Fifth, we improved social governance and maintained social harmony and stability. In the face of natural disasters and other emergencies, we worked in an orderly and efficient way and in accordance with laws and regulations, put people first, and responded in a well-planned way. We both coped with emergencies effectively and explored how to set up new mechanisms to improve social governance.

2014 Two Sessions

Last year, several severe natural disasters occurred in China, including earthquakes in Lushan, Sichuan Province, and in Min and Zhang counties, Gansu Province; floods in the Heilong, Songhua and Nen river areas; high temperatures and drought in southern China; and ferocious typhoons in coastal areas. The transmission of avian flu to humans also occurred. We improved the emergency response and disaster relief mechanism based on separate responsibilities for central and local governments and close coordination between them. With the central government coordinating overall aid and assistance and local governments in the affected areas exercising direct relief management, people's lives and property received the best possible protection.

Workplace safety and market oversight were strengthened. We improved relevant mechanisms, conducted thorough investigations into major workplace accidents and held those involved accountable. As a result, serious and major work-related accidents decreased by 16.9%. We merged food and drug oversight agencies, carried out a campaign to improve food and drug safety, exercised strict oversight over the quality of infant formula in accordance with drug supervision regulations, and strove to ensure that people have access to safe food and drugs.

To enhance law-based governance, the State Council made proposals to the Standing Committee of the National People's Congress on enacting or revising 34 laws, put forward a bill for abolishing the system of reeducation through labor, and enacted or revised 47 administrative regulations. We improved the system for handling people's complaints expressed in letters or visits and for mediating disputes, and prevented and defused social conflicts. We cracked down on all kinds of crime in accordance with the law.

We fully implemented the CPC Central Committee's eight-point decision on improving Party and government conduct, carried out the campaign to heighten awareness of and implement the mass line, firmly opposed formalism, bureaucracy, hedonism and extravagance, and strictly implemented the State Council's three-point decision on curbing government spending. Spending by central government bodies on official overseas visits, official vehicles, and official hospitality was reduced by 35%, and spending by provincial-level governments on official hospitality decreased by 26%. Efforts to uphold integrity and fight corruption were strengthened and a number of people violating the law or discipline were brought to justice.

Last year, we made new ground in conducting China's diplomacy. President Xi Jinping and other new state leaders accomplished much through their participation in major multilateral events, including the G20 Leaders Summit, the APEC Economic Leaders Meeting, the Shanghai Cooperation Organization Summit, the BRICS Leaders Meeting, and the East Asian leaders meetings, and their visits to a number of countries.

China entered a new phase in pursuing neighborhood diplomacy. Progress was made in economic diplomacy. China's exchanges and cooperation with other developing countries reached a new level. China's relations with other major countries steadily grew through interaction. China played the role of a large responsible country in important international and regional issues and hotspot issues. We resolutely safeguarded China's sovereignty, territorial integrity and maritime rights and interests. China's influence in the world further increased.

The achievements we made last year did not come easily. We owe them to the correct leadership of the Party Central Committee with Comrade Xi Jinping as General Secretary as well as to the concerted efforts of the whole Party, the entire armed forces, and the people of all of China's ethnic groups.

On behalf of the State Council, I express our sincere gratitude to the people of all our ethnic groups and to the democratic parties, people's organizations and people from all sectors of society. I express our heartfelt appreciation to our compatriots in the Hong Kong and Macao special administrative regions, our Taiwan compatriots, and overseas Chinese. I also express our sincere thanks to foreign governments, international organizations and friends from all over the world that show understanding of and support China in its endeavor to achieve modernization.

In carrying out our work ahead, we will adhere to the thinking and practices that proved effective in last year's government work and keep improving them.

At the same time, we must be keenly aware of the many difficulties and problems on our road ahead. The main ones are: The foundation for sustaining steady economic growth is not yet firm, and the internal impetus driving growth needs to be increased. Risks and hidden dangers still exist in public finance and banking; some industries are heavily burdened by excess production capacity; and the exercise of macro-controls has become more difficult. Increasing agricultural output and rural incomes is becoming more difficult. Air, water and soil pollution is severe in some places, and the task of conserving energy and reducing emissions remains arduous. There are major structural problems constraining employment. There are still many problems which people are unhappy about in housing, food and drug safety, medical services, old-age services, education, income distribution, land expropriation and resettlement, and public order. Serious and major industrial accidents occur frequently. The social credibility system needs to be improved. Some government employees are prone to corruption and some still do not perform their duties with integrity and diligence.

Some of these problems have arisen in the course of development and others have occurred because we have not done our work well enough. The government must first examine itself to identify the causes of these problems and work out ways to resolve them. It must follow people's wishes in exercising governance. We must firmly bear in mind our duties and mission, increase our sense of vigilance against potential dangers, be eager to take on challenges, work tirelessly and effectively to solve problems, and truly live up to people's expectations.

II. General Work Arrangements for 2014

In 2014, we are still in a complex environment with both favorable and unfavorable factors. The world economic recovery still faces instability and uncertainties. Macro-policy adjustments made by some countries introduce new variables into the equation, and emerging economies are facing new difficulties and challenges. The global economy is undergoing profound adjustment and international competition is getting fiercer.

We are at a critical juncture where our path upward is particularly steep: The basic conditions underpinning development are undergoing profound changes; deep-seated problems are surfacing; painful structural adjustments need to be made; the pace of economic growth is changing; and downward pressure on the economy remains great.

At the same time, it should be noted that China has the foundation and conditions for maintaining a medium-high rate of economic growth for some time to come: We are still in an important period of strategic opportunity during which great progress can be made in China's development; industrialization and urbanization are being advanced; and there is considerable potential for regional development. We must address problems as they emerge, guard against latent problems, and keep the development initiative firmly in our hands.

