Ride The East Wind of the Tenth Five-Year Plan and Play the Victory Song of Western Development
Zheng Peiyan Chairman, China State Development Planning Commission
Nanjing, China - 19 September 2001
Chairman,
Ladies and Gentlemen:
Nanjing in September has clear skies and fresh air and pleasant scenery. In this beautiful season, famous overseas Chinese entrepreneurs from all over the world have gathered in this historic famous capital with leaders and experts of the related ministries of the Chinese government to jointly foresee the operation strategy of the overseas Chinese enterprises in the 21st century and discuss the development prospect of the Chinese economy. This is of great significance to strengthen exchange and cooperation among overseas Chinese businessmen of various parts of the world. Based on the arrangement of the conference, I would like to take this opportunity to introduce to you China's Tenth Five-Year Plan and western development.
The last more than 20 years of the 20th century was a time when the Chinese economy started to take off. We stuck to market-oriented reform, primarily established socialists market economic system. Market mechanism more and more played a basic role in resource allocation, providing strong engine for rapid economic development. We stuck to the development of open economy. An all-round open-up layout has been established. Great progress has been made in foreign trade and utilization of foreign capital. Last year, foreign trade value was $474.3 billion and real utilization foreign capital was $59 billion. Reform and opening to the outside world has substantially liberalized and developed social productivity. During the 20 years, the Chinese economy enjoyed a real annual growth of 9.7 percent, 3.6 percentage points higher than the growth rate before reform and opening up, and 7 percentage points higher than the world economic growth rate of the same period. Last year, China's GDP exceeded $1 trillion, ranking the 7th in the world. We have realized the first two strategic objectives of the modernization drive. The shortage of commodities has basically come to an end. The dream for a thousand years of people to have enough food and clothing has become real. The living standard of people has basically reached a well off way of life. This is a new cornerstone in the development history of the Chinese nationality. The huge achievement of China's economic and social development laid a sound foundation for future development. This year when the economic growth in some countries and regions was weak and even went into recession and the overall international economic environment became gloomy, China's economy continued to maintain rapid growth momentum. GDP growth in the first half of this year was 7.9 per cent. The economic growth quality continued to increase. The sound cycle has been strengthened and boom and vitality have emerged.
Ladies and Gentlemen:
Starting from the new century, China entered into a new development period of building a well off society and speeding up socialist modernization drive. The next 5 to 10 years will be a very important period for China's economic and social development and for strategic readjustment of economic structure and for improving socialist market economic system and opening wider to the outside world. During this period, we should lay sound foundation for implementation for the third step strategic initiative. In March this year, the National People's Congress approved the 10th five-year plan. The tenth five year Plan put forward the guidelines, objectives, important tasks and policy measures of economic and social development in the next five years, define the government working priorities and demonstrate the nice prospect for China's development at the beginning of the new century.
The tenth five year plan stresses: with development as the major theme and on the basis of pursuing speed and efficiency at the same time, seize the opportunity and speed up development; with structural readjustment as the main line, try to readjust industrial structure, regional structure and urban and rural structure; with reform and opening up and science and technology progress as the engine, we will rely on system innovation and science and technology innovation to promote economic development and structural adjustment; with human beings as the most important factor, we will put the enhancing of the living standard of the people as the fundamental starting point, try to increase the income of urban and rural residents, especially that of the farmers and the low income people in the urban and town areas; combine economic development and social development, actively develop various social undertakings, control population growth, save and protect resources, strengthen ecological construction and realize the coordinated development of economy, society, population, resource and ecological environment.
China is a populous developing country. In the process of continuing to speed up industrialization and promoting urbanization, the income of urban and rural residents will maintain rapid growth. Consumption structure conceives new upgrading and potential market demand is huge. The constant increase of savings of urban and rural residents provides sufficient capital conditions for increasing investment and consumption. We will stick to the policy of expanding internal demand, through comprehensive utilization of planning, fiscal and financing means, let prices, taxation, interest rate and exchange rate and other levers play their respective functions, encourage investment, consumption and export so that the huge, potential market demand will convert into real purchasing power and drive sustained, rapid and sound economic development. Comprehensively analyzed various factors, China's economic growth in the next five year will be around 7 per cent per year and the comprehensive economic power of the nation will be strengthened.
