. Ways of effectively instituting multiple forms of public ownership should be vigorously explored. Large and medium-sized state-owned enterprises to which the stockholding system is applicable should make use of the stock market and quickly implement stockholding system reforms. In addition to striving to develop those large enterprise groups that are internationally competitive, we should also realistically work to relax control over small and medium-sized state-owned enterprises in a variety of ways. The establishment of a service system for medium-sized and small enterprises should be accelerated. While keeping the public sector of the economy in the dominant position, sound development of the non-public sector, including self-employed and private businesses, should be encouraged.

    The central authorities' guiding principles and policies on the reform of the grain distribution system should be further implemented. The government will continue to purchase surplus grain from farmers at protective prices without limit. The policy of setting higher prices for better quality grain products should be conscientiously implemented to promote improvement in the mix of grain varieties. The State Council has decided to exclude some varieties of grain from price protection in line with supply and demand, and the need to improve the mix of grain varieties, and government policy should be adjusted accordingly. Sustained efforts in this area should be focused on reform of state-owned enterprises engaged in grain purchase and marketing, promoting of the separation of government functions from enterprise management, changing the way enterprises are operated and reducing costs as much as possible. We should review our experience in this field and improve our policies and measures for the reform of the grain distribution system.

  The reforms of finance, taxation, banking, investment, funding, income distribution and the circulation of goods should continue to proceed in an orderly fashion. The central authorities have formulated guidelines for the reform of urban housing, medical insurance, pharmaceuticals and health care. Governments of all provinces, autonomous regions and municipalities directly under the central government should make their own decisions and arrangements in this regard in light of local conditions.

  The central authorities have defined the major policies on reform and development, and a number of important laws and regulations have been promulgated. To ensure that these policies, state laws and regulations are observed to the letter, it is imperative that management be tightened, putting strict observance above all else. The time has come when we must take decisive action against sloppy management, indiscipline and disorder, which have become rampant in production, construction and circulation of goods, as well as against the lax execution of laws, decrees and regulations seen in some localities and government departments. These problems seriously hinder the implementation of the guiding principles and policies of the central authorities and the progress of various reforms. All departments under the State Council and local governments at all levels should make it a priority this year to improve their administration in the spirit of reform. Institutions and enterprises in all sectors, including industry, agriculture, finance, taxation, banking, trade, science, technology, education, culture and public health, should also make great efforts to improve their management. Better management encompasses both strengthened supervision and rectification of problems.

    Scientific management of enterprises should be conscientiously strengthened. All enterprises should have strict internal management, improve their quality, and pay close attention to weakness in their cost management, fund management and quality control. They should formulate correct strategies for enterprise development, technological innovation and marketing in line with changes in both domestic and world markets. They should rely on their employees and bring their initiative into full play. They should also improve their system of democratic management and make enterprise affairs more transparent. In particular, the basic work of enterprise management needs to be improved to end practices seen in some enterprises such as keeping bogus account books and the reporting of inaccurate figures and distorted information, and to put an end to fraud and deception. All enterprises should attach great importance to operating safety and take effective measures to promptly eliminate hidden hazards. They should work to establish and improve various rules and regulations and strictly implement the responsibility system for all posts. Senior managerial staff of all state-owned enterprises should conscientiously implement the regulations on honesty and self-discipline, and resolutely resist and oppose all kinds of corruption.

