Full Text: Report on the Work of the Government

4. Deepening reform and opening up with greater political courage and vision Reform and opening up are the fundamental force that drives

China's development and progress. We can continue to advance our cause only by adhering to reform and opening up. China has entered a crucial stage of reform. We must further emancipate our minds, comprehensively deepen reform of the economic structure, continue to actively yet prudently carry out reform of the political structure, deepen reform of the cultural administrative system, accelerate reform of the social system, improve the system for promoting ecological progress; and constantly deepen reforms.

We need to improve the socialist market economy. We should unwaveringly consolidate and develop the public sector of the economy and encourage, and support and guide the development of the non-public sector, so as to foster a structural environment in which economic entities under different forms of ownership have equal access to factors of production in accordance with the law, compete on a level playing field and enjoy equal legal protection. We should deepen reform of state-owned enterprises and key industries.

We should quicken reform of the fiscal and taxation systems, adjust relations between the central government and local governments concerning financial resources and powers, and improve the system of transfer payments. We should improve the public finance system, institute a system of local taxation, and establish a taxation system conducive to optimizing the economic structure and enhancing social fairness.

We should deepen reform of the financial system and improve the modern financial system so that it supports development of the real economy. We should raise the competitiveness of the banking, securities and insurance industries, accelerate development of a multilevel capital market, and actively develop the bond market. We should steadily carry out reforms to make interest rates and the RMB exchange rate more market-based, expand cross-border use of the RMB and gradually achieve the RMB's convertibility under capital accounts.

We should deepen reform of the investment and financing systems, carry out price reform and improve the pricing mechanism for resource products and the system of compensation for ecological damage.

We should continue to actively yet steadily advance function-based reform of public institutions.

The income distribution system is a basic system of vital importance for economic and social development, and an important cornerstone of the socialist market economy. We have formulated guidelines on deepening reform of the income distribution system, and we now need to promptly formulate specific policies, ensure that institutions are established and policies are implemented, resolve problems in income distribution, and narrow the income gap so that the fruits of development are more equitably shared by all the people.

We need to advance development of socialist democracy and the socialist rule of law. We should ensure that the people occupy the principal position, make people's democracy more extensive, fuller in scope and sounder, ensure that the people enjoy extensive rights and freedoms prescribed by law, and promote people's well-rounded development and safeguard social fairness and justice. We should govern the country on the basis of the law, and fully respect the authority of the Constitution and laws. We should ensure that the powers of policy making, implementation and oversight both constrain each other and function in concert and that government bodies exercise their powers in accordance with statutory mandates and procedures. We should continue to transform government functions, separate government administration from the management of enterprises, state assets, public institutions and social organizations, and build a well-structured, clean, efficient and service-oriented government that has scientifically defined functions and that the people are satisfied with. We should improve the conduct of our work, maintain close ties with the people, advocate hard work and plain living, practice thrift, oppose extravagance and waste, and eliminate formalistic and bureaucratic practices. We should uphold democratic oversight, legal oversight and public opinion-based oversight and improve the system of checks and oversight over the exercise of power to ensure that the people oversee the exercise of power and that power is exercised in a transparent manner. We should unwaveringly combat corruption, strengthen political integrity, establish institutions to end the excessive concentration of power and lack of checks on power and ensure that officials are honest, government is clean and political affairs are handled with integrity.

Profound changes in domestic and external environments place new and higher requirements on China in developing an open economy. We should adhere to the basic state policy of opening up and implement a more proactive opening up strategy. We should both keep exports stable and expand imports. We should raise the quality and returns of foreign trade rather than just increase its volume, and raise its overall competitive advantages instead of relying only on cost and price advantages. We should make China's exports more competitive in terms of technology, brand, quality and service. We should simultaneously use foreign investment in China and make Chinese investment overseas, and support Chinese enterprises in going global, to create new space for economic development. We should simultaneously deepen opening up in coastal areas and open inland and border areas wider so as to foster a balanced and coordinated pattern of opening up in which all regions have their own distinctive features, draw on each other's strengths, have a clear division of work, and cooperate with each other. We should continue to open up to both developed and developing countries and expand and deepen common interests with all other parties.