Ten Trends of China's Macro-Policies at Current Period

Ten Trends of China's Macro-Policies at Current Period

 

Macro-Policies Tendency Analysis Team of the Economic Forecast Department in the State Information Center

Person in charge of the subject: Fan Jianping

Written by Zhu Min and Hao Yanfei

 

Now China's economy is at the crucial stage. In the short-term, the economy is faced with quick downslide; in the long run, the economy faces the great pressure from the change of export-oriented economy to domestic demand-based economy as well as non-balanced development to sustainable development. In a bid to prevent the economy from continuously deterioration as well as create the favorable external environment for transformation of the economic development mode, recently, the government launched a number of macroeconomic control policies within such a short period. Now, we roughly sort out the macro-policies from ten aspects, so as to provide the readers with some short-winded descriptions.
 

From "steadiness" to "positiveness"

In 2009, the financial policy will be changed from the "steadiness" to the "positiveness", particularly, further enlarge the consumer demand and accelerate the reform. Also, various public finance measures shall be adopted to coordinate with the financial policy and other measures, so as to improve the economic structure and drive the economic growth.

Firstly, investment on the people's livelihood shall be increased. Low cost consuming of Chinese people is mainly caused by the housing, education and medical treatment. In a long time, the fiscal expenditure was put in the economic construction, while the public expenditure for the people's livelihood was relatively low. Moreover, due to the insufficient reform in such aspect as housing, education and medical treatment, Chinese people's expectation for consumption was poor, so, deposit is preferred rather than consumption. Therefore, the financial policy in the next year shall attach importance to solve the lost cost consuming of the residents. The investment shall be enhanced in housing, medical treatment and hygiene education to decrease the resident, particularly, low income group's expenditure in education, medical treatment and housing, so as to beef up the residents' consumption capacity and desire for consumption, namely, the economic growth could be driven in the short run. Also, the transformation of the economic structure could be boosted to realize the long-term growth.
 

Secondly, the fiscal expenditure shall be optimized to improve the economic structure. The financial input shall be enhanced to accelerate the self-innovation and structural adjustment as well as support the industrialization of the high technology, development of the service industry and improvement of industry & technique. The high energy-consuming and high pollution industries shall be strictly controlled and the energy-saving shall be enhanced, so that the key energy-saving project shall be backed. The preferential policy in finance and taxation shall be implemented to boost the self-innovation of the enterprise. Also, the development of high-grade technology industries and equipment shall be accelerated. The enterprises shall be encouraged to increase the investment in the scientific research. The compensated using system and compensation mechanism for the ecological environment shall be established for the mineral resources such as the coal. Meanwhile, the regenerative energy shall be developed. In addition, the preferential tax policy shall be adopted for supporting the small and medium-sized enterprises. The guarantee system shall be improved to help the small and medium-sized enterprises to conduct financing.
 

Thirdly, tax reduction shall be positively carried out to stimulate the enterprises' investment and residents' consumption. We should reduce the tax burden on the enterprises, particularly, the small and medium-sized enterprises, so as to enlarge the investment and stimulate the economic growth. Also, the tax refund could be further enhanced in such fields as textile, clothing, high technology and agricultural products processing. The export tax could be levied or improved for certain products. The export growth shall be strongly supported. At appropriate time, the tax reduction policy shall be available for the residents. For instance, the interest tax for the savings deposit shall be completely terminated. Meanwhile, the financial subsidy shall be increased for the low income group. Thus, the residents' purchasing power could be guaranteed in terms of the public finance.
 