    Indiscipline in financial and economic affairs cannot be tolerated, and administration of these areas must be strict. The transparency and restraining power of budgets need to be enhanced. Supervision and auditing of budget implementation should be improved. The Accounting Law should be strictly enforced to improve the quality of accounting data. Taxes should be levied in accordance with the law. In order to safeguard the integrity and authority of tax laws, no officials should overstep their power by offering tax reductions or exemptions; overdue tax payments should be collected and accounts settled in accordance with the law; and more efforts should be devoted to cracking down on cases of tax evasion, tax fraud or refusal to pay taxes. The management, supervision and inspection of both the collection and use of funds for government revenue need to be tightened to put extrabudgetary funds under legal control. A vigorous review of all government fees should be conducted to eliminate arbitrary charges. More work should be done to strengthen supervision over financial institutions. In particular, effective measures should be taken to strengthen supervision and regulation of leading cadres and key professionals in financial institutions. Efforts to clean up and reorganize financial institutions engaged in illegal activities and those with serious problems should continue. Foreign exchange management should be improved. Good order should be maintained in public credit transactions and good settlement discipline ensured. Loans should be repaid and interest collected in accordance with the law, and debts owed to other enterprises should be paid off. Accounting firms and other intermediary institutions should be put in order and standardized. Administrative supervision and audit supervision should be strengthened by taking full advantage of the roles of supervisory and auditing departments.

    Market order should be further improved. Those involved in producing and marketing counterfeit or shoddy goods, infringing on the rights and interests of consumers or other types of commercial fraud, should be severely punished. The fight against smugglers and traffickers must continue. Resolute efforts must be made to check unfair competition and regional protectionism, which tend to fragment larger markets and isolate local markets. Illegal markets for pharmaceuticals must be closed down, and violations of the law in the purchase and marketing of medicine should be strictly investigated and prosecuted. The Construction Law and the Law on Public Bidding should be strictly enforced. The legal person responsibility system for projects and the public bidding, project supervision and contract management systems should be strengthened and strictly followed. Cases of evasion or fraud in public bidding for construction projects should be strictly investigated and prosecuted, and the transfer of contracts or illegal subcontracting on the part of survey, design, engineering and supervision organs should be stopped.

  Basically speaking, in order to bring about comprehensive improvement in management, the economic order in our socialist market economy must be standardized and safeguarded in accordance with the law, and various types of scientific management systems and mechanisms must be instituted and improved. Officials in all industries and institutions must set high and strict standards, uncover problems in administration and management and take prompt action to improve management and supervision by establishing rules and regulations and changing mechanisms. Leading cadres at all levels must adhere to principles and not be afraid of offending anybody in working to improve management. They must also adopt effective means and measures in light of the new conditions presented by reform and opening up.

V. Accelerating the Development of Science, Technology and
Education and Promoting Cultural and Ethical Progress

  The strategy of developing China through science and education and the strategy of sustainable development should be vigorously followed in promoting economic restructuring, enhancing the overall quality of the economy and furthering coordinated economic and social development.

  Great efforts should be made to develop and spread the use of high and new technology that can play a crucial role in upgrading our traditional industries and can be widely applied. Outstanding scientific and technical personnel should be encouraged to help in upgrading technology in enterprises and in the utilization and modification of imported equipment and technology related to key projects. Application of high and new technology to production should be stepped up, with efforts focused on creating a number of competitive products and supporting enterprises which apply high and new technology. The successful operation of national high and new technology industrial development zones should be continued. Efforts to develop a state innovation system should be strengthened. Greater emphasis should be placed on strengthening basic research and high technology research efforts by supporting a contingent of highly qualified, top-notch researchers to focus on making pioneering advances in these fields. Efforts to promote reform of the management system for science and technology should continue. Applied research institutes and other research institutes studying projects with market potential should be turned into enterprises or work with enterprises to strengthen their technology development efforts. In addition, great efforts should be made to carry out trial reforms of research institutes working for the public good. Efforts should be made to promote the integration of production, teaching and research in a variety of ways. The protection and management of intellectual property should be strengthened. Investment in science, technology and education should be increased and return on investment should be enhanced. Vigorous efforts should be made to develop philosophy and social sciences. Workers engaged in the fields of philosophy and social sciences should carefully study the major theoretical and practical problems arising in the process of reform and opening up and the modernization drive in order to better serve the cause of building socialism with Chinese characteristics.