In order to support economic development and create sound environment for various market economic activities, we will further strengthen infrastructure construction. In the next 5 years, the major areas for construction include:
Highways. Continue to maintain large construction scale. Prioritize the five vertical and seven horizontal national trunk lines, improve highway and inter-province high-grade highway network in the west. In five years, the newly added highways will be 200,000 km, among which express highways will be 10,000 km.
Urban public utilities. This is an important measure for improving city functions and environment. The major tasks are to build rail transportation, environmental protection facilities such as sewage water and garbage treatment and other public facilities. During the tenth five-year plan period, we plan to invest 800 billion yuan in urban rail transportation with a total mileage of 450 km, among which 200 billion yuan will be used in subways. Right now among the 34 cities with population above 1 million, 20 of them are building and preparing to build their own rail transportation. In a period from now, China will enter into a large-scale construction period in urban subways.
Railways. We will increase investment in this sector. The priorities will be building and improving 8 vertical and 8 horizontal trunk lines and the rail network in the western region. We plan to build 7,000 km of new lines and 4,000 km of double lines. By 2005, our total mileage of railways will be 75,000 km. The Qinghua Tibet railway on top of the mountain is being built. We will build the express railway from Beijing to Shanghai.
Ports and airports. This is new growth area for infrastructure construction. We will build 140 deep-water berths in the coastal ports. By 2005, the total number of deep-water berths will be 800, among which the newly added container berths will be 50. We will improve hub airports, expand trunk line airports, build and expand 40 regional airports.
Power. Meeting the needs of economic development and the improvement of people's living standard, we will continue to maintain a large power construction scale. We plan to build a number of hydropower stations, pit-mouth thermal power stations and nuclear power projects with a total scale of 770 MW. The objective is to connect all power networks into one and build 60,000 km of power transmission trunk lines. Another objective is to improve transmission capacity of the rural power network and build 130,000 km of low voltage transmission lines.
Oil and gas and petrol chemical industry. Oil and gas, upstream and down stream will be considered as an integrated project. We plan to build or expand 4 million tons of ethylene production scale and increase production capacity of synthetic fiber, resin and rubber.
In order to strengthen the structural support for economic development, increase economic efficiency will be our focal point. The increase of overall national economic quality, international competitiveness and sustained development will be our objective. The air is to speed up strategic adjustment of economic structure.
New science and technology, new production mode and new industries will play key roles in China's modernization. To meet the challenge of the rapid development of world science and technology revolution, we will substantially promote science and technology progress and innovation, actively develop high tech industry, concentrate our resources and seek breakthroughs in information technology, biology technology, new material technology, speed up industrialization of high tech, actively nurture and develop the major industries of the national economy.
Informationization is the big trend in today's world. The new historic opportunities make it necessary for us to speed up informationization. Combine industrialization and information industry and realize the leapfrog development of social productivity and strengthen information infrastructure construction. During the next 5 years, we will substantially develop fixed phone networks, mobile telecom network and internet, add 290 million telephone subscribers and 80 million internet subscribers and add 1.25 million km of optic cables, extensively utilize information technology. Through the application of microelectronics, computer and network technology, increase the standard of industrial research development and design and the transformation of processing technology. Through the application of E-commerce, especially the E-commerce among business, promote the change in marketing, transportation and service modes. Reduce cost and increase market scale of industrial products. Through the integration of information products and traditional products and the application of information technology in new products, increase the added value of information technology in the products. Speed up the establishment of government information system and raise working efficiency.
China's industry has good foundation and is a very important pillar for national economic development and has large room for further development. Due to the backward technology and equipment and weak competitiveness, our industry base is large but not strong. During the tenth five-year plan period, we will actively utilize high and new technology and advanced and appropriate technology to improve traditional industry and optimize and upgrade the industrial structure. We will strengthen the technological upgrading in mining, energy, chemical, metallurgy, and textile industries. Extensively utilize new technology and equipment, increase the capability for product development and intensive processing. Taking advantage of important project construction, increase the standard of design, manufacturing and integration of advanced technology and equipment. Actively develop digital controlled machines tool, instrument and meters and basic components. Support the development of new and high efficiency power generation equipment such as large gas turbines, large pump storage units and nuclear power generators and high voltage DC power transmission equipment, large-scale metrology, chemical fertilizer and pert chemical equipment and urban rail transport equipment.
