Since the beginning of this year, notable result has been achieved in macro-control, the national economy as a whole has maintained a good momentum of development, an important reason for this is that in macro-economic control, the Party Central Committee and State Council have persisted in tackling the problem into both the root cause and symptoms, deepening reform and paying attention to solving institutional obstacles that restrict sound economic development and to boosting economic structural adjustment and expediting change in economic growth method by system innovation.

The Party Central Committee and the State Council pay high attention to reform. Last year, the Third Plenum of the 16th Party Central Committee made the "Decision, --"Decision on Some Issues Concerning Perfection of the Socialist Market Economic System", the third one of its kind for comprehensively planning reform since the launch of the reform and opening up project, the Decision set forth targets, principles and tasks for perfecting the socialist market economic system. This year, the State Development and Reform Commission, with approval from the State Council, published the "Opinions on Pushing Forward 2004 Economic Structural Reform", further clearly defining targets and main tasks for this year's reform. A series of major progresses have been gained in China's economic restructuring over the past half year, and flashpoints have burst forth in many aspects.

The government management system reform has been put in an important position, government functions have been further changed, and administration exercised according to law has been pressed forward in an all-round way. Local governments at all levels are trying to change their development concepts, reduce direct intervention in micro-economic activities and further transform government economic management functions onto chiefly serving the market as the mainstay and creating a good environment for development. Centered around implementation of the Law on Administrative Licenses, the State Council and departments and regions concerned are comprehensively deepening the reform of the administrative examination and approval system, including the abolition and adjustment of 495 administrative examination and approval items in the third group of the State Council, thus bringing about marked changes in the situation of excessive and indiscriminate examination and approval.

Important progress has been made in rural fee-to-tax reform. A market-oriented pattern of food circulation system has been set up in the main, and a mechanism for expediting increase in the incomes of and reduction of burden on farmers has been further established. Early this year, the Party Central Committee and the State Council published the "Central No. 1 Document", the sixth of its kind on the question relating to farmers, rural areas and agriculture since the introduction of the reform and opening up program and issued a nine-faceted, 22-article policy of "giving more, taking less and being flexible" to boost farmers' incomes. Various departments and regions have also adopted supplementary policy measures, implementation of which has yielded good results. In the first half of this year, per-capita cash income of rural residents reached 1,345 yuan, a 10.9 percent real increase year on year, a two-digit growth unheard-of for many years. Farmers' burden has been greatly reduced, with the exception of tobacco leaf, special agricultural product tax has been completely canceled, agricultural tax has been exempted or basically exempted in eight provinces nationwide, agricultural tax rate has been cut by 3 percentage points in 13 provinces and by 1 percentage point in 10 provinces, estimate shows that implementation of these policy measures will reduce farmers' burden by about 30 billion yuan. Decontrolling food purchase markets in main producing areas has thoroughly broken the system where the planned and market economy actually coexisted in China's food circulation; The system of direct subsidies to grain growers has been implemented in 29 provinces nationwide, the total amount of which is estimated to reach 11.6 billion yuan which benefits 600 million farmers. In addition, the policy and system environment for migrant farmers working in cities has been further improved. Various restrictive stipulations and discriminatory policies toward farmers going to work in cities have been further canceled by governments at all levels. The question of migrant farmers' wages being in arrears has received high attention and been actively cleared up, of which labor departments at various levels helped migrant farmers in the construction fields recover defaults of wages worth over 27 billion yuan accumulated over previous years, over 80 percent of which have been cleared up.

Major breakthroughs have been made in the reforms of finance, taxation, investment and other macro-control systems. With regard to finance, shareholding system reform in the Bank of China and China Construction Bank has been quickened, and market-oriented interest rate reform has been steadily advanced; experiment with reform of rural credit cooperatives has been progressing smoothly, funds supporting agriculture have been remarkably increased, the financial supervision and control system has been further strengthened, construction of the finance legal system has been quickened; as a result of implementation of the "Some Opinions on Advancing the Reform and Opening and Steady Development of the Capital Market issued by the State Council, the functions of the capital market in promoting economic development have been further demonstrated.

As regards taxation, the export rebate mechanistic reform has been progressing smoothly, export tax refund worth nearly 200 billion yuan left over from previous years was basically paid off in the first six months this year, and guarantee was given to that "new accounts are not in arrears". With respect to the investment system, the deepening of finance, taxation and investment system reforms as well as government management system innovation have strengthened macro-control system guarantee, enriched macro-control means, made macro-control more timely, flexible and efficient in the complicated and volatile socio-economic environment, the macro-control system linkage effect has begun to take shape under the new situation.

The strategic adjustment of State-owned economic layout and the restructure and regrouping of State-owned enterprises have been quickened. The situation regarding the excessive wide distribution of the State-owned economic front and the irrational state of resources allocation have been noticeably improved. The proportion of State-owned economy in the competitive field has evidently dropped, State capital is being further converged in important industries and key areas such as oil, petro-chemistry, power, metallurgy, railway, armament, ship, aviation and other sectors bearing on State security and national economic lifelines. Positive results have also been achieved in the construction of a modern enterprise system. In January-June, the State Council started the experiment with central enterprises being separate from the performance of social functions, with the three groups-Petro-China, Sinopec and Dongfeng Automotive as the pilot units in the first group. In addition, the State-owned asset management syste continued to be improved. By the end of June, provincial-level State asset supervision organizations had been set up in all 31 provinces nationwide, instituting the integration of the management of asset and personnel and affairs.

Positive progress has also been achieved in the construction of a social credit system, in employment and social security system reform, Reform in the social realm has been carried out step by step. In regard to the construction of a social credit system: The "accelerated formation of a general framework of China's social credit system" has been published, and construction of a food security credit system has been quickened. Positive results have been gained in the improvement and standardization of market economic order. As regards employment and social security system reform, institutional barriers hindering employment and re-employment have been further removed, the "two guarantees" (basic living necessities are guaranteed for lay-off workers, pensions paid on time and in full are guaranteed for retirees) continue to be consolidated, old-age, medical, unemployment, industrial injury and child-birth insurances cover a wider area, the experiment with perfecting the urban social security system has expanded t the two provinces of Heilongjiang and Jilin.

The outburst of flashpoints in several spots of reform indicates that the Party Central Committee and the State Council, while tightening macro-control, have not slowed down the pace of reform. It is due to the timely adoption of macro-control measures and the active advances of various reforms that local problems in China's economic life have not developed into problems related to the overall situation, that unstable and unsound factors in economic operation have been kept under control and at the same time the economy has maintained fairly rapid growth.

China has entered a new development stage for the building of a moderate prosperous society in an all-round manner, reform and development are in a crucial period. We should have the future