    Efforts should be made to deepen the reform of education and work to improve the overall quality of students. All types of schools at all levels should strengthen moral education among their students, help them develop practical abilities and a spirit of innovation, and effectively reduce too heavy homework assignments for primary and secondary school students to ensure that they improve in terms of their moral, intellectual and fitness level as well as in their appreciation of aesthetics. Goals in the effort to make nine-year compulsory education basically universal in the country and to eliminate illiteracy among young and middle-aged people should be attained on schedule. Efforts should be made to further develop senior secondary school education, higher education and all types of vocational education. Enrollment in regular institutions of higher learning should be increased, and the practical problems of student dormitories, cafeterias and teaching facilities should be resolved by gradually making such services independent in their operation. Personal loans to finance education should be vigorously promoted. More channels should be opened to create jobs for graduates from institutions of higher learning. Efforts should be made to develop schools not operated by government education departments. Modern information technology should be used to develop distance education. Reform of the management system for education should be continued. Except for the Ministry of Education and a small number of special departments, other departments under the State Council will no longer directly manage schools in an effort to form a new system under which schools are run by governments at both the central and provincial levels, with most schools managed by local governments. Restructuring of the internal management of schools should be deepened and close attention should be paid to ideological and political work in the schools. The quality of the teaching staff should be improved in an all-round way. Efforts to provide coordinated support for educational undertakings in poverty-stricken areas should be stepped up.

    The system of income distribution giving preferential treatment to outstanding personnel should be reformed and improved to establish an incentive mechanism. Special measures should be adopted to improve the working and living conditions of scientific and technical personnel who work for the state in key fields and hold important positions. In addition, effective policy measures should be taken to encourage and attract students studying overseas and outstanding personnel residing abroad to come home to work in China.

  We should continue to follow a path of sustainable development. We should further strengthen family planning, striving to stabilize the low birth rate and promote good prenatal and postnatal care, and devoting strong efforts to the management of family planning and related services in rural areas and among the floating population. More work should be done in the area of care for senior citizens. The various programs to help the physically and mentally challenged deserve our concern and support. The programs for the development of work concerning women and children should be earnestly implemented. Efforts to bring urban environmental pollution under control should be intensified, focusing on projects to prevent and control environmental pollution in major cities, valleys, regions and coastal areas and striving to achieve the goals set for environmental protection and pollution control. Urban and rural areas should be properly planned. The management of natural resources should be strengthened, and efforts should be made to protect and make rational use of land, forest, grassland, mineral, marine and water resources in accordance with the law. Work in public health and sports should be further improved with close attention paid to disease prevention and control, strengthening urban community health services and rural primary health care, and raising the overall physical fitness level of the public.

    Governments at all levels should adhere to the principle of "doing two jobs at once and attaching equal importance to each" and pay very close attention to and strengthen socialist cultural and ethical progress. Close attention should be paid to the development of science and culture while serious efforts are also being made to promote ideological and ethical progress. Efforts to promote patriotism, collectivism and socialism should be continued to help foster in the masses, especially the young, the correct values and outlook on the world and life and give them a firm faith in the ideal of building socialism with Chinese characteristics. Mass participation activities should be extensively launched to promote cultural and ethical progress. The scientific spirit should be encouraged throughout society by spreading the use of scientific methods, introducing scientific knowledge to the public and combating ignorance and superstition. Literature and art, the press and publishing, and the radio, film and television industries should be allowed to flourish, while at the same time they should be required to maintain the correct orientation for public opinion and create more literary and artistic works that are excellent both ideologically and artistically. Work to protect cultural relics and archives should be strengthened. Great efforts should be made to develop cultural facilities, improve and rectify the entertainment industry and the market for audio-visual products and publications, and strengthen the management of the market for cultural products. The fight against pornography, illegal publications and piracy should continue. Healthy and civilized lifestyles should be promoted, and varied and interesting cultural and sports activities should be developed for the participation of the masses.  

VI. Opening Wider to the Outside World

  The overall trend in the world's economic and trade situation is getting better. The process of China's entry into the World Trade Organization (WTO) has been accelerated. We must take a more active stance in opening China wider to the outside world, seizing new opportunities and meeting new challenges. We will be taking more effective measures in 2000 to promote the expansion of foreign trade and utilize more foreign funds.

