Continuously deepen our understanding of the scientific concept of development,

Strive to create a new situation in scientific development﹡

（二OODecember 5th, sixth year)

Hu Jintao

Since the beginning of this year, focusing on the goals, tasks and requirements put forward by the Fifth Plenary Session of the 16th Central Committee of the Communist Party of China, and in response to the new situations and new changes in my country's economic and social development and the prominent contradictions in economic operations, we have continued to strengthen and improve macro-control, promote reform and opening up, further improve development conditions, further optimize the development environment, and further improve the development momentum. The national economy has shown a trend of faster growth, better economic benefits, and lower price levels, achieving a good start in the "Eleventh Five-Year Plan" period. First, the national economy maintains steady and rapid development. This year, the GDP will exceed 20 trillion yuan, an increase of 10.5% is expected; consumer prices will increase by about 1.3%, stabilizing at a low level; economic efficiency will continue to improve, and the profits of industrial enterprises above designated size are expected to increase by about 30% throughout the year, and the national fiscal revenue will reach 3900 billion yuan. Second, the construction of a new socialist countryside has been solidly advanced. Rural infrastructure and production and living conditions have been improved, and the agricultural structure has been further optimized. Despite frequent natural disasters and successive increases in production, grain harvests have been bumper, with output exceeding 980 billion jins; animal husbandry and aquaculture have developed steadily. The per capita net income of farmers has increased by more than 6% for three consecutive years. Third, the economic structure continues to improve. Infrastructure construction has been strengthened, and bottleneck constraints such as coal, electricity, and oil transportation have been significantly alleviated. The Qinghai-Tibet Railway was put into operation, and the Three Gorges Left Bank Power Station achieved full load power generation. The competitiveness of the manufacturing industry has been further improved, the momentum of blind investment in industries such as steel and cement has been curbed, and the service industry has developed rapidly. There have been positive changes in the coordinated development of regional economies. The work of improving independent innovation capabilities has achieved preliminary results. Fourth, new progress has been made in the reform of key areas and key links. The scope of comprehensive rural reform pilots has been expanded, the joint-stock reform of state-owned commercial banks has taken important steps, the civil servant salary system reform has been implemented smoothly, the administrative management system reform has continued to advance, land management and resource product price reforms have made positive progress, reforms in the fields of finance and taxation, investment, social security and other fields have gradually deepened, the share-trading reform of listed companies has achieved significant results, and the RMB exchange rate formation mechanism has gradually improved. Fifth, the level of opening up to the outside world continues to improve. We have conscientiously fulfilled our commitments on joining the WTO and effectively used the transition period to develop our foreign economy. Foreign w88 imports and exports are growing rapidly, with the annual total expected to exceed US$1.7 trillion. The quality and level of utilization of foreign capital have improved. It is expected that the actual utilization of foreign direct investment will reach about 60 billion US dollars throughout the year. The implementation of the "going out" strategy has achieved new results. Sixth, social undertakings have accelerated their development. The number of new urban jobs can exceed 10.5 million, which is well within reach of the target expected at the beginning of the year. The state's investment in science and technology, education, health, documentation, etc. has increased significantly, the social security system has continued to improve, a new mechanism to guarantee funding for rural compulsory education has been steadily implemented, the scope of the new rural cooperative medical pilot has been expanded, and the work of promoting social harmony has been significantly strengthened.

In general, through the joint efforts of the whole Party and the people of all ethnic groups, our country’s economic strength and comprehensive national strength have continued to increase, our international influence has continued to rise, and people’s lives have continued to improve. We have taken another solid step towards the goal of building a moderately prosperous society in an all-round way. These achievements show that all regions and departments have conscientiously implemented the Scientific Outlook on Development, with new improvements in understanding, new policy measures, and new progress in practice.

While fully affirming the achievements, we must be clearly aware of the outstanding contradictions and problems that exist in economic and social development. In particular, we must fully understand the major issues that affect the overall development of our country.