Resource, ecological and environmental issues are important strategic issues for long-term development of the Chinese nationality. Right now, the situation of resource and ecological environment is severe in China. For example, when water resource is not adequate, water and soil erosion and pollution are serious and water quality in the sea near the coat is deteriorating; the domestic oil development and production cannot meet the needs of economic and social development and supply demand contradiction is getting bigger. In order to realize sustainable development and increase the quality of people's livelihood, we will put resource and ecological environment solution on a very important place. Resource development and conservation are equally important and conservation is more important. Protect and reasonably utilize resource based on law and not take a path of pollute first and then deal with the pollution. Continue to increase investment in resource and ecological environment construction. Strengthen the policy support and solve the resource issues such as water and oil.
Ladies and gentlemen:
Implementation of west development strategy, speeding up development in central and west regions is a very important measure for realizing the third strategic objective in the modernization construction. The territory in the west accounts for more than 70 per cent of the total area and population accounts for 28 per cent of the total. Right now, the development level in the west is apparently backward than the east. Promoting the great development of west is of great significance for reasonable adjustment of regional economic division of labour, promoting coordinated regional economic development and jointly getting rich at last.
Since the implementation of the west development strategy, we have seen a good start. In 2000, the state has increased investment in western regions and the investment in infrastructure construction has exceeded 70 billion yuan. This year investment is increased. During the first half of this year, the fixed asset investment in the west was up by 30 per cent, 12 percentage points higher than other regions. A series of important projects have been started with a total value of 300 billion yuan investment. In addition to Qinghai Tibet railway, other projects that are important for western development such as west east power transmission, west east gas pipeline, national highway trunk lines and water conservancy hub along the upstream of rivers have been started or will be started in the area of ecological construction and environmental protection. During the past two years, 16.37 million mu of forests and grass have been planted in the former arable land and 15.41 million mu of forests have been planted in the barren mountains and land. Projects like natural forest protection, ecological environment comprehensive improvement in important regions, improvement of wind and sand source along Beijing and Tianjin, the recovery and construction of natural grass land and water and soil are progressing in a stable manner. The smooth implementation of western development strongly promoted west economic development. During the first half of this year, the GDP grew by 8.5 per cent, 0.6 percentage points higher than the average in the country.
Western development is a complicated and tough work. We will consider it as a long-term task, make integrated plan and scientific evaluation, identify the priority and implement it step by step. The overall strategic objective is : through the hard efforts of people in several generations, by the mid of this century when the whole country basically realize modernization, fundamentally change the comparative backward situation in the west and build a new west of China that enjoys economic prosperity, social progress, stable livelihood, unity among nationalities, beautiful mountains and rich life for people. During the next 5 to 10 years, we should strengthen infrastructure and ecological environmental construction so that breakthrough progress can be achieved and meanwhile science, technology and education can enjoy substantial development.
Speed up infrastructure construction. Speed up the building of national highway trunk lines and the western portion of the railway trunk line and build 8 new highways in the west. Improve trunk airports such as Chengdu, Chongqing, Kunming, Xining, Xi'an, Lasa and Lanzhou, build and expand a number of regional airports. To expand the internet, wireless communication coverage in the West. We will ensure the two key energy projects, West-to-East gas pipeline project and West-to-East power transmission project, be well carried out. The 22 middle and large scale water conservancy projects currently under construction will be finished, including Zipingpu Project in Chengdu and Shapotou Project in Ningxiz.
Strengthening ecological improvement and environmental protection. Along the upper stream of Yangtze River and the upper and middle stream of the Yellow River, reforestation will be carried out on slope lands that are above 25 degrees. A natural forest protection project will be implemented, namely, 13.33 million hectares (200 million mu) of land will be reforested in the West.