    The strategy of success through quality and market diversification should be continued, and relevant policies should be implemented to expand exports. First, the mix of exports should be adjusted by increasing the proportion of electromechanical products, accelerating the upgrading and updating of such traditional export commodities as textiles, garments and other light industrial products, and working to increase the proportion of high-tech products. Agricultural exports should also be increased. Second, we should work actively to open up more markets abroad. In particular, strong efforts should be made to open up emerging markets in Africa, Latin America, Eastern Europe and the Commonwealth of Independent States, and actions should be taken to develop economic and trade relations with neighboring countries and other developing countries. Chinese enterprises which are relatively strong should be encouraged to make investments and set up factories abroad, engage in processing trade and exploit natural resources through cooperative agreements. Overseas contracted projects and labor services should be further expanded. Third, reform of the foreign trade system should be deepened. Foreign trade enterprises should set up management mechanisms for expanding access to international markets and improve their internal management. More producers should be allowed to engage in export on their own. The number of types of export commodities subject to voluntary quotas should be reduced and quota management and bidding methods should be improved. The mix of imports should be optimized and the import of the key equipment, technology and major raw and semi-finished materials which are urgently needed in the country should be increased. E-business should be promptly studied and promoted.

    We should utilize foreign funds effectively. The spheres of activity and geographical regions open to foreign businesses should be expanded. Commerce, foreign trade, banking, insurance, securities, telecommunications, tourism and intermediary services should gradually be opened to the outside world. Restrictions on foreign investment pertaining to technology transfer, the proportion of products to be sold domestically and share of holdings in some industries should be relaxed. Foreign businesses should be encouraged to invest in agriculture, infrastructure development, the environmental protection industry, and high and new technology industries. Vigorous efforts should be made to attract investment from transnational corporations, especially in research and development and in the reorganization and technological upgrading of state-owned enterprises.

  We must lose no time in adjusting to the new situation created by the accelerated process of China's entry into WTO. All trades and professions and all enterprises should work to strengthen their competitiveness and ability to handle risks by accelerating reform, strengthening management and raising the level of technology. In addition, we should lose no time in revising and improving relevant laws and regulations and step up our efforts to train various types of special personnel.

VII. Developing a Social Security System to Maintain Social Stability

  The establishment and development of a social security system has an overall impact on reform, development and stability. This is an endeavor of great significance which requires our most diligent efforts to ensure its success. For the present we need to continue implementing and improving the system of "three guarantees"-guarantee of basic cost of living allowances for workers laid off from state-owned enterprises, guarantee of unemployment insurance benefits and guarantee of subsistence allowances for urban residents. On this basis, we must work to create the necessary conditions for the transition to a sound social security system.

    The operation of re-employment service centers for state-owned enterprises must be further improved. These centers should pay basic living expenses to laid-off workers on schedule and in full and pay the premiums for the social welfare insurance of these workers, including old-age, unemployment and medical insurance. The funds needed should be secured according to a principle of "three-thirds". The shortage in funds remaining after the enterprises and society make their respective contributions should be covered by the state budget. Allocations from the central government budget will continue to support the central and western regions and old industrial bases whose financial problems are truly serious. All local authorities should guarantee the basic cost of living allowances for workers laid off from state-owned enterprises under the central government and work to find employment for them, incorporating this work into their overall local planning and regulating the allocation of funds raised by society as needed. Effective measures must be taken to ensure that retirees from state-owned enterprises receive their basic old-age pension payments on time and in full, with no more payments falling into arrears. Local authorities must strengthen supervision and management over social security funds and strictly adhere to separate management of revenue and expenditures to ensure that funds are used for the specified purposes only. Efforts to recover funds diverted in the past should be strengthened and cases of misappropriation must be severely punished.