Change from tightening to moderate loosing

The financial policy and monetary policy are the two important tools adopted by the state to control the macro-economy. As the macro-economy is confronted with the disadvantageous situations from outside and slowing down, the state made the resolution to implement the positive fiscal policy and moderately looser monetary policy. The moderately looser monetary policy shall be the appropriate monetary easing to lower the financing cost, so as to provide the enterprises with the loose and comfortable financing environment. Thus, the enterprises' production and operative activities could be promoted. For the specific implementation, we shall begin from the aspects as follows:

Firstly, the bank credit shall be appropriately increased. The growth of currency credit shall be properly kept. Also, the restriction on the line of commercial bank credit shall be cancelled. Expanding the line of credit appropriately to guarantee the mobility of the financial system, so that flexible support could be timely provided to the financial institution. Meanwhile, the support shall be given to the key projects, energy-saving, environmental protection, self-innovation, agriculture, rural areas and farmers, small and medium-sized enterprises, infrastructure and service industry. Thus, the point of growth for the unproductive credit could be cultivated and consolidated.
 

Secondly, the enterprise's finance channel shall be further widened. We shall accelerate the development of financing tools for the non-financial enterprise debt such as corporate bond, short term financing certificates and middle term note to widen the finance channel of the enterprises. Also, the institutional investor-based bond market among banks shall be further developed to offer the platform for the implementation of the positive fiscal policy and moderately looser monetary policy. In addition, the stable and healthy development of the stock market shall be promoted to increase the ratio of the direct financing.
 

Thirdly, the interest rate and the rate of reserve against deposit shall be continuously lowered. In order to prevent the economy from recession, the People's Bank of China shall further loosen the monetary policy. So, lowering of the interest rate and the rate of the reserve against deposit shall be the most powerful tools adopted by the People's Bank of China to carry out the monetary policy. The former could lower the financing cost of the enterprises, while the latter could provide the bank with more credit funds. Various tools shall be used by the People's Bank of China to further support the growth of economy, so that the demands for finance service from the tangible economy could be effectively met.
 

Finally, the diversified monetary policy shall be adopted. The transformation of economy shall be boosted. The moderately looser monetary policy shall not be applicable to all the industries and enterprises. The principle of "Different Treatments for Different Industries" shall be followed, so as to reflect the state's orientation of the industry policy and boost the optimization of the industrial structure and change of the economical growth mode, so that the economic structure could be changed to the anticipated direction. The monetary policy shall guide the fund flowing via such methods as diversified rates of reserve against deposit, interest rates, window guidance and credit policies. The guidance or direct intervention could be used to achieve the conditions which are more favorable than the market finance, so that the funds could be put in the strategic field, leading industry and mainstay industry. Also, the credit and loan for the industries and enterprises with High Energy-Consuming, High Pollution and Resource Dependence shall be strictly restricted.

Gross amount expansion and structural optimization shall be equally important

Currently, the central government launched the investment plan for a total amount of RMB 4 trillion. Also, total investment amount from the local governments also accounted for over RMB 18 trillion. So, the expansive investment policy shall be main key in the next year. Meanwhile, adjustment and optimization of the investment structure shall be particularly stressed. The investment policy shall be good for not only the economic growth, but also the structural adjustment. In addition, the investment policy shall be helpful to boost the economic growth at this moment and the future development thereof as well as the expansion of investment and consumption. The priority of investment shall be mainly focused on the fields as follows:
 

Firstly, the transportation facilities shall be taken into account. For the investment plan launched by the central government, the transportation facilities have been taken into the first account. We shall accelerate the major infrastructure development projects such as the railroad, road and airport. Also, the passenger traffic lines, coal transportation channels and main railroads in the western areas shall be constructed. The expressway network shall be improved. In addition, the construction of major airports and second-tier airports in the middle and western areas shall be arranged.
 

Secondly, construction of the rural infrastructure shall be accelerated and the rural consumption shall be launched. We shall enhance the construction of the projects for methane, drinking water, safety engineering, highway and Power Grid in the rural area. The major hydraulic engineering such as south-north water transfer and reinforcement of the damaged reservoirs shall be further carried out. Also, the reconstruction of water-saving facilities in the large-sized irrigated area shall be strengthened. In addition, the aid-the-poor program shall be beefed up.
 