Currently, the prominent contradictions and problems faced by my country’s economic and social development include the following aspects. First, the agricultural foundation is still fragile and it is increasingly difficult to increase rural income. There is a lot of debt in agricultural infrastructure construction and the ability to resist disasters is not strong. The level of agricultural science and technology is not high, and cultivated land is still decreasing year by year. The downward pressure on grain prices is greater, the comparative benefits of grain growing have declined, and the income-increasing effect of state subsidies to grain farmers has weakened. Although the number of migrant farmers has increased, the increase in income is restricted by various factors. Establishing a long-term mechanism to promote the stable development of agriculture and continue to increase farmers' income is still a major issue that requires determination and great efforts to solve. Second, the risk of investment rebounding and causing economic fluctuations still exists. Since the third quarter, although the problems of excessive investment growth and excessive credit have been alleviated, the current total scale of investment is still too large, the problem of excess liquidity in the banking system is still prominent, various factors that caused excessive investment growth and excessive credit still exist, and the impulse for investment expansion in some regions is still strong. Although consumption growth has accelerated, the imbalance between investment and consumption continues to expand due to faster investment expansion. Third, the price paid for economic growth is still too high. The mode of economic growth is extensive, the problem of land occupation and abuse is more prominent, the efficiency of energy resource utilization is low, and environmental pollution is still quite serious. This year, the goals and tasks of energy conservation, consumption reduction and pollution emission reduction have been clearly stated. All regions and departments have indeed stepped up their efforts, but the goals and tasks for the whole year may still be difficult to achieve, and the contradiction between economic and social development and resources and the environment has become increasingly acute. Fourth, the imbalance of the international balance of payments remains prominent. Since the beginning of this year, the w88 surplus has continued to expand and may exceed US$150 billion for the whole year. Coupled with large capital inflows, the country's foreign exchange reserves have exceeded US$1 trillion. This has aggravated the contradictions of excessive foreign exchange holdings and excess liquidity, and increased w88 friction and pressure for RMB appreciation. Fifth, there are still many factors affecting social harmony and stability. Although mass incidents have declined since this year, issues related to the vital interests of the masses such as labor and employment, social security, income distribution, education fees, medical and health, food safety, judicial justice, production safety, and social security are still prominent. There are still many phenomena that infringe on the interests of the masses in enterprise restructuring, land acquisition, urban demolition, and environmental pollution. The task of maintaining social stability and promoting social harmony is quite arduous and urgent.

Summarizing the experience of recent years and combining it with the new situation faced by the current economic and social development, we have gained some new experiences in implementing the Scientific Outlook on Development.

First, we must deeply understand that good and rapid development is the essential requirement for fully implementing the Scientific Outlook on Development. Our country is facing a period of important strategic opportunities and is in a stage of rapid economic growth. Adhering to good and rapid development is an inevitable requirement for implementing the Scientific Outlook on Development and achieving the goal of building a moderately prosperous society in an all-round way. It is an effective way to mobilize the enthusiasm of all parties and unleash the potential of various production factors. It is the only way to seize development opportunities and achieve an overall jump in comprehensive national strength. Good and fast development is an organic and unified whole. It not only requires maintaining stable and rapid economic growth and preventing ups and downs, but also requires persisting in seeking speed while doing good things, focusing on optimizing the structure, and striving to improve quality and efficiency. Our country already has many conditions to support sound and rapid economic development. The key is to work hard to transform the growth model. At present, we must especially take substantial steps to enhance independent innovation capabilities, save energy, reduce consumption, and protect the ecological environment.

Second, we must insist on placing the issues of “agriculture, rural areas and farmers” in a prominent position in the overall economic and social development. Historical experience shows that agricultural development is related to the overall national economy. In recent years, my country's agricultural situation has been good. Grain production has increased steadily and farmers' incomes have continued to increase. This has provided important support for the overall stability of economic and social development and enabled us to take the initiative in planning the overall situation. In the process of promoting modernization, it is an objective law that the proportion of agriculture gradually declines, but the status and role of agriculture have not been reduced at all, but have become more important. We must always keep in mind that our country has a population of 1.3 billion, and ensuring food security must be based at home; the focus and difficulty of building a moderately prosperous society in an all-round way lies in rural areas; solving the "three rural" issues requires long-term and unremitting efforts. At the same time, we must also note that agriculture, rural areas, and farmers provide a broad market, a large amount of industrial raw materials, and a rich labor force for the development of the national economy. In the process of accelerating industrialization, urbanization, urbanization and internationalization in our country, we must always attach great importance to the issues of "agriculture, rural areas and farmers". We must stand at the height of the overall economic and social development, combine tapping the potential of agriculture with industry feeding back agriculture, combine expanding rural employment with guiding the orderly transfer of rural surplus labor, combine promoting the construction of a new socialist countryside with steadily advancing urbanization, accelerate the establishment and improvement of policy systems and institutional mechanisms that use industry to promote agriculture and cities to lead rural areas, and form a development pattern of benign interaction between urban and rural areas.