    We must work energetically to promote the re-employment of laid-off workers. Local authorities should help these workers change their ideas about what kind of job they are seeking, work hard to create jobs, develop vocational training programs for laid-off workers, and help more of them find new jobs as soon as possible. Governments at all levels and concerned departments should cooperate whole-heartedly in strengthening supervision and inspection to ensure the full implementation of the various policies concerning re-employment. Whenever possible, enterprises should be encouraged and advised to separate their main and secondary business activities, find other positions for their redundant workers within the enterprise, and set up new economic entities with independent accounting and responsibility for profits and losses to absorb redundant workers. Career counseling and placement services should be provided to assist workers from closed-down and bankrupt state-owned enterprises to find suitable new positions.

  While working to carry out the above, we should advance reforms to gradually form a social security system with Chinese characteristics which is independent of the employer, has diversified funding sources and has management and services not provided by the employer. First, the coverage of social welfare insurance programs should be expanded in accordance with the law, and the insurance premium collection rate raised. Social welfare insurance, particularly old-age, unemployment and medical insurance, must be made mandatory in urban areas. This is an important way to increase social security funds and at the same time an important prerequisite for instituting a new system. At the same time, expenditures in the central and local budgets at all levels must be appropriately restructured to increase the proportion of social security spending. Various measures should be adopted to open up new funding channels to supplement social security funds. Second, we should improve the unemployment insurance system and speed up the development of the labor market. The current practice of enterprise re-employment centers guaranteeing the basic cost of living allowances to laid-off workers should be changed to laid-off workers receiving unemployment insurance benefits and looking for jobs in the labor market. This work will begin on a trial basis in our eastern coastal areas and in cities with the necessary conditions. After the results of these trials are analyzed, the new practice will be gradually introduced to other areas. Third, non-employer management of old-age insurance programs should be promoted to gradually shift responsibility for retirees from their former employers to society at large and effect non-employer payment of old-age pensions as soon as possible. We should conduct trials of community-administrated programs for retirees. We should exercise more effective leadership and management of communities and improve their function as service providers. At the same time, it is important to ensure continuity in our work during the changeover to the new social security system.Fellow Deputies,

  Safeguarding social stability and state security is a fundamental prerequisite for promoting reform and opening up as well as the modernization drive. We must take strong measures against acts of sabotage perpetrated by hostile forces and elements inside and outside China, and crack down on violations of the law and all types of crime. The focus of such measures should be on curbing violent crime, drug-related crime, organized crime, crimes involving guns and explosives and all kinds of serious economic crime. At the same time, evil cults must be banned and persecuted in accordance with the law. Measures for controlling all facets of public security should be better implemented to create a safer social environment. Problems among members of the general public arising from the changing conditions in society require special attention and proper handling, with the interests of all sides fully taken into consideration. We should take seriously letters and called-in complaints from the general public and carry out effective ideological and political work to solve problems and settle disputes in good time before they develop and spread.

    China is a unified multi-ethnic country. We must work to consolidate and develop socialist relations characterized by equality, unity and mutual assistance among all ethnic groups for common prosperity and progress. We should continue to implement the guiding principles of the Central Conference on Ethnic Affairs and speed up economic development and social progress in areas inhabited by ethnic minorities. The Law of the People's Republic of China on the Autonomy of Ethnic Minority Regions should be carefully followed and the autonomy of the ethnic minority regions and the equal rights of their inhabitants should be protected. We should train more cadres and various kinds of qualified personnel from among ethnic minorities. The stability of ethnic minority areas and the unity of the motherland must be resolutely defended. The government policy on freedom of religious belief should be thoroughly and correctly enforced; the administration of religious affairs should be strengthened in accordance with the law; and vigorous efforts should be made to guide the various religions in adapting to socialist society. We should properly handle affairs relating to overseas Chinese under the changing conditions to give full play to the role of Chinese nationals residing abroad in promoting reform and opening up and realizing the great cause of the peaceful reunification of the motherland.