Thirdly, investment on the social security and major projects for the people's livelihood shall be enhanced. For a long period of time, China's fixed investment attached the importance on the production rather than the people's livelihood, so as to directly cause the insufficient construction of facilities for the consumer service in the town and country. Thus, the government investment will be appropriately focused on the key projects for the people's livelihood in the town and country. For instance, we shall accelerate the construction of the housing project for low-income families and the support for the cheap rental housing as well as the reconstruction of the shanty towns. The nomad settlement project shall be implemented and the pilot reconstruction of the unsafe buildings in the countryside shall be increased. Also, we shall spare no efforts on the development of the city rail transportation. The tax revenue and finance-related preferential policies shall be used to guide the large-sized circulating enterprises to set up the circulating facilities in the rural areas for the convenience of the people.
 

Finally, the social fund shall be positively input to the fields encouraged by government such as the improvement of ecological environment. The supporting policies such as subsidy, discount, tax revenue and price could be used and the guidance of the government investment could be brought into full play, so as to guide the non-government capital to the fields which are subject to the industry policy of the state, self-innovation, industry upgrading, resources-saving, people's livelihood project and environmental protection. Induction of the government investment shall be effectively combined with the non-government investment. Also, we shall step up the town sewage control, construction of the garbage disposal facilities and water contamination control in the key river basins. In addition, protection of the major shelter-forest and natural forest shall be enhanced. Meanwhile, the major projects for energy-saving shall be supported.
 

Work along both lines in the growth of income and burden alleviating

As a big developing country with a large population and enormous domestic demand, China's economic growth shall pay more attention to the enlargement of the domestic demand, especially when the global economy is slowing down. The increase of the consumer demand shall be the key point for the expansion of the domestic demand because the investment demand eventually depends on the resident consumption. For enlargement of the consumption, we shall try to increase the income of the residents in the town and country, so that the residents will have the money for consumption. On the other hand, the consumer environment shall be dramatically improved to branch out the new consumption concerns, so that the residents will have the places for consumption.
 

Firstly, we shall try to increase the income of the residents in the town and country. The income distribution among the government, enterprises and workers shall be adjusted, so that the income distribution could be preferred to the workers appropriately. Thus, the actual consumption capability of the residents could be improved. For the village people, the lowest purchasing price for the foodstuff shall be lifted. Also, the standards shall be established to increase the subsidies for farming, improved varieties and agricultural implements. The social security level for the low income group in both the urban and rural areas shall be improved. The service coverage of "Home Appliances Services in the Countryside" shall be expanded. Meanwhile, the allowance for farmers' purchasing shall be increased. For the town dwellers, the basic pension level for the retirees and the living subsidy for the especially cared objectives shall be continuously improved. The central government made the resolution to adjust the basic pension level of the retirees for five consecutive years since the New Year's Day. The wage level of the public officers in the government and institutions shall be improved. The personal income tax exemption shall be further improved. Also, the measures for wage-related expense deduction shall be reformed. The expense deduction thereof shall be with due regard to the population supported by the tax payer as well as the health level, children' education and housing mortgage thereof. The dynamic adjustment of the currency allowance for the housing shall be established, so that the currency allowance standard for housing shall be appropriately adjusted according to such factors as the price change of the ordinary commercial housing in various regions. The currency allowance for the provinces and cities with a higher housing price could be increased as per the local circumstance. Also, the capital gains tax from the extra dividend of the listed companies could be exempted from taxation. In addition, the stabilization fund in the stock market could be established.
 

Secondly, we should further perfect the social security system, including the pension, medical treatment and housing. Due to the undeveloped social security system in the town and country, the residents have to bear the heavy burdens in education, medical treatment and housing. So, people always consider the uncertainties concerning the future income and consumption. Thus, the residents' savings ratio is always high in China, so as to greatly restrain the consumption currently. Therefore, we should enlarge the social insurance coverage and improve the private enterprises' participation in the social insurance as well as improve the social insurance for the freelances. Also, we shall solve the problems arising from the medical security of the retirees in the bankruptcy enterprises. The lowest living guarantee system for the village people shall be enhanced to increase the coverage thereof.
 

