BEIJING, March 17 (Xinhua) -- Following is the full text of the Report on the Implementation of the 2016 Plan for National Economic and Social Development and on the 2017 Draft Plan for National Economic and Social Development, which was submitted on March 5, 2017 for review at the Fifth Session of the 12th National People's Congress and was adopted on March 15.
REPORT ON THE IMPLEMENTATION OF THE 2016 PLAN FOR NATIONAL ECONOMIC AND SOCIAL DEVELOPMENT AND ON THE 2017 DRAFT PLAN FOR NATIONAL ECONOMIC AND SOCIAL DEVELOPMENT
Delivered at the Fifth Session of the Twelfth National People's Congress on March 5, 2017
National Development and Reform Commission
The National Development and Reform Commission has been entrusted by the State Council to submit this report on the implementation of the 2016 plan and on the 2017 draft plan for national economic and social development to the Fifth Session of the Twelfth National People's Congress (NPC) for your deliberation and for comments from the members of the National Committee of the Chinese People's Political Consultative Conference (CPPCC).
I. Implementation of the 2016 Plan for National Economic and Social Development
Last year, conditions both at home and abroad were complex and challenging; the global economic recovery struggled to take effect while downward pressure on China's economy remained significant. However, under the firm leadership of the Central Committee of the Communist Party of China (CPC) with Comrade Xi Jinping at its core, all regions and departments continued to follow the general principle of making progress while keeping performance stable, upheld the new development philosophy, earnestly implemented the 2016 plan approved at the Fourth Session of the Twelfth NPC, and acted in line with the review of the plan by the NPC's Financial and Economic Affairs Committee. In accordance with the keynote of advancing supply-side structural reform, we appropriately increased aggregate demand, advanced reform with determination, responded effectively to risks and challenges, guided public expectations to ensure they remained positive, and worked hard to deliver a good performance in all areas of work. As a result, economic and social development remained stable and healthy, the 13th Five-Year Plan got off to a good start, and implementation of the 2016 Plan for National Economic and Social Development was successful overall.
1. We developed new and better ways of conducting macro regulation to keep the economy operating within an appropriate range.
On the basis of range-based regulation, we strengthened targeted and well-timed regulation and pursued a more proactive fiscal policy as well as a prudent monetary policy that retained an appropriate degree of flexibility so as to ensure that economic performance was stable. China's gross domestic product (GDP) rose to 74.41 trillion yuan, an increase of 6.7%, meeting our projected target.
Figure 1. Quarterly GDP and Growth Rate in 2016
1) Consumption played a more fundamental role.
The action plan to stimulate industrial transformation and upgrading through increased consumption was formulated, and the Ten Initiatives for Boosting Consumer Spending were implemented. We implemented the policies for promoting green consumption, transformation of physical retail businesses through innovation, and integrated development of transportation and logistics. The guidelines on further boosting consumer spending in tourism, culture, sports, health, elderly care, education, and training services were promulgated and implemented; the consumption of services flourished; and consumer spending on automobiles and other physical goods was increased and upgraded. We formulated the guidelines on providing incentives to key groups to promote an overall increase in urban and rural incomes, and people's ability to consume continued to increase. Total retail sales of consumer goods for the year rose by 10.4%. Consumption served as a major driver of economic growth, making a 64.6% contribution. And there was a further improvement in the ratio between consumption and investment.
Box 1: Ten Initiatives for Boosting Consumer Spending
2) Investment sustained steady growth.
Strengthening areas of weakness, making structural adjustment, and increasing supply were our primary focus in working to increase rational and effective investment. We further improved the structure of investments falling within the central government budget, took initial steps to set up the reserve of government investment projects and formulate the three-year rolling investment plan, and stepped up the construction of major projects. We channeled great energy into stimulating private investment, formulated a 26-point policy to ensure its sound development, and worked to expand the application of public-private partnership (PPP) models. Total fixed-asset investment for the year rose by 7.9%, of which 61.2% came from nongovernmental sources (excluding rural households).