    Strengthening national defense and building up the army are important guarantees for the security of the country and the success of the modernization drive. We should energetically support efforts to improve the quality of the People's Liberation Army, continuing to strengthen the army through science and technology and upgrading its weapons and equipment. We should improve the army's defense capabilities and combat effectiveness, fully taking into consideration modern technology, especially high technology. We should strengthen the reform, restructuring and development efforts of the national defense-related technology industry. Reform of the national defense mobilization system should be continued and the militia and the reserves strengthened. National defense education should become more widespread to raise the people's awareness of the importance of national defense. Good arrangements should be made for demobilized service men and women. Extensive activities should be launched to encourage the government and the people to support the army and give preferential treatment to families of service personnel and martyrs and the army to support the government and cherish the people. The army and the people should work together to promote cultural and ethical progress. All this will consolidate and develop the unity between the army and the government and between the army and the people. Further, the people's armed police and the public security and state security organs should be strengthened.

    This year the government will formulate the Tenth Five-Year Plan for National Economic and Social Development. This will be the first five-year plan to be formulated under our fledgling socialist market economy and during the implementation of the third strategic step of the modernization drive. This plan will have an important bearing on the overall economic and social development in China at the beginning of the 21st century. All localities and departments should pay special attention to this work and strive to do it well.

VIII. Keeping the Government Strictly in Line and Making Greater Efforts
to Develop the Government Itself

  The government should be strict with itself in carrying out its official duties in accordance with the law and try to be honest, diligent, pragmatic and efficient. We must intensify our efforts to improve our political and ideological competence and work style, formulate essential rules and regulations and carry out institutional restructuring, concentrating on the following tasks.

  Greater efforts should be made to fight corruption and build a clean and honest government. Our government is a people's government. Honesty in the performance of official duties is the minimum requirement for governments at all levels. All government functionaries should serve the people wholeheartedly and must be clean and honest. Over the past few years we have made notable achievements in fighting corruption and building a clean and honest government, but we still fall far short of what the central authorities require of us and what the people expect of us. Fighting corruption is still a tough task. We must take more effective measures and make unremitting efforts to fight corruption and build a clean and honest government. First, we should continue to strictly follow the Code of Conduct for Building a Clean and Honest Government and other regulations formulated by the CPC Central Committee and work hard to ensure that leading cadres are clean, honest and self-disciplined. Government functionaries at all levels must observe relevant regulations and laws and, in particular, leading cadres should stay clean and honest and self-disciplined and be sure that their relatives and office staff do the same. The regulations prohibiting leading cadres from illegally taking advantage of their power and position in the interests of their spouses or children must be strictly implemented. When this kind of case occurs, the leading cadres and other people involved in the case must be held responsible. Second, we must strictly investigate and prosecute all types of cases involving violation of laws and regulations, concentrating particularly on major cases. We should focus on cases in which government departments at all levels or leading cadres at and above the county level are involved in violation of laws and codes of conduct, and make greater efforts to deal with cases involving violations of laws and codes of conduct in banking, securities, construction projects, approval for land leasing and subleasing and material purchases. We should also carefully investigate and prosecute cases involving senior managerial staff in state-owned enterprises who violate laws or codes of conduct and cause huge losses of state assets. All major cases, no matter which department or who is involved, must be thoroughly investigated, and corrupt officials must be severely punished. Third, we should continue to vigorously work to correct unhealthy tendencies in government departments and industries. We should focus on solving outstanding problems of great concern to the general public. Supervision needs to be strengthened to ensure that laws and codes of conduct are strictly enforced. Reform of the administration and management system should be deepened to strengthen supervision and restraint mechanisms. We should implement the government procurement system, accountant assignment system and auditing system for determining the economic responsibility of leading cadres below the county level. Efforts to prevent and control corruption at the source should be strengthened. We should earnestly work to implement the leading cadre responsibility system for building a clean government.