Promoting economy that takes advantage of local characteristics and sectors with a competitive edge. Strengthen the West as an agricultural base for the country by making good use of the local resources and competitive sectors, and promoting framing, animal husbandry, green food, herbs and bio-pharmacy. Advantageous resources like water resource, oil and gas will be appropriately developed and further processed. A number of production bases will be built up, such as potash fertilizer site in Chaidamu Salt Lake in Qinghai, phosphate fertilizer sites in Yunnan and Guizhou, lead and zinc mine in Yunnan, nickel mine in Gansu, aluminium mine in Guizhou and Guangxi, and rare earth mines in Inner Mongolia and Sichuan. Tourism will become a pillar industry by making good use of the abundant natural and humanistic landscape.
Developing science, technology, and education. Science and education are our top priorities, and actions will be taken to promote 9-year compulsory education, and more supportive measures will be given to ethnic minority inhabited areas and poverty-stricken regions. Vocational education will be actively encouraged. Advanced environmental protection technologies, which are suitable to the region, will be applied to build and resume ecosystem and develop water resource. Efforts will be made to improve agricultural products, coal liquefaction and other clean coal technology. Priorities will be given to energy efficiency, pollution-reducing and agricultural products deep-producing technologies, and other new and high technologies, such as renewable energy, processing and production of Chinese and Tibetan traditional medicine and the designing and production of new regional airplanes and spare no effort to cultivate, attract and use talents and engage talents from home and abroad in the development of the western region.
We will sum up historical experiences of western region development, meet the demand of the new situation, accelerate the reform and opening up of the western region, and create good institutional structure for western region development. We will guide the deepening reform of SOEs in the western region, encourage and support the development of the non-public sectors of the economy, establish and improve the market system, and greatly facilitate the normal flow and optimization of productive elements. To encourage foreign investors to invest in the western region, last year the Chinese government issued a series of preferential policies, which allow the western region to try out measures of the reform and opening up in some sectors. For instance, the corporate income tax of foreign-funded enterprises in government-encouraged sectors or sectors with competitive edge in the western region should be collected at a reduced rate of 15 % for the next ten years. New enterprises engaged in transport, power, water conservancy, postal service, broadcasting and television in the western region are eligible for a two-year tax exemption and a 50% tax reduction for the next three years following the tax exemption. If foreign investors invest in the western region in sectors where investment is encouraged by the government or sectors with competitive edge and need to import advanced technology and equipment to facilitate their invested projects, these imports, except for those are not exemptible by government regulations, should be exempted from tariffs and import value-added tax, provided that the imports are purchased within the total amount of investment. The pilot operations of foreign investment in banks, retail stores, and foreign trade enterprises will be extended to municipalities directly under the central government and the capital cities of provinces and autonomous regions. Foreign banks in the western region will be allowed to engage in RMB transactions gradually, and telecommunications, insurance, tourism, accounting, legal service, engineering design, cargo transportation and municipal public utilities are opened to foreign investment. Chinese-foreign joint ventures are encouraged to re-invest in the western region, and if the proportion of foreign capital in the project of re-investment exceeds 25%, the project will be entitled to the same preferential treatment enjoyed by those with FDI. With regard to foreign investment in the western region in infrastructure and sectors with a competitive edge, the allowed proportion of equity held by foreign investors can be appropriately raised, and the proportion of financing provided by domestic banks in RMB for foreign-funded fixed asset investment can be appropriately increased. The proportion of concessional foreign loans in the total investment may be appropriately raised for some projects in the region. Approval procedure for foreign funded project will be simplified. Easy and convenient access will be provided to tourists and investors to the region.
Ladies and Gentlemen:
The twenty-first century is a century that Chinese nation will be revived. Over the past twenty years, a large number of people with vision from business circle both home and abroad have made investment in China with good return. China now has healthy economic development momentum, great market potential and continuously improved investment environment, which make China an internationally targeted place for investment, and China is providing its people more opportunities to make investment in China. China now is a place that Chinese businessmen can display their ability and expand their business presence. The Western Region, in particular, has great market potential and investment value due to its abundant resource and vast land. We hope that all Chinese businessmen continue paying attention to the economic development in our country. We also sincerely welcome you to come to our motherland, especially the Western Region, for economic and technological cooperation, and all Chinese people can make joint efforts for China's social and economic development and a better future!
Thank you!
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