Thirdly, we shall remove the systems and policies which restrict the consumption and step up the construction of the credit system for both the enterprises and the individuals. Meanwhile, we shall standardize the fields concerning the vital interests of the people, safety consumption and services as well as fight against the commercial fraud and fake products. The producer's responsibility system shall be established and the consumer interest protection association shall be available. The governmental charges such as management expenses and construction fees shall be eliminated if violating related regulations. Particularly, we shall make an effort to relieve the residents' various taxation burdens from purchasing of houses and cars. The supervision on the monopoly enterprises shall be enhanced. In addition, the telecommunication charge standards and toll road charging standards shall be lowered. The road-related overdue charge shall be curbed. The product oil pricing system shall be reformed. Thus, the people could benefit from the restriction of the monopoly profits and the consumption capacity could be released.
 

Finally, we shall positively branch out the new consumption concerns. The rational consumption demand shall be properly guided, so that the consumer demand will be introduced into the consumption concerns encouraged by the state and the fields which could vitalize the market promote the economic growth and guide the improvement of the consumption's level and quality. Based on the unbalanced economic development in different regions and variation of the demand structure, we shall enrich the commodities and services at all levels, so as to meet the demands from different consumers. For example, the travel program for the citizens will be launched by the National Tourism Administration recently. Such program includes the incentive travel, welfare travel, studying travel and silver hair travel, etc.
 

Steady growth of export shall be promoted

The subprime mortgage crisis caused the recession of global economy and recession in demand from outside. So, it also brought negative effect on China's import and export gradually. Now China's export growth is slowing down. The uncertainty still exists for the external demand. Thus, China's export situation is not good enough. For stabilizing the economy, China still needs to take measures to keep the export growth, so as to avoid the recession trends thereof though the external demand is deficient.
 

Firstly, the policies and measures for the export rebate, foreign trade expansion funds and discount shall be adopted to support the export of the products and large mechanical equipment with self-owned brands and core technology as well as the labor intensive products in agriculture, light industry and textile. Also, the enterprises shall be supported to carry out the marketing, R&D and acquisition as well as accelerate the implementation of diversified strategy for the export market.
 

Secondly, we shall boost the structural optimization of the export products. We shall upgrade the export rebate policy and further improve the export rebate rate for certain labor intensive products, electromechanical products and other products with high added value. Also, we shall set up the dynamic adjustment mechanism for the admission list of the processing trade. The export of high energy-consuming, high pollution and resources dependent products shall be strictly controlled.
 

Thirdly, the enterprises shall be encouraged to make investment abroad. The eligible enterprises shall be encouraged to increase the investment abroad. The measures, policies and coordination mechanism shall be improved for the investment at overseas. For the encouraged overseas investment, Chinese government will give the support from various aspects such as foreign affairs, foreign exchange, tax revenue, Customs, credit and loan, insurance and multi-or two-way cooperation. The supervisory system for the overseas investment shall be improved. Major support shall be given to the resources-based overseas investment which is able to relieve the bottleneck of the economic development, the off-shore production-based facilities and infrastructure investment which is helpful to the structural optimization as well as export of domestic products, equipment, technology and labor. Meanwhile, special support shall be given to the overseas investment in the R&D center which could introduce the advanced technology, management experiences and professionals from abroad. The major enterprises in China are also encouraged to carry out the distribution, banking, electronic message, logistics and shipping, etc.
 

Finally, we shall adjust the policies concerning the import tariff, expansion of credit import and establishment of the import financing guarantee to positively enlarge the import of the advanced technology, equipment, key components, energy resources and raw materials, so as to increase the material reserves with the grand strategy.
 