Box 2: Measures for Encouraging Sound Development of Private Investment
3) The overall employment situation remained positive.
We sped up efforts to develop community-level facilities providing employment and social security services and to establish public vocational training centers, provided better services to college graduates as well as to workers laid off due to the scaling-down of overcapacity, and continued to advance pilot projects to support rural migrant workers returning home to set up businesses. An additional 13.14 million urban jobs were created over the year, and the registered urban unemployment rate stood at 4.02% at the end of 2016.
Figure 2. Urban Jobs Created
4) Overall prices were generally stable.
We increased regulation over commodity prices, effectively carried out regulation over the price of hogs, and strengthened monitoring, early warning, regulation, and oversight over the prices of major commodities such as vegetables during the flood season and major holidays. Oversight over pricing was tightened up and law enforcement efforts to counter monopolistic pricing intensified with numerous cases being investigated and dealt with. The consumer price index (CPI) for the year rose by 2.0%.
5) Risks and challenges were handled appropriately.
We stepped up reviews to verify the authenticity of outbound investment projects and worked to ensure the sound and orderly development of overall outbound investment. We employed market-oriented, law-based measures to guard against and defuse bond default risks. Policies tailored to local conditions were implemented to regulate the real estate market on a per-category basis. We worked to guard against and deal with severe flooding in some regions, particularly the Yangtze basin, as well as other natural disasters, and acted quickly to provide effective rescue and relief so as to minimize damage, and ensure recovery and reconstruction efforts proceeded in an orderly manner.
2. We worked to secure solid progress in supply-side structural reform,achieving initial success in the five priority tasks of cutting overcapacity, reducing excess inventory, deleveraging, lowering costs, and strengthening points of weakness.
By enhancing policy guidance and support and establishing an effective work mechanism, we achieved preliminary progress in our efforts to carry out the five priority tasks.
1) Annual targets for cutting overcapacity were met ahead of schedule and were surpassed.
The State Council's Guidelines on Addressing Overcapacity and Achieving a Turnaround in the Steel Industry (G.F.  No. 6) and the State Council's Guidelines on Addressing Overcapacity and Achieving a Turnaround in the Coal Industry (G.F.  No. 7) were published and implemented. We launched three initiatives which focused on shutting down outdated production facilities, dealing with projects that violated laws and regulations, and carrying out coordinated law enforcement, thereby strictly controlling the expansion of production capacity, ensuring the shutting down of outdated production facilities was accelerated, and guiding the orderly elimination of overcapacity. We made appropriate arrangements to ensure that laid-off employees were resettled and provided employment and that enterprise debts were properly handled; and we encouraged businesses affected by overcapacity to merge, restructure, transform, and upgrade, or optimize business distribution.
We took timely and appropriate action in responding to the effects of adjustments in supply and demand and price fluctuations. In 2016, we reduced excess production capacity by over 65 million metric tons of steel and over 290 million metric tons of coal; both numbers surpassed the targets for the year. The steel and coal industries operated more efficiently: cases of companies being in arrears were reduced, cash-flow problems were eased, and problems of insufficient investment in workplace safety, overdue wages, and outstanding payments were alleviated to some extent. Overall, the performance of both industries as well as market expectations improved.
2) Work to cut excess inventory surged ahead.
We promoted the granting of urban residency to people who have moved to cities from rural areas and worked to ensure the housing needs of new urban residents were met, such that by the end of 2016, the area of commodity housing for sale was 49.91 million square meters less than it was at the end of 2015. We further expanded the use of direct monetary housing compensation for people displaced by the rebuilding of run-down urban areas. 2.94 million households received monetary housing compensation over the year, accounting for 48.5% of the year's newly-commenced projects to rebuild run-down urban areas; this marked an increase of 18.6 percentage points over 2015.
3) Efforts to deleverage delivered initial results.
