Full text: Report on China's economic, social development plan (8)

- Improving the quality and performance of the economy

The systems and mechanisms for promoting innovation will be gradually improved, and R&D spending will be steadily increased. The contribution of the value-added of strategic emerging industries and the service sector to GDP will continue to increase, and the transformation and upgrading of traditional industries will be accelerated. The new type of urbanization will be carried out vigorously, and development between different regions will be better coordinated. Both energy consumption and carbon dioxide emissions per unit of GDP will be cut by at least 3.1%. Chemical oxygen demand will be reduced by around 2%, ammonia nitrogen emissions by around 2%, sulfur dioxide emissions by around 3%, and nitrogen oxide emissions by around 5%.

- Continuing to improve the standard of living

More than 10 million urban jobs will be created, and the registered urban unemployment rate will be kept within 4.5%. Personal income will increase in step with economic development, and the rural population living in poverty will be cut by at least 10 million. The social security system will be improved, the coverage of old-age, medical, and other social security services will continue to expand, and the level of social security benefits will increase gradually. We will strive to make continued progress in making access to education, healthcare, cultural services, and other basic public services more equitable. The natural population growth rate will be kept under 6.5 per thousand.

- Keeping the equilibrium in the balance of payments

Total imports and exports will increase by around 6%, general trade and trade in services will account for more of foreign trade, foreign investment utilized will remain stable overall, and outward foreign direct investment will continue to grow rapidly.

To achieve these targets and make our economic work for 2015 a success, we must ensure that the macro policies are stable, micro policies are flexible, and social policies meet people's basic needs. We must make coordinated efforts to ensure steady growth, advance reform, make structural adjustments, improve the standard of living, and guard against risks. We must also continue to make innovations in and improve the way we exercise regulation at the macro level, ensure the continuity and stability of policies, and make sure that macro policies are further coordinated and work together to create synergy.

We will increase the vigor and effectiveness of our proactive fiscal policies. The government budget deficit for 2015 is projected to be 1.62 trillion yuan, which is an increase of 270 billion yuan compared to last year, resulting in a deficit to GDP ratio of around 2.3%. Of this amount, the central government deficit is 1.12 trillion yuan, and the remaining 500 billion yuan is from local government deficit. In addition, we will allow local governments to issue an appropriate amount of special bonds. Our fiscal policies will be focused on the following areas:

First, we will continue to make structural tax reductions and cut fees across the board. We will extend the trials of replacing business tax with VAT to the construction, real estate, financial, and consumer service industries. We will also make sure that the tax reduction and exemption policies for small and micro enterprises are well implemented.

Second, we will improve the structure of expenditures. This will be done by giving high priority to agriculture, rural areas, and farmers; people's wellbeing; environmental protection; old revolutionary base areas, ethnic minority areas, border areas, and poor areas; and key eco-functional zones, and by increasing support for financing guarantee for agriculture, rural areas, farmers, and small and micro businesses. We will continue to be economical and strictly control regular expenditures.

Third, we will utilize government funds more efficiently. We will make innovations in the way we use government funds, increase the intensity of treasury cash management, and put treasury funds on hand to good use.

We will implement a prudent monetary policy that is neither too loose nor too tight. This year, the money supply M2 is forecasted to grow by around 12%, but may be adjusted to a higher level to meet practical needs. We will carry out fine-tuning at an appropriate time and to an appropriate degree; strengthen targeted regulation, coordinated supervision, and management of expectations; and maintain reasonably ample liquidity. Our monetary policy priorities will be as follows:

First, we will effectively lower financing costs in the real economy. We will apply a combination of quantitative and price-based regulatory tools to guide financial institutions toward lowering their interest rates on loans, so that interest rates in the market move toward an appropriate level.

Second, we will support economic restructuring, transformation, and upgrading. We will use a combination of monetary policy tools to guide financial institutions in increasing their credit support for small and micro businesses, agriculture, rural areas, and farmers, the central and western regions, and SOE mergers and reorganizations. We will give stronger support to enterprise debt restructuring by applying policies tailored to their specific situations and types of debt.

Third, we will effectively prevent, control, and defuse financial risks. We will tighten oversight over the real estate market, local government debt, shadow banking, mutual guarantee and guarantee chains, and cross-market financial products, and ensure that no systemic or regional financial risks occur.

Fourth, we will steadily liberalize interest rates and improve the mechanisms for determining RMB exchange rate. We will allow the pricing of more debt products of financial institutions to be market-based and improve the central bank's framework of adjusting interest rates. We will allow the RMB exchange rate to float more freely, while keeping it basically stable at an appropriate, balanced level.

We will ensure our policies are well coordinated and function together to create synergy. We will manage supply and demand with equal importance, link together industrial and competition policies, fully allow fiscal and monetary policies to play their role as major tools for economic adjustment, and better coordinate policies for consumer spending, investment, industries, pricing, regions, land, and environmental protection.

First, we will carry out all the policies and measures for expanding consumer spending and getting it to fully play the fundamental role in driving economic growth, stimulate reasonable increases in personal income, nurture and expand growth areas in consumer spending, and improve the environment for consumer spending.

Second, we will improve the system of government public investment, optimize where and how government investment is used, enhance coordination and cooperation between budgetary investment on the one hand and developmental and policy-backed finance, bonds, funds, and insurance on the other, and use government investment to attract and guide nongovernmental investment.

Third, in order to raise the core competitiveness of our industries, we will attach greater importance to giving inclusive incentives, removing obstacles, and strengthening regulation; improve industrial distribution and strengthen guidance through plans; improve quality, standards, and brand-building; establish a sound mechanism for assessment and exit of production capacity; and improve our institutions and mechanisms to be conducive to the development of a modern industrial system. (Mo