Top 10 Focus Areas for Chinese Government in this Year

You may remember that in our earlier article: Chinese Government Key Targets and Work Plan for 2011, we introduced that Chinese premier Wen Jiabao has pointed out his "2011 Top 10 Focus Areas" following the Government Work Plan in his Government Work Report which was released on 5 March 2011. These 2011 Top 10 Focus Areas are now summarized as follow:

(1) Keep Overall Prices Level Basically Stable: Details were already outlined in our previous article: 5 Key Methods to Curb China Inflation.

(2) Expand Domestic Consumption: Increase subsidies to low-income residents in urban areas and farmers in rural areas. Continue to implement the policies of providing subsidies for rural residents to purchase home appliances and also subsidies for trading-in old home appliances for new ones. Encourage consumption in the areas of culture, travel and old-age people care. Develop modern services like e-commerce, online shopping and Geographic Information System (GIS). Strive to crack down on manufacture or sale of counterfeit or substandard products, and violations of intellectual property rights. Implement the China State Council's 36 new guidelines for encouraging and guiding non-governmental investment to enter areas like infrastructure, municipal public utilities, social programs and also financial services. Guide non-governmental capitals to take part in SOE (State-owned Enterprise) reform. Avoid haphazard investment and redundant construction, in order to improve investment quality and efficiency. Enforce investment project approval standards on land use, energy conservation, safety and environmental protection.

(3) Strengthen Agriculture Industry: Keep total areas planted in grain crops basically stable. Support the most favorable areas to grow cotton, oilseed and sugar crops. Aggressively develop the animal husbandry, fishery, and forestry sectors. Continue to implement the policy of minimum grain purchase prices. Raise the minimum purchase price for wheat by ¥5 to ¥7 per 50 kg and raise the minimum purchase price for rice by ¥9 to ¥23 per 50 kg this year. Focus on developing more water conservancy and irrigation projects, and harnessing small-and-medium-sized rivers. Improve the existing irrigation and drainage facilities, e.g.: develop water-saving irrigation, reinforce river embankments, clear away silt in waterways, reinforce small reservoirs and dangerous or faulty sluices, eliminate hidden dangers in reservoirs, and also increase reservoir storage capacity to avoid flooding. Increase China grain production capacity by 50 million tons. Allocation for "Three Rural" (agriculture, rural areas, and farmers) from the central government budget this year will be RMB 988.45 billion, an increase of RMB 130.48 billion over last year. Lift transfer payments from central government to the major agricultural counties that supply other counties with grain, oilseed and pigs. Encourage financial institutions to increase their credit for "Three rural" and make sure the percentage increase in their credit this year is no less than that of last year. Set up an agricultural re-insurance system and also a mechanism for diffusing the risk of massive catastrophes.

(4) Accelerate Strategic Economic Restructuring: Promote balanced development between different regions in China. Stick to the path of urbanization with Chinese characteristics. Implement the 2011-2020 Rural Poverty Alleviation Program. Implement policies for the new 10-year period of large-scale development of the western region, including Tibet and Xinjiang. Shenzhen and other special economic zones, Pudong New Area in Shanghai and Binhai New Area in Tianjin should better play a leading role in economic reform and opening up. Protect legitimate rights concerning the land that farmers contracted to work and the land where their homes sit. Promote energy conservation, environmental protection and also ecological development. Develop the circular economy and run the pilot program to build low-carbon cities. Set up well-equipped statistical and monitoring systems for energy conservation, greenhouse gas emissions, and emissions reduction.

Transform industries by pushing in 4 directions as below: (i) Transform and upgrade the manufacturing sector. Upgrade quality, technological content and value-added of products. Encourage enterprises in key industries to perform trans-regional acquisitions and reorganizations. Perfect the exit mechanism for outdated production capacity. (ii) Foster development of strategic emerging industries. Develop the next-generation IT (Information Technology) industry. Accelerate the "Three Networks" integration of the telecommunications network, the radio and TV (television) broadcasting network, and the Internet. Promote the application of "Internet of Things" (IoT), or also called "Internet of Objects" (IoO). Develop the strategic emerging industries like energy conservation, environmental protection, high-end equipment manufacturing, biotechnology, new energy, new materials and new energy vehicles. (iii) Upgrade the software industry, and develop service industries for both producers and customers. (iv) Strengthen the integrated transportation system and also the modern energy industry. Promote the clean use of traditional energy sources, reinforce the construction of smart power grids, and aggressively develop the clean energy.

(5) Implement Strategy of Re-invigorating China through Science and Education: Improve education with a target that government spending on education should reach 4% of GDP by 2012. Expedite the development of preschool education and vocational education. Lead secondary schools and universities to help their students to become better able to find jobs or start their own businesses. Foster a large number of innovative scientists, engineers and skilled workers who are in shortage or urgently needed. Make breakthroughs in a number of key technologies, and increase capabilities for integrated innovation projects. Encourage enterprises to undertake jointly funded Research and Development (R&D) on key technologies. Encourage universities, research institutes, scientists and also engineers to closely cooperate with enterprises.

