Full Text of Hu's Report at 18th Party Congress

IV. Accelerating the Improvement of the Socialist Market Economy and the Change of the Growth Model

Taking economic development as the central task is vital to national renewal, and development still holds the key to addressing all the problems we have in China. Only by promoting sustained and sound economic development can we lay a solid material foundation for enhancing the country's prosperity and strength, improving the people's wellbeing and ensuring social harmony and stability. We must unwaveringly adhere to the strategic thinking that only development counts.

In contemporary China, pursuing development in a scientific way best embodies the thinking that only development counts. Taking the pursuit of development in a scientific way as the underlying guideline and accelerating the change of the growth model as a major task is a strategic choice we have made for promoting China's overall development. In response to changes in both domestic and international economic developments, we should speed up the creation of a new growth model and ensure that development is based on improved quality and performance. We should fire all types of market participants with new vigor for development, increase motivation for pursuing innovation-driven development, establish a new system for developing modern industries, and create new favorable conditions for developing the open economy. This will make economic development driven more by domestic demand, especially consumer demand, by a modern service industry and strategic emerging industries, by scientific and technological progress, by a workforce of higher quality and innovation in management, by resource conservation and a circular economy, and by coordinated and mutually reinforcing urban-rural development and development between regions. Taking these steps will enable us to sustain long-term development.

We should keep to the Chinese-style path of carrying out industrialization in a new way and advancing IT application, urbanization and agricultural modernization. We should promote integration of IT application and industrialization, interaction between industrialization and urbanization, and coordination between urbanization and agricultural modernization, thus promoting harmonized development of industrialization, IT application, urbanization and agricultural modernization.

1. Deepen economic structural reform across the board

Deepening reform is crucial for accelerating the change of the growth model. The underlying issue we face in economic structural reform is how to strike a balance between the role of the government and that of the market, and we should follow more closely the rules of the market and better play the role of the government. We should unwaveringly consolidate and develop the public sector of the economy; allow public ownership to take diverse forms; deepen reform of state-owned enterprises; improve the mechanisms for managing all types of state assets; and invest more of state capital in major industries and key fields that comprise the lifeline of the economy and are vital to national security. We should thus steadily enhance the vitality of the state-owned sector of the economy and its capacity to leverage and influence the economy. At the same time, we must unswervingly encourage, support and guide the development of the non-public sector, and ensure that economic entities under all forms of ownership have equal access to factors of production in accordance with the law, compete on a level playing field and are protected by the law as equals. We should improve the modern market system and strengthen institutional procedures for setting macro-regulation targets and employing policy tools. We should accelerate the reform of the fiscal and taxation systems and ensure that the central and local governments have sufficient financial resources to exercise their respective powers and fulfill their respective responsibilities. We should improve the public finance system to ensure equal access to basic public services and promote the building of functional zones. We should also institute local tax systems and improve the structure of the taxation system to promote social fairness. We should establish a mechanism for equitable sharing of proceeds from public resource transfers. We should deepen reform of the financial system and improve the modern financial system so that it will better contribute to macroeconomic stability and support development of the real economy. We should accelerate development of a multilevel capital market, take steady steps to make interest rates and the RMB exchange rate more market-based, and promote the RMB's convertibility under capital accounts in due course. We should speed up the development of private financial institutions. We should improve financial supervision and oversight, promote financial innovations, improve the competitiveness of banking, securities, insurance and other sectors, and ensure financial stability.

2. Implement the strategy of innovation-driven development

Scientific and technological innovation provides strategic support for raising the productive forces and boosting the overall national strength, and we must give it top priority in overall national development. We should follow a path of making innovation with Chinese features and take steps to promote innovation to catch up with global advances. We should increase our capacity for making original innovation and integrated innovation and for making further innovation on the basis of absorbing advances in overseas science and technology, and place greater emphasis on making innovation through collaboration. We should deepen reform of the system for managing science and technology, promote close integration of science and technology with economic development, and speed up the development of the national innovation system. We should establish a system of technological innovation in which enterprises play the leading role, the market points the way, and enterprises, universities and research institutes work together. We should improve the knowledge-based innovation system, and strengthen basic research, research in frontier technologies, and public benefit-oriented research and development; and we should improve research and our capacity for applying research results to production to ensure that we can obtain the leading strategic position in research and development. We should launch important national science and technology projects to remove major technological bottlenecks. We should speed up the research, development and application of new technologies, products and production processes, strengthen innovation in integration of technologies and develop new business models. We should improve standards for evaluating scientific and technological innovations and mechanisms for rewarding such innovations and applying them to production. We should implement the strategy concerning intellectual property rights and strengthen their protection. We should efficiently allocate and fully integrate innovation resources, and ensure that the wisdom and strength of the whole society are directed toward promoting innovation-driven development.