The State Council's Guidelines on Proactively yet Prudently Lowering Enterprise Leverage Ratios (G.F.  No. 54) were published and implemented. We encouraged business mergers and restructuring, promoted market-oriented and law-based debt-for-equity swaps, developed equity financing, and adopted other comprehensive measures so as to reduce business leverage ratios in an active yet prudent way. We launched an initiative for enterprises to engage in market-based debt-for-equity swaps with banks. By the end of 2016, a number of commercial banks had selected, via relevant agencies, 20 leading enterprises, which, despite having relatively high debt-to-asset ratios, had good prospects for development. Framework agreements on debt-for-equity swaps were drawn up with these enterprises on the basis of independent consultation, and are worth over 250 billion yuan. At the end of 2016, the debt-to-asset ratio of nationwide industrial enterprises with annual revenue from their main business operations of 20 million yuan or more was 55.8%, a year-on-year decrease of 0.4 percentage point.
4) Significant progress was achieved in reducing costs.
The State Council's Circular on Publishing the Work Plan on Reducing the Costs of Enterprises in the Real Economy (G.F.  No. 48) was published and implemented. We continued to promote the reforms to streamline administration, delegate more powers, improve regulation, and provide better services, thereby reducing transaction costs imposed by government. We extended trials of replacing business tax with value added tax (VAT) to all sectors and appropriately lowered the ratio of enterprise contributions for old-age insurance, medical insurance, unemployment insurance, workers' compensation, maternity insurance, and housing provident fund schemes for the current stage. We implemented the mechanism for coupling the price of coal with that of electricity, promoted price reform of electricity transmission and distribution, increased the number of direct sales by electricity generation companies to users, and improved the implementation of the basic electricity pricing scheme, so as to lower enterprise energy costs. We reviewed and standardized fees and charges levied on enterprises related to imports and exports and financial services, pushed forward in reforming the freight transportation system for railways, launched a cost-reduction and performance-improvement campaign within the logistics industry, and published and implemented an action plan to develop logistics channels.
In 2016, industrial enterprises with annual revenue from their main business operations of 20 million yuan or more reduced their costs by 0.1 yuan per 100 yuan of income from their main business operations and increased their profit rate by 0.19 percentage point on a year-on-year basis.
Figure 3. Lowering Business Costs in the Real Economy
5) Efforts to strengthen points of weakness were intensified.
Keeping in mind the need to secure both short-term and long-term benefits and focusing on the development of both infrastructure and management and services, we pursued market-based investment and financing initiatives to stimulate bank loans and other forms of investment and worked to strengthen points of weakness in the key areas of poverty alleviation, post-disaster water conservancy restoration and reconstruction, social programs, innovation capacity-building, new industry, and other areas in need of attention. We achieved our target of helping more than 10 million rural residents lift themselves out of poverty over the course of the year.
3. We made new breakthroughs in reform and opening up, unleashing new impetus for economic and social development.
We launched a number of crucial signature reform plans, made breakthroughs in reform of major areas and key sectors, and improved the performance of China's open economy.
1) Reforms to streamline administration, delegate more powers, improve regulation, and provide better services were intensified.
The goal of the current administration to cut the number of items requiring government review by a third had been achieved ahead of schedule. On that basis, last year we cancelled the requirement on a further 165 items for review by State Council departments and authorized local governments. We also overhauled and standardized 192 items of intermediary services for government review as well as 220 items of approvals and accreditations for professional qualifications. The Catalog of Investment Projects Requiring Government Review was revised for the third time. Reform of the business system was deepened. We fully implemented the oversight model consisting of inspections of randomly selected entities by randomly selected inspectors and the public release of inspection results, made operational and post-operational oversight more effective, and promoted the Internet Plus government services model. The newly-launched reform piloting a negative list for market access yielded positive results. The four major platforms for streamlining administration, delegating more powers, improving regulation, and providing better services have all been assembled and are in operation.
Box 3: Reforms to Streamline Administration, Delegate More Powers, Improve Regulation, and Provide Better Services
Figure 4. The Four Major Platforms
2) Reform of the investment and financing systems picked up pace.