The overall requirements for the government's work this year are as follows:

Hold high the great banner of socialism with Chinese characteristics; take Deng Xiaoping Theory, the important thought of Three Represents and the Scientific Outlook on Development as our guide; comprehensively implement the guidelines of the Eighteenth National Party Congress and the second and third plenary sessions of the Eighteenth CPC Central Committee; implement the guiding principles of Comrade Xi Jinping's important speeches; adhere to the general work guideline of making progress while maintaining stability; carry out reform and innovation in all areas of economic and social development; maintain continuity and stability of our macroeconomic policies; make macro-control more forward-oriented and targeted; comprehensively deepen reform; constantly expand opening up; drive development through innovation; keep to the new path of industrialization, IT application, urbanization and agricultural modernization with distinctive Chinese features; accelerate transformation of the growth model, structural adjustments, and industrial upgrading; strengthen the development of the basic public service system; ensure and improve people's wellbeing; raise the quality and returns of development; promote socialist economic, political, cultural, social, and ecological advancement; and achieve sound and sustained economic development and social harmony and stability.

The following are the main targets we have set for China's economic and social development this year: Increase GDP by about 7.5%, keep the rise in the CPI at around 3.5%, create ten million more urban jobs, ensure that the registered urban unemployment rate does not rise above 4.6%, achieve basic balance in international payments, and increase personal incomes in step with economic development. We need to make overall planning for and balance major targets, namely, economic growth, employment, prices and international payments.

Here, I will speak more on two of the targets.

On the target for economic growth: China is still a developing country in the primary stage of socialism, and development remains the key to solving all our country' s problems. We must keep economic development as the central task and maintain a proper economic growth rate. On the basis of careful comparison and repeatedly weighing various factors as well as considering what is needed and what is possible, we set a growth rate target of around 7.5%.

This target is in keeping with our goal of finishing building a moderately prosperous society in all respects, and it will boost market confidence and promote economic structural adjustment. More importantly, stable growth ensures employment. We need both to meet the need to create new urban jobs and provide opportunities for rural migrant workers who come to cities for work. Ultimately, stable growth will ensure that urban and rural incomes increase and people's lives improve. There are many positive factors for fulfilling this year's target for economic growth, but to reach it, we must make arduous efforts.

On the target for controlling price increases: We hope to keep the rise in the CPI at around 3.5%. This is based on consideration of both the carry-over effect of last year's price rises and inflationary factors this year. It also demonstrates our resolve and confidence to keep inflation under control and ensure people's wellbeing.

China's agricultural output has gone up for several years in a row; supply of manufactured goods on the whole exceeds demand; and we have substantial reserves of grain and other goods and materials. We are fully capable of adjusting supply and demand through import and export, and all these factors will help maintain basic stability in general prices. However, there are many factors driving up prices this year, so we must not lower our guard. We must keep prices under control to ensure that price increases do not exert a major negative impact on people's lives.

To fulfill this year's goals for economic and social development, we should adhere to the following principles and policies:

First, we should create impetus by deepening reform. Reform has brought us the greatest benefits. China's reform has entered a critical stage and a deep water zone. We must rely fully on the people, break mental shackles and vested interests with great determination, and pursue economic structural reform as the key step to deepen comprehensive reform in all areas. In carrying out reform, we need to focus on areas where the public call for reform is strongest, the most pressing problems hindering economic and social development, and links on which there is extensive public consensus.

We need to ensure that the market plays the decisive role in allocating resources and make the government better play its role, vigorously advance reforms conducive to economic structural adjustment, remove constraints on market actors and efficiently allocating factors of production, fully tap the creative potential in society, promote fairness and justice, and enable everyone to share in the fruits of reform and development.

Second, we should keep economic performance within a proper range. We will improve the macro-control policy framework, maintain a lower limit to ensure stable growth and employment and an upper limit to keep a cap on inflation, and continue to implement a proactive fiscal policy and a prudent monetary policy.

The government budget deficit for this year is projected to be 1.35 trillion yuan, an increase of 150 billion yuan over last year. The projected government budget deficit consists of 950 billion yuan of central government deficit and 400 billion yuan of provincial-level government debt in the form of treasury bonds issued by the central government on provincial-level governments' behalf. The government deficit and national debt are increasing along with the growth in the whole economy. However, the deficit rate will be kept at 2.1%, which demonstrates continuity of our fiscal policy.

We will pursue a balanced monetary policy, move toward a basic balance between overall supply and demand in society, and foster a stable monetary and financial environment. We will strengthen macro-prudential management to encourage an appropriate increase of monetary credit and nongovernmental financing. This year, M2 is forecast to grow by around 13%. We will strengthen the coordination of fiscal and monetary policies with industrial and investment policies, maintain policy options, make adjustments at an appropriate time and to an appropriate degree, and ensure smooth sailing of the giant ship of China's economy.

Third, we should work hard to raise the quality and returns of development, promote industrial upgrading and keep improving people's wellbeing. The development we seek is development that raises the quality and returns of development, promotes industrial transformation and upgrading, and improves people's lives. While maintaining steady growth, we need to shift from relying mainly on increasing input of factors of production to making development driven more by innovation, and from relying mainly on traditional comparative strengths to utilizing overall competitive advantages. We need to move up from the low to middle range of international division of labor to the middle to high range, and shift from unbalanced urban-rural development to coordinated and balanced development.

We will improve the system for evaluating officials' performance and get everyone involved in a common endeavor to accelerate transformation of the growth model, make structural adjustment and achieve sound development. This will steadily increase employment and personal incomes, improve the environment, and make China's economic and social development more efficient, equitable and sustainable.