We must practice strict economy and combat extravagance and waste. In the present changing circumstances, we should continue to carry forward our fine tradition of building the country and handling all affairs through diligence and frugality. Governments and functionaries at all levels must have an awareness of hardship and maintain a sense of frugality, always keeping in mind the interests of the country and the people. We must resolutely put an end to the extravagance, waste and squandering seen in some areas, departments and institutions. Governments at all levels should continue to implement relevant regulations to curb expansion or construction of office buildings, not allowing any new luxury building projects to be launched. Departments under the State Council should play an exemplary role in this regard. Cases of misuse of public funds and institutional spending in violation of relevant regulations must be strictly investigated and prosecuted. Government officials travel, entertain and dine in a luxurious style at public expenses in the name of all sorts of invented activities such as "festival" celebrations, ribbon-cutting ceremonies and standards inspections. This wastes money and manpower and arouses the indignation of the people. Such practices must be resolutely stopped.

    We should further transform the functions of the government and carry forward reform of government institutions. Departments under the State Council should consolidate the results of institutional reform. Local governments should intensify their institutional reform in line with the arrangements and requirements of the central authorities. We should streamline our administration and establish a highly-efficient, well-coordinated and standardized administrative system and operating mechanism through reform. Government institutions should perform their duties in strict accordance with the limits of authority and procedures as prescribed by law, and institute and improve a system of work responsibility. We should strengthen publicity and education about law. According to the requirements set by the CPC Central Committee, all the departments under the State Council and governments at provincial and prefectural levels should consolidate their achievements in the education about the importance of studying, being political-minded and being honest and upright. Rectification measures should be implemented in earnest. In addition, this education should be carefully carried out at the county level. Governments and government functionaries at all levels should bear in mind that they are servants of the people. They should maintain close ties with the masses, listen to their opinions and show concern for their weal and woe. We should especially show our concern these days for those who are experiencing difficulties in their life and do everything possible to help them overcome their difficulties. We should continue to improve and exercise a civil service system and enhance the political integrity and professional competence of public servants.

    Governments at all levels must conscientiously subject themselves to the supervision of the people's congresses at the corresponding levels and their standing committees, take the initiative to strengthen contacts with the committees of the Chinese People's Political Consultative Conference at all levels, and earnestly listen to the views of the democratic parties, federations of industry and commerce, prominent persons without party affiliation and mass organizations. We should make government affairs public, encourage people to exercise supervision over the work of the government and its functionaries in accordance with the law, and bring the supervisory role of public opinion into full play.

IX. Promoting the Great Cause of Peaceful Reunification of the Motherland

  The return of Hong Kong and Macao to the motherland marks great progress toward the realization of the great cause of complete reunification of the motherland. We will continue to adhere to the principle of "one country, two systems", support the governments of the Hong Kong and Macao special administrative regions in their efforts to govern in accordance with the law, and maintain the prosperity and stability of these two regions. The recovery of Hong Kong and Macao has made the task of resolving the Taiwan question and realizing the complete reunification of the motherland even more outstanding as a sacred mission for the people of all ethnic groups in China, including our compatriots in Taiwan and overseas Chinese. We will, as always, stick to the basic principles of "peaceful reunification", "one country, two systems" and the eight-point proposal put forward by President Jiang Zemin, and continue to work hard to develop cross-straits relations and promote the peaceful reunification of the motherland. We will not sit idly by and watch any serious separatist activity aimed at undermining China's sovereignty and territorial integrity, such as those advocating the "two-state theory" or "the independence of Taiwan". We would like to reiterate that the One-China Principle is the foundation and prerequisite for peaceful reunification. On the basis of this principle, we are willing to conduct cross-straits dialogue and negotiations on any matter. We will continue to promote visits of people in both directions and various cross-straits exchanges, vigorously promote cross-straits economic and trade relations and conscientiously protect the legitimate rights and interests of our Taiwan compatriots, including their legal rights and interests related to investment and business operation on the mainland. We place our hopes on the Taiwan authorities and even more on the people of Taiwan. We are willing to continue working with the vast numbers of our Taiwan compatriots in developing cross-straits relations and achieving peaceful reunification of the motherland. The Chinese people are determined and absolutely able to bring the Taiwan question to an early settlement and realize the great cause of reunification of the motherland.