Guidelines on deepening reform of the investment and financing systems and regulations on the review and reporting of investment projects for enterprises were introduced, spurring a new round of reform throughout the investment and financing systems. We revised regulations on the management of projects for which the central government budget provides investment and loan-interest subsidies, and formulated 80 specific documents concerning the management of such projects. Significant progress was made in demonstration initiatives to attract private capital for projects such as the Ji'nan-Qingdao and Hangzhou-Shaoxing-Taizhou railway lines.
3) Price reform was deepened.
Trials to reform electricity transmission-and-distribution prices were extended to all provincial-level grids. We established a new pricing mechanism for the pipeline transportation of natural gas, and worked to ensure that the market decided citygate prices of natural gas for non-household users, who accounted for over 80% of natural-gas consumption. Markets for trading petroleum and natural gas experienced rapid development. Around 90% of cities have adopted tiered pricing for household water, electricity, and natural gas usage. Price reforms for medical services were implemented across the board and pricing for passenger rail and airline tickets became noticeably more market based. Comprehensive pricing reform on water for agricultural use registered solid progress. We improved the minimum state purchase price policy on rice and wheat and pressed on with pilot reforms for ensuring base prices for cotton and soybeans.
Box 4: Price Reform in Key Areas
4) Steady progress was made in the reform of State-owned Enterprises (SOEs) and major industries.
In putting in place a framework that consists of the Guidelines on Deepening Reform of SOEs as well as supplementary documents, we promulgated work plans to more quickly relieve SOEs of their obligations to operate social programs and help them address other longstanding issues, and steadily pressed ahead with the nine major tasks for deepening SOE reform and the 10 pilot SOE reforms*. We implemented the pilot reform to introduce mixed ownership for an initial group of SOEs and made progress in the trials to establish the first group of state capital investment companies.
We approved reform plans for the electricity industries in 31 provinces,autonomous regions, and municipalities directly under the central government, and released the first batch of 105 trial projects to increase the number of electricity distributors. Plans were formulated for reforming state forestry farms in all provinces, autonomous regions, and municipalities directly under the central government and for reforming key state forestry areas in Inner Mongolia, Jilin, and Heilongjiang. Trial reforms on state forestry farms were successfully concluded in Zhejiang, Hunan, Jiangxi, and three other provinces.
The plan for structural reform of the salt industry was issued, and all controls on producer, wholesale, and retail prices of salt were lifted. The system for purchasing and stockpiling corn was reformed, and the policy for temporary purchase and storage of corn in the northeast was replaced with a mechanism based on market-price purchases and supplementary subsidies. The work to reduce stockpiles of grain and cotton through the provision of policy support proceeded smoothly.
Box 5: Reform of SOEs
5) Work to create a fair and competitive market was accelerated.
The guidelines on improving the property rights protection system and protecting property rights in accordance with the law were published so as to ensure the rights and interests of economic entities under all forms of ownership are subject to law-based protection on an equal footing. Steady progress was made in the pilot reform for market-based allocation of land designated for industrial purposes. Guidelines on establishing a review mechanism within the market system to ensure fair competition were issued so as to impose direct controls on government departments preventing them from adopting policies or measures that eliminate or stifle competition.
New headway was made in developing a credit rating system, and guidelines on enhancing the credit standing of governments and individuals, and within the e-commerce sector, were formulated. More than 50 departments worked together in 12 sectors to take punitive actions against those who act in bad faith and in three sectors to provide incentives to those who act in good faith. Coordinated efforts to combat infringements and counterfeiting were enhanced, with over 170,000 cases of illegal and criminal activities being investigated and handled. Steady progress was achieved in the comprehensive trials to reform and develop the domestic commodity distribution system.
6) Fiscal, tax, and financial reforms proceeded in an orderly manner.
