The Outline (draft) seeks to reflect requirements resulting from the development of the socialist market economy and implementation of the policy of reform and opening up. It is a macroscopic, strategic policy document that clearly defines the government's priorities and responsibilities. The document is original in both form and content. The content of the Outline (draft) gives specific expression to the strategic philosophy of implementing a scientific outlook on development and building a harmonious socialist society. It emphasizes the need to maintain the "five balances," strengthen weak links in economic and social development, solve the problems that concern the people and affect their vital interests, and properly balance market forces and macroeconomic regulation. The targets in the Outline (draft) are divided into two types: anticipated and obligatory. Anticipated targets are those that we expect or hope to meet, mainly by guiding the actions of market players. Obligatory targets are those that must be achieved, mainly by improving management in accordance with the law and providing services. In form, the Outline (draft) consists of a main body and a number of boxes, in which development targets and key projects are listed. The content of the main text is presented in a clear and easy-to-read way.

The Outline (draft) was compiled based on data from China's first economic census. This census, which took over two years to complete, gives the clearest picture yet of the basic state of the nation's economic and social development, and shows the true GDP and the true proportions of the economy accounted for by primary, secondary and tertiary industries, thus more closely and accurately reflecting China's national conditions and strength. Because it is based on the results of the first economic census, the Eleventh Five-Year Development Guidelines better reflects China's conditions and is more scientific.

2. Major economic and social developments during the Tenth Five-Year Plan period

The past five years were an unusual period of development in China, one in which we built on our past achievements and kept pace with the times. We avoided any serious impact from the Asian financial crisis, prevailed over the SARS outbreak, and overcame major natural disasters. We lost no opportunity to further reform and opening up, strengthened the basic role of market forces in allocating resources, improved macroeconomic regulation, and maintained fast yet steady economic development. The pace of China's progress in industrialization, urbanization, market development and internationalization increased significan tly; overall production capacity, overall national strength and people's living standards all reached new highs; and the appearance of both urban and rural areas underwent great changes.

China's economic strength grew significantly over the last five years. GDP was 57.3 percent higher in 2005 than in 2000, an average annual increase of 9.5 percent. Government revenue rose by 136 percent over the same period, up an average of 364.7 billion yuan per year. Agricultural production, particularly grain production, took a significant turn for the better. The output of major manufactured products grew substantially. High-tech industries expanded rapidly. Tremendous achievements were made in strengthening basic industries and infrastructure development. Construction of many major projects was completed, and many others were launched in such fields as water conservancy, energy, transportation and communications. IT application in the economy and society expanded rapidly.

Great successes were achieved in reform and opening up over the past five years. Major progress was made in rural reforms, in reform of state-owned enterprises, and in reform of the financial, fiscal, tax and investment systems as well as in developing a market economic system and a social security system. China's accession to the WTO began a new stage in opening up. The total import and export volume tripled over the last five years, and the amount of foreign direct investment actually used came to US$274.08 billion. A number of competitive enterprises went global.

People's living standards improved markedly over the last five years. Urban per capita disposable income rose by 58.3 percent and rural per capita net income grew by 29.2 percent, both in real terms. About 42 million new jobs were created in urban areas. Consumer spending on housing, communications, cars and services grew significantly. Rapid progress was made in science and technology, education, culture, health, sports, and other social programs.

Further progress was made in socialist political, cultural, and social development over the past five years.

These splendid achievements have greatly increased the confidence of all our ethnic groups to forge ahead on the path of socialism with Chinese characteristics.

At the same time, we also encountered many difficulties and problems in economic and social development during the Tenth Five-Year Plan period. The main problems were an unbalanced economic structure, weak capacity for independent innovation, slow change in the pattern of economic growth, excessive consumption of energy and resources, worsening environmental pollution, serious unemployment, imbalance between investment and consumption, widening gaps in development between urban and rural areas and between regions, growing disparities between certain income groups, and inadequate development of social programs. We need to work hard to solve all these problems.

3. Guiding principles and major targets for economic and social development in the Eleventh Five-Year Development Guidelines period

The Eleventh Five-Year Development Guidelines period will be a crucial time in building a moderately prosperous society in all respects. A comprehensive analysis of all factors shows that on the whole the international environment will be conducive to China's development in the coming five years, but that there are quite a few unstable factors and uncertainties. Domestically, there are many favorable conditions as well as a number of restraining factors and difficulties. We should seize opportunities, exploit favorable conditions while avoiding dangers, remain vigilant against adversity, properly handle risks and challenges, and press ahead with reform and opening up and the modernization drive.

The Outline (draft) fully reflects a scientific outlook on development and embodies the important principles laid out in the Proposal of the Central Committee. These principles are: We must sustain steady, rapid economic development, speed up change of the pattern of economic growth, improve China's capacity for independent innovation, balance development between urban and rural areas and among regions, intensify efforts to build a harmonious society, deepen reforms and open wider to the outside world. To put these principles into practice, we need to change our way of thinking about development, create a new pattern of growth, improve the quality of development, and make economic and social development more people-oriented, comprehensive, balanced, and sustainable.

Major targets for economic and social development in the Eleventh Five-Year Development Guidelines period listed in the Outline (draft) were set on the basis of the guidelines and principles set out in the Proposal of the Central Committee. These targets are designed to meet the goal of building a moderately prosperous society in all respects, and they reflect conditions of the current stage of economic and social development as well as objective requirements. Now, I would like to briefly speak about just two of these targets.

First is the economic growth rate. GDP growth for the next five years is set at an annual average of 7.5 percent in the Outline (draft). This figure is based on necessity and feasibility and was determined taking all factors into account. According to recently published data from the first national economic census and the actual results of economic growth in 2005, the GDP growth rate during the Tenth Five-Year Plan period was higher than originally projected. If the average annual growth rate is maintained at 7.5 percent during the Eleventh Five-Year Development Guidelines period, the goal of doubling the 2000 per capita GDP by 2010 set in the Central Committee's Proposal will be surpassed. This is an ambitious target, but we can attain it with hard work. It should also be pointed out that this target is based on successfully improving economic structure and efficiency and reducing energy consumption. In actual implementation, each local government should balance the growth rate with structural and performance improvement, rather than single-mindedly competing with other areas for the fastest economic growth. Both historical and recent experiences show that it is crucial to maintain fast yet steady economic development.

Second is energy conservation and environmental protection. In the Outline (draft), the target for reducing energy consumption per unit of GDP is set at about 20 percent and the target for cutting the total discharge of major pollutants is set at 10 percent. These targets are designed to address the acute problem of mounting pressure on resources and the environment. They reflect the need to build a resource-conserving and environment-friendly society and are necessitated by current conditions and long-term interests. They therefore provide a clear guide for policy making. Though achieving them will be quite difficult, we have the confidence and determination to succeed.

4. Strategic priorities and major tasks during the Eleventh Five-Year Development Guidelines period