We shall gradually enlarge the scope of the commodities and services with the market-set prices
 

The market-set prices are available for most commodities in China, while the government mainly conducts the effective price supervision, so as to guard against the price-related fraud and market malfunction. However, the valorization system is still adopted for certain commodities which are related to the national economy and the people's livelihood; e.g. certain resources-based products, common products and monopoly enterprises' products, etc. In addition, during the particular period, the government could take the provisional price control so as to stabilize the social economy. In the future, China's price reform shall be focused on the establishment of the price administration system which combines the market adjustment with the government control. The specific aspects are listed as below:

Firstly, the market-based resource allocation shall be brought into full play. The scope of commodities and services with the market-set prices shall be gradually enlarged. We shall unshakably adhere to the price reform in the market and reduce the government's direct intervention for the economic activities. More freedom shall be given to the prices for the commodities and services of which the effective competition is available. Thus, the price signals could play an active role in the guidance of the resource flow and adjustment of the benefit. Meanwhile, the supervision on the price shall be substantially enhanced. The markup and charging via speculation shall be restricted, so as to protect the price-related legal interests of the masses.
 

Secondly, supervision shall be enhanced for the price of the monopolization industry. The cost constraint shall be intensified. We shall strictly control the high welfare, high production cost and high price of the monopolization industry and restrict the monopolized prices from the state-owned monopoly enterprises in such industries as petroleum, telecommunication, transportation, medical treatment and education, so as to protect the consumer behavior. The monopoly profit could be restricted to release the consumption capacity which was pinched off previously.
 

Thirdly, for the resources-related products, we shall carry out the reformation of the pricing mechanism on the basis of the social acceptance, so that the resources-related pricing mechanism could be established to reflect the relation of market supply and demand, quantity of resources and environmental protection cost. The resources are the base and lifeline of the national economy, while the price change will involve in the entire economy and social stability. The significance, complexity and sensitivity thereof determine that the resources-related price reform must control the rhythm and push forward carefully. The differential prices system shall be established through the public utility and public interests-based service industry. For the low income group, the favorable price and allowance shall be properly given to relieve the living burdens thereof.
 

Finally, the farming-related price and charge shall be further sorted out. According to the central government's requirements for development in the town and country, regurgitation-feeding to agriculture via industry and city's support to the rural areas, we shall cancel or eliminate the policies for farming-related price and charge if such policies are disadvantageous to the agricultural production, farmer's life and rural development. Also, the over high price or charging standards shall be lowered. The operation-based service must follow the principle of willingness. Do not offer the charged service forcibly, or the service is unavailable, but charged. Also, we shall sort out and standardize the charge items for the construction of the rural infrastructure. The relevant departments and organizations are forbidden to increase the farmer's burdens in terms of the new rural construction.
 

Increasing the farmers' income, so as to activate the domestic demand from the rural areas
 

For increase of the domestic demand in China, the rural area shall have the largest potential. In a long time, The "Binary Structure" enlarged the income differential between the urban area and rural area. In 2007, China's proportion of residents' income between the urban area and rural area was increased to 3.33:1; the absolute gap thereof reached RMB 9646. So, the farmer's income is far lower than that of the urban resident. In this case, the consumer demand is hard to be met. China's domestic demand could not be really and continuously increased until the consumer demands from 700 million farmers are activated. Therefore, we shall be focused on the increase of the demands from the rural areas, so as to enlarge the domestic demand. The farmer-based policies shall be launched to promote the increase of the farmers' income.
 

Firstly, investment shall be continuously increased for the "agriculture, rural areas and farmers". The finance and taxation policies shall be consolidated and enhanced to promote the development of the modern agriculture and push on the comprehensive reformation in the rural area, so as to completely advance the farming community. The construction of the rural infrastructure shall be accelerated and the rural consumption shall be launched. Also, we shall enhance the construction of the projects for methane, drinking water, safety engineering, highway and Power Grid in the rural area. The major hydraulic engineering such as south-north water transfer and reinforcement of the damaged reservoirs shall be further carried out. The project for the people's livelihood and rural infrastructure shall be accelerated. In the long run, the centralized public service system shall be established for both the urban and rural areas. Meanwhile, the lowest living guarantee system shall be established to meet the demands from the residents in both urban and rural areas, so as to obviously improve the anticipation on the social consumption.