The State Council's Guidelines on Advancing Reform for the Sharing of Fiscal Authority and Spending Responsibilities between the Central and Local Governments (G.F.  No. 49) were promulgated and implemented. We extended trials to replace business tax with VAT to all sectors, including the construction, real estate, financial, and consumer service industries, and ensured that VAT deductions cover all new immovable property of enterprises. Ad valorem rates were introduced for all resource taxes, and trial reforms to levy a water-resource tax were carried out. Reform of state-owned commercial banks as well as of development and policy-backed financial institutions were deepened. The deposit insurance system performed solidly. A number of measures for financial-sector opening up and innovation created by the China (Shanghai) Pilot Free Trade Zone were replicated in the pilot free trade zones in Guangdong, Tianjin, and Fujian. The Shenzhen-Hong Kong Stock Connect was launched.
7) Social reforms were accelerated.
Reform of the system for the use of official vehicles was completed in all organs of the CPC Central Committee and the State Council and its implementation was deepened in local Party and government bodies. A second group of trials to delink industry associations and chambers of commerce from the government were launched. Implementation of a unified registration system for immovable property was accelerated, with 100% of prefectures, prefecture-level cities, and autonomous prefectures and 98% of counties, county-level cities, and districts across the country issuing new certificates to replace old ones. Management reform for state science and technology initiatives was deepened, profit distribution policies were developed with the goal of strengthening the value ascribed to knowledge, and efforts to apply scientific and technological advances were intensified. Comprehensive education reform was stepped up.
The system of tiered diagnosis and treatment was further developed, and substantive progress was made in integrating the basic medical insurance schemes for rural and non-working urban residents. The proportion of health care expenses borne by individuals dropped to 28.9%. Guidelines on Fully Opening up the Elderly Care Market and Improving Elderly Care Services (G.B.F.  No. 91) by the State Council's General Office were published and implemented. We made steady progress in reforming the pension system for employees of Party and government offices and public institutions.
We moved faster to develop philosophy and the social sciences with Chinese characteristics, and launched an initiative to encourage innovation in philosophy and the social sciences. We worked to speed up implementation of soccer reforms.
Box 6: Social Reforms
* They are to: ensure the power of the board of directors of SOEs; carry out competitive selection and employment of executives and managers; promote the professional management system; implement differentiated pay in SOEs; develop companies for state capital investment and operations; merge and reorganize central government enterprises; introduce mixed-ownership structures in some major sectors; allow employees of SOEs with mixed-ownership structures to hold shares in their employer company; make information on SOEs public; and relieve SOEs of their obligation to operate social programs and help them address any other longstanding issues.
8) The Belt and Road Initiative served as pacesetter to an open economy that saw continuous improvement.
The Belt and Road (the Silk Road Economic Belt and 21st Century Maritime Silk Road) Initiative saw rapid progress. Development of the Initiative's framework, which consists of six corridors and six channels serving multiple countries and ports*, made steady progress, enabling China and its partners to markedly increase cohesion between their development strategies and plans. China-Europe freight train services, which have registered a total of nearly 3,000 trips, were brought under a single unified brand.
A number of signature projects for international industrial-capacity cooperation got off the ground. The Addis Ababa-Djibouti Railway officially came into service-from investment and financing to technology, operation, and management and maintenance, Chinese standards were applied throughout the project, making it the first full-production-chain export of China's railway. Steady progress was achieved in the construction of major international projects including railways connecting Jakarta and Bandung (high-speed railway), China and Laos, China and Thailand, and Hungary and Serbia; the railway project in southern Malaysia; and the Gwadar Port in Pakistan.
Further steps were taken to facilitate foreign investment, ensuring that utilized non-financial foreign investment remained stable. The regulation system and institutions for outbound investment were improved, which enabled further growth of outbound non-financial investment. All coastal ports installed and started using the Single Window System for foreign trade, and all ports throughout China successfully integrated customs clearance procedures and inspection and quarantine procedures.China experienced a 0.9% fall in total imports and exports for the year, which was 6.1 percentage points less than the previous year's decrease. Trade in services grew rapidly. The RMB was officially included in the International Monetary Fund's special drawing rights (SDR) basket. Of particular note was China's hosting of the G20 2016 Hangzhou Summit which produced important and far-reaching outcomes.
Box 7: Major Platforms for Development and Opening up