(6) Enhance Social Development: Invest RMB 42.3 billion to assist and promote employment in this year. Take full advantage of the workforce structure in China to develop labor-intensive industries, service industries, small and micro-businesses, and innovative high-tech enterprises. Continue to execute population and family planning, and to keep the birthrate low.

Insistently curb excessive rise of property prices. Total number of units for new low-income housing and renovation housing will reach 10 million, and number of units for renovating dilapidated housing in rural areas will reach 1.5 million in this year. Central government will allocate RMB 103 billion in this year's budget for subsidies to support developing public rental housing, an increase of RMB 26.5 billion over last year. For more about property market cooling measures, please read: How New National Eight can Cool China Property Market for details.

Re-adjust people's income distribution by pushing in 3 directions as below: (i) Increase basic incomes of low-income people in both rural and urban areas. Steadily raise the minimum wage of workers, basic pensions of enterprise retirees, as well as subsistence allowances for both rural and urban residents. (ii) Truly reduce the tax burden on low-and-middle income people by lifting up the individual income tax threshold on salaries and also adjusting the tax rate structure reasonably. Reinforce controls on total wages and wage scales in industries with excessively high incomes, and standardize the management of executive wages and bonuses in SOEs (State-owned Enterprises) and financial institutions. (iii) Overhaul the existing income distribution. Set up a system to monitor income distribution and insistently prohibit illicit incomes. Reverse the trend of a widening income gap so that people can all share the fruits of reform and development. Speed up the social security system improvement which covers both rural and urban residents. Extend the pilot program with a new kind of insurance for old-age rural residents to cover 40% of counties. Develop charity business, and promote reform of the old-age people insurance system for government agencies and institutions.

Implement reform of the healthcare and pharmaceutical systems by pushing in 5 directions as below: (i) Fully implement a national system to guarantee supplies and cut prices of basic medicines. (ii) Properly execute pilot programs for reforming public hospitals. (iii) Increase the basic medical protection level. Government subsidies for the new rural cooperative medical care system and also the medical insurance for jobless urban residents will be increased to ¥200 per person in this year. (iv) Establish village health service network in rural areas and also community-based health service agencies in cities. Raise government expenditures on basic public health services to an average level of ¥25 per person this year. Develop ethnic minority medicine and also traditional Chinese medicine. (v)Encourage non-governmental capitals to invest in medical institutions.

(7) Reinforce Cultural Development: Enhance the development of civic morality. Accelerate the establishment of behavioral and moral norms that carry forward traditional Chinese virtues. Promote the development of a credibility system with relevant laws, regulations and systems. Develop radio and television, press and publishing, film, literature, art and archives. Strengthen the use and administration of the Internet. Develop cultural industries to become one of the pillars of Chinese economy.

(8) Deepen Reforms in Key Topics: Improve the taxation and fiscal systems so that the financial resources of local governments should align with their respective responsibilities. Perform a pilot program to institute VAT (Value Added Tax) reform on some production services, and also push forward the resource tax reform. Compile budgets for social security funds on a trial basis. Carry forward market-based reform of interest rates. Expand the use of the RMB (renminbi) in cross-border trade and investment. Push forward in making RMB convertible under capital accounts. Perfect the mechanism for setting prices on refined petroleum products and natural gas, and also the pricing mechanisms for different types of electricity. Push forward the reform of water resource prices. Study and establish guidelines of a pilot program for trading and compensation usage of pollution emission rights.

(9) Upgrade Opening-up Level: Push forward the Doha round of trade talks, and oppose protectionism in any form. Take most of China's advantages in labor resources, reduce the consumption of energy and natural resources, extend to higher end of industrial chain, promote Chinese own-brand products, and also improve quality, value-added and grade in all export trades. Constantly increase the proportion of services in overall trades with foreign countries. Insist equal importance to exports and imports. Increase imports from the least developed countries and also from countries that China has large trade surplus, so as to gradually improve trade imbalances and settle trade frictions properly. Speed up to implement the "go global" strategy, and provide assistance for qualified individuals and enterprises to invest overseas. Encourage multinational companies to establish R&D (Research and Development) centre in China. Encourage more foreign investments in new and high technologies, environmental protection and energy conservation, modern service sectors, and also the central and western regions.

(10) Build Clean Government and Combat Corruption: Strengthen anti-corruption efforts in 2011. Strictly control government expenses to oppose formalism, extravagance and waste.

The above "2011 Top 10 Focus Areas" is the final part (Part III) of the Government Work Report. In coming article(s), we will further formulate an investment guide for the 12th 5-Year Plan so that you can take full advantage of this plan to optimize your own investment portfolio.


Related article(s):
China's 12th 5-Year Plan: Government Work Report Part I
Chinese Government Key Targets and Work Plan for 2011: Government Work Report Part II