X. Diplomatic Work

  In the face of the complex and volatile international situation in 1999, China adhered to an independent foreign policy of peace, vigorously promoted friendly relations and cooperation with other countries of the world, and scored new diplomatic achievements.

    China increased high-level contacts and engaged in more economic and trade cooperation and cultural exchanges with other developing countries, working with them to safeguard the legitimate rights and interests of developing countries through better coordination and cooperation in international affairs. China further developed its friendly good-neighborly relations and cooperation with the surrounding countries. It maintained the traditional friendship with the D.P.R.K. and consolidated the mutually beneficial cooperation with the R.O.K. China's dialogue and cooperation with ASEAN continued to expand and the partnership characterized by good-neighborliness and mutual trust was further developed. Sino-Vietnamese relations were strengthened with the signing of a treaty on the land border between the two sides. China's cooperation with Mongolia and countries in South and Central Asia continued on a good path. China continued to strengthen its friendly exchanges with African and Latin American countries.

  Sino-U.S. relations suffered a severe setback in the first half of last year. President Jiang Zemin's meeting with US President Bill Clinton in Auckland helped improve the bilateral relations. The two countries concluded a bilateral agreement on China's entry into the World Trade Organization, facilitating economic and trade cooperation between the two countries and the development of bilateral relations. The Sino-Russian strategic partnership of cooperation was enriched with the broad consensus reached during the summit meetings between the heads of state and government of the two countries. The two European tours taken by President Jiang Zemin and the meetings between Chinese and EU leaders promoted the development of Sino-European relations. In a spirit of keeping in mind the past and looking toward the future, China is following up on the important consensus and agreements reached by Chinese and Japanese leaders. However, we must keep up our guard against the attempts of a handful of ultra-right forces in Japan to obstruct and undermine Sino-Japanese relations. China's mutually beneficial cooperation with other developed countries also continued to improve.

    China actively participated in multilateral diplomatic activities and resolutely defended the purposes and principles of the UN Charter and the dominant role of the UN in maintaining world peace and development. China took a clear-cut stand against the fallacy of "human rights above sovereignty" and other "neo-interventionist" fallacies, thus presenting a positive image to the world of a country which adheres to principles, upholds justice, safeguards peace and promotes development. We foiled the anti-China human rights draft resolution in the United Nations for the eighth time and shattered Taiwan's seventh attempt to "return to the United Nations". China's international standing continued to rise.

  In the year 2000, China is still facing more opportunities than challenges and more hopes than difficulties in terms of the global climate. We will continue to follow Deng Xiaoping's thinking on diplomatic work, adhere to an independent foreign policy of peace, oppose hegemonism, safeguard world peace and resolutely defend our state sovereignty and territorial integrity. We will strive for a long-term peaceful international environment and good surrounding environment for our socialist modernization drive. We will unswervingly take the strengthening of unity and cooperation with other developing countries as a basic principle underlying China's foreign policy. We will continue to maintain friendly good-neighborly relations and further consolidate and strengthen all-round cooperation with neighboring countries. Intensified efforts will be made to strengthen cooperation characterized by equality and mutual benefit with developed countries on the basis of the Five Principles of Peaceful Coexistence. China will continue to play an active and constructive role in the global multilateral arena. We stand ready to work hand in hand with the people of all countries to press forward with the establishment of a peaceful, stable, just and reasonable new international political and economic order, promote the development of the trend toward multi-polarity and make unremitting efforts to ensure world peace, stability, development and prosperity in the new century.

Fellow Deputies,

    This year we will have formidable tasks in carrying out reform and development and maintaining stability, but there are also many favorable conditions that will enable us to make our work a success. Let us rally more closely around the CPC Central Committee with Comrade Jiang Zemin at the core, hold high the great banner of Deng Xiaoping Theory, adhere to the basic line of the Party, seize the opportunities, blaze new trails in a pioneering and confident spirit, work diligently and carry forward in an all-round manner the cause of reform and opening up and the socialist modernization drive into the new century.