Secondly, the subsidies via public finance shall be increased. As considering the continuously decline of the farmer's income and reduction of foodstuff output in this year, the state shall choose the pudding time to improve the purchasing price for the foodstuff. On the basis of the existing policies, and reference to the price indices from the agricultural production data, the comprehensive interacting system with the agricultural "Price -Direct Subsidy" shall be established to guarantee the farmers' incomes. Thus, both the planting enthusiasm and reasonable profit of the agricultural producers could be guaranteed; also, stable growth of income is ensured for the farmers, so as to form the far-reaching and positive influence on the enlargement of the domestic demand.
 

Establishing the business to boost the employment

Since the third quarter, the enterprise's employment demand has been obviously decreased. More and more emigrant workers are returning to their hometown. It is anticipated that in 2009, the rate of unemployment will be continuously increased. So, the employment situation is serious. The problem of employment is always the non-negligible issue in China's economic development. If the employment situation is further deteriorated, it will affect not only the economic development, but also the social stability. Establishing the business is the most active way of employment. It helps the labors to be employed themselves. Also, the employment is driven, so as to produce the multiplier effect.
 

Firstly, we shall establish the business to promote the employment. The workers shall be encouraged to establish the business via various favorable polices in the taxation, petty loan, social insurance subsidy, operating site and business administration. Also, the limits to the business establishing shall be reduced and the relevant cost and risk shall be lowered. Meanwhile, the preferential policy shall be worked out for the entrepreneurs in the urban and rural areas to enlarge the scope of business establishing. The credit and loan shall be further increased; the petty loan and discount shall be available for the self-employment (except the fields restricted by the state), so that the supporting system could be established via the encouragement of government, social support, self-employment and continuously innovation.
 

Secondly, the vocational training system for the workers in the urban and rural areas shall be further improved. For establishing the business to drive the employment, the skill training shall be strengthened. This shall be the important method adopted by the workers to master the business establishing skills and improve the success rate thereof. We shall set up the training system which is guided by the government and participated by all walks of life, so that the training could be closely combined with the employment. The social service resources shall be further integrated and the long-term effective working mechanism shall be established, so that the start-up service could be extended to the villages and towns. The training for business establishment shall be deemed as the important part of the professional education training. So, it shall be faced to all the laborers. As improving the workers' abilities to establish the business, the concept of employment shall be available in the entire training for business establishment, so that the employment could be achieved through various methods.
 

Finally, the business incubator and practical training base shall be further integrated to improve the quality of training for business establishment. The social capital shall be attracted from various aspects, so as to offer the incubation period and policy support to the entrepreneurs who lack the experience and funds. In this case, the success rate of their business could be improved. Also, the risks thereof could be lowered. The effective working mode shall be continuously explored to bring the business incubator and practical training base into full play. In addition, support and service shall be given to the entrepreneurs in terms of funds, protection of intellectual property rights, government procurement and policy & law, etc.
 

Promoting the regional development soundly

Though recently, the economic development was fast in the middle and west areas, such areas are still easy to be affected by the financial crisis and social contradictions as compared with the developed area in the east. Therefore, the government shall bring the macro-economic control policy and regional policy into full play in the course of coordinated development among the regions. The comparative advantage shall be given the reins for the regional development as making the policies for the macro-economic control and regions, so as to reflect the regional difference.
 

Firstly, the guidance and policy support shall be given to the key regions. The regional policy, regional planning and regional legislation shall be comprehensively used to boost the overall strategy of the regional development. Also, the economy with the regional characteristics shall be developed. On the basis of the market mechanism, we shall attach the importance on the supporting and control of the industrial integration in the region, so as to cultivate the motility to drive the growth of the regional economy. Particularly, we shall make the plans to boost the growth of middle part of China. The relevant policies and measures shall be made to promote the development of the urban agglomeration in the middle area as well as the industry transfer thereof.
 