3. Carry out strategic adjustment of the economic structure

This is the major goal of accelerating the change of the growth model. We must strive to remove major structural barriers to sustained and sound economic development, with a focus on improving the demand mix and the industrial structure, promoting balanced development between regions and advancing urbanization. We should firmly maintain the strategic focus of boosting domestic demand, speed up the establishment of a long-term mechanism for increasing consumer demand, unleash the potential of individual consumption, increase investment at a proper pace, and expand the domestic market. We should focus on developing the real economy as a firm foundation of the economy. We should adopt policies and measures to better facilitate the development of the real economy. We should make the economy more demand-driven, promote the sound growth of strategic emerging industries and advanced manufacturing industries, speed up the transformation and upgrading of traditional industries, develop and expand the service sector, especially modern service industries, and make the geographical and structural layout of the development of infrastructure and basic industries more balanced. We should develop next-generation information infrastructure and modern IT industry, better ensure information security, and promote the application of information network technologies. We should enhance the core competitiveness of large and medium-sized enterprises and support development of small and micro businesses, especially small and micro science and technology companies. We should continue to implement the master strategy for regional development and fully leverage the comparative advantages of different regions. We should give high priority to large-scale development of the western region, fully revitalize old industrial bases in northeast China, work vigorously to promote the rise of the central region, and support the eastern region in taking the lead in development. We should increase support for old revolutionary base areas, ethnic minority areas, border areas and poor areas through pairing assistance and other means. We should make scientific plans for the scale and layout of urban agglomerations; and we should make small and medium-sized cities and small towns better able to develop industries, provide public services, create jobs, and attract population. We should accelerate reform of the household registration system, conduct registration of rural migrant workers as permanent urban residents in an orderly way, and endeavor to ensure that all permanent urban residents have access to basic urban public services.

4. Integrate urban and rural development

Resolving issues relating to agriculture, rural areas and farmers is the number one priority in the Party's work, and integrating urban and rural development provides the fundamental solution to these issues. We should better balance urban and rural development, boost rural development, work to narrow the gap between urban and rural areas, and promote their common prosperity. We should continue to encourage industry to support agriculture in return for agriculture's earlier contribution to its development and encourage cities to support rural areas. We should give more to farmers, take less from them and lift restrictions over their economic activities. We should increase policy support to boost agriculture, benefit farmers and increase rural prosperity, and encourage the rural population to participate in modernization on an equal footing and share in its fruits. We should speed up the development of modern agriculture, raise the overall production capacity of agriculture, and ensure food security and effective supply of major agricultural products in China. We should give high priority to rural areas in developing infrastructure and social programs in the country. We should work harder to build new rural areas, carry out programs of poverty alleviation through development and fully improve rural working and living conditions. We should ensure sustained and fast growth of rural income. We should uphold and improve the basic system for rural operations and protect in accordance with the law farmers' rights to farm the land they have contracted, to use the land on which their houses sit, and to share in the proceeds from rural collective operations. We should strengthen the collective economy, develop specialized cooperatives and joint stock partnerships for farmers, foster new types of agricultural business entities, and develop large-scale agricultural operations in diverse forms. We should establish a new type of system for intensive agricultural operations that are specialized, well organized and commercialized. We should reform the land expropriation system and increase the share of gain in land value to farmers. We should speed up improvements to institutions and mechanisms for promoting integrated urban and rural development, with a focus on integrating urban and rural planning, infrastructure and public services. We should ensure equal exchange of factors of production between urban and rural areas and balance allocation of public resources between them. What we aim to achieve is a new type of relations between industry and agriculture and between urban and rural areas in which industry promotes agriculture, urban areas support rural development, agriculture and industry benefit each other, and there is integrated urban and rural development.

5. Promote all-around improvements to China's open economy

In response to new developments in economic globalization, we must implement a more proactive opening up strategy and improve the open economy so that it promotes mutual benefit and is diversified, balanced, secure and efficient. We should move faster to change the way the external-oriented economy grows, and make China's open economy become better structured, expand in scope and yield greater returns. We should make innovations in the mode of opening up; encourage coastal, inland and border areas to draw on each other's strengths in opening up; develop open areas that take the lead in global economic cooperation and competition; and form leading areas of opening up that drive regional development. We should continue to attach equal importance to export and import, better coordinate trade and industrial policies, and make China's exports more competitive in terms of technology, brand, quality and service. We should transform and upgrade processing trade, develop service trade, and promote balanced development of foreign trade. We should make full use of our overall advantageous position in utilizing foreign capital and make better use of such investment. We should step up efforts to attract investment, technology and high-caliber professionals from overseas. Chinese companies should expand overseas presence at a faster pace, enhance their operation in an international environment, and develop a number of world-class multinational corporations. We should make overall planning for bilateral, multilateral, regional and sub-regional opening up and cooperation, accelerate implementation of the strategy of building free trade areas, and promote infrastructure connectivity with our neighboring countries. We should become better able to defuse international economic risks.

We must have firm confidence in winning the tough battle of deepening reform of the economic structure across the board and of accelerating the change of the growth model so as to increase the vitality and competitiveness of China's economy.