Third, total balance must be promoted in structural optimization. The most prominent aggregate contradictions in the current economic operation are excessive investment growth, excessive credit investment, and excessive w88 surplus. This is actually a reflection of the unreasonable economic structure. The contradictions in the economic structure are highlighted by the uncoordinated relationship between investment and consumption, excessive investment scale, and relatively insufficient consumer demand. In particular, the income levels of farmers and urban low-income earners are low and their spending power is not strong. At the same time, the industrial structure has the problem of a large proportion of industry, especially heavy industry, and a low proportion of service industry. Therefore, to solve the total contradiction, we must intensify structural adjustment, focus on adjusting the proportion of investment and consumption, continuously optimize the industrial structure, rationally adjust the national income distribution structure, and strive to build the total balance on the basis of structural optimization.

Fourth, promoting balance of international payments must be an important task in maintaining macroeconomic stability. Promoting economic growth, increasing employment, stabilizing prices and maintaining balance of international payments are the main goals of macroeconomic control. After years of practice, we have gradually gained a deeper understanding of achieving the first three goals. As my country's opening up to the outside world continues to expand, especially in the context of the in-depth development of economic globalization and the accelerating international industrial transfer, the impact of the international balance of payments on the stable development of the economy is increasing. There will always be a surplus or deficit in the balance of payments, but it should be kept within reasonable limits. In a period of foreign exchange shortage, earning foreign exchange from exports is an important goal we pursue, and it is also an effective way to promote balance of international payments. At present, the main contradiction affecting my country's international balance of payments has changed from the shortage of foreign exchange in the past to an excessive w88 surplus and excessive growth of foreign exchange reserves. This not only shows that my country's comprehensive national strength is gradually increasing and its international competitiveness is gradually improving, but it also brings about increased pressure for RMB appreciation, increased w88 frictions, and more domestic resources flowing abroad. We must regard promoting the balance of international payments as an important task of macro-control, insist on proceeding from national conditions, pay attention to learning from international experience, and take effective measures from multiple parties to gradually alleviate the contradictions in the imbalance of the international balance of payments.

Fifth, the incentive and restraint mechanisms of enterprises must be continuously strengthened. Under the conditions of the socialist market economy, the pursuit of legitimate economic interests by enterprises is the vitality and driving force of economic development. However, some enterprises may also overemphasize their own interests and ignore external influences and social responsibilities. What stands out at present is that many companies ignore their responsibilities of conserving energy resources, protecting the ecological environment, achieving safe production and ensuring labor security for their employees. The important reasons for this phenomenon are that the current price formation mechanism does not truly reflect the degree of resource scarcity and the environmental costs paid; the regulatory role of tax levers is insufficient; laws and regulations on resource property rights, resource consumption, pollution emissions, and safety production are imperfect; the integrity system is imperfect; government guidance is not in place; and external supervision is not implemented. Excessive consumption of energy resources and damage to the ecological environment not only directly affects current economic and social development, but also seriously restricts long-term sustainable development. This problem must be understood and dealt with from an overall perspective. It is necessary to continue to improve the corporate incentive mechanism, but also to focus on strengthening the external constraints of the company, guiding companies to establish modern business concepts and effectively assume social responsibilities.

Sixth, we must persist in promoting coordinated economic and social development. To achieve social harmony, we must adhere to economic construction as the center, vigorously develop social productivity, and create a solid material foundation for social harmony. However, economic development and an increase in the total amount of social wealth cannot automatically achieve social harmony. If we only focus on economic growth and ignore social development, it will not only aggravate the contradiction of unbalanced economic and social development, but ultimately make economic development unsustainable. To accelerate social development and promote social harmony, we must pay more attention to social fairness, properly handle the relationship between economic growth and income distribution, continuously improve social security, income distribution, public education and fiscal transfer payment systems, adhere to active employment policies, focus on providing better basic public services to low-income people in rural and urban areas, and strive to let the broad masses of the people share the fruits of reform and development. It is necessary to properly handle the relationship between meeting the needs of the people and the financial resources of the government. We must do our best to correctly exert the public service functions of governments at all levels, promote the allocation of public resources to be more tilted towards areas that directly benefit the people, and actively solve the vital interests of the people; we must also act within our capabilities to prevent expectations from being too high and deviating from actual possibilities.

The above experiences and understandings boil down to one point, which is to continuously deepen the understanding of the Scientific Outlook on Development, constantly enrich the connotation of the Scientific Outlook on Development, constantly improve the policy system for the implementation of the Scientific Outlook on Development, and strive to create a new situation for the Scientific Outlook on Development. (End)

﹡This is part of Comrade Hu Jintao’s speech at the Central Economic Work Conference