Secondly, we shall continuously arrange the formulation and implementation of the regional planning and push forward the formation of the appropriate the space development structure. Research and formulation of the regional policy shall be strengthened to encourage the regional development structure with characteristics. The policy advice shall be brought up to set up the development zones and demonstration plot for industry transfer through the cooperation among the different regions, so that the industry transfer among the regions could be smoothly carried out. When continuously considering the old industrial zones and employment & economical restructuring in the backward regions, the improvement and protection of the regional ecological environment shall be valued, so as to guarantee the harmonious development among the economy, society and environment in the region.
 

The policies and systems shall be eliminated if they are unfavorable to the expansion of the domestic demand

China's economic reform shall be based on the "Enlargement of Domestic Demand" and "Increase of Income, Reduction of the Burdens and Structural Adjustment", so as to eliminate the policies which are unfavorable to the expansion of the domestic demand in such fields as investment, consumption, foreign trade and people's livelihood. Also, the self-innovation and energy-saving shall be strongly supported, so that the smooth and quick growth of the economy and optimization of the economic structure could be guaranteed in terms of the system. The reform shall make breakthrough in the key links and fields.
 

Firstly, Since the New Year's Day of 2009, the reform of the value added tax shall be implemented in all the regions and industries, so as to lower the tax burden from the enterprises' investment on the equipment. The enterprises shall be encouraged to conduct the technical reconstruction to boost the reorganization of the industry and change of the economic growth mode. As calculated, the reformation hereof in the next year will reduce the taxation for the enterprises by around RMB 123.3 billion.
 

Secondly, we shall accelerate the reformation of the system for the medical treatment, hygiene and cultural education. The reform of the medicine & hygiene system shall be push forward and the pilot reformation shall be well organized. Also, the medical health service system for the grass roots shall be strengthened. In addition, various relevant policies shall be launched. We shall step up the reconstruction of the school buildings for the junior middle schools in the middle and west area. Meanwhile, the construction of the schools for special education and comprehensive culture centers in the villages and towns shall be boosted.
 

Thirdly, the reform of government’s administrative management system shall be boosted to improve the work efficiency. The objective, phrasal missions and implementation steps thereof shall be further deepened to accelerate the change of the governmental functions, so that the administration according to law could be completely carried out. The responsibilities for the governmental departments shall be appropriately divided. Also, the coordination among the departments shall be enforced to improve the work efficiency. In addition, the administrative responsibility system shall be enhanced to aggressively promote the pilot reformation in the institutions.
 

Fourthly, we shall push forward the structural reorganization in the finance, taxation and investment. The administrative authority and financial power of the government at each level shall be adjusted and standardized. Meanwhile, the transfer payment system for the government finance at state & provincial level shall be improved and the financial funds-related performance evaluation system shall be gradually perfected. Meanwhile, we shall pay close attention to the establishment of the administrative directions for the government investment and the decision-making responsibility system for the government investment shall be launched. The finance and taxation-related preferential policy shall be implemented to stimulate the self-innovation of the enterprises. In addition, the tax preference policy shall be fulfilled to back the development of the small and medium-sized enterprises
 

Fifthly, the reform of monetary system shall be deepened. We shall accelerate the reform of the management system for the state-owned insurance companies and the insurance fund application. The multi-level capital markets shall be established and the venture capital fund-related policies and management systems shall be perfected. The market-oriented withdrawal mechanism shall be gradually established for the financial firms. Also, we shall coordinate the development of various money markets such as the bank, negotiable securities and insurance. The deposit insurance system shall be established and the construction of guarantee system shall be improved. Meanwhile, the small and medium-sized enterprises shall be assisted to conduct financing and the scientific technical progress and technology innovation thereof shall be promoted.
 

Finally, we shall step up the establishment of the government capital operation budgeting system. The profits from the government capital shall be equitably distributed. Meanwhile, we shall improve the administrative structure for the legal person in the state-owned enterprise, investment risk control system and internal supervisory management system. The reform of the stated-owned & exclusively owned industries and the monopolize industries shall be enhanced. The proportion of profits sharing in the state-owned enterprise shall be greatly improved. Also, the cash dividends of the state-owned enterprise must be brought into the fiscal budget or special fund of the public finance, so that the cash dividends could be used to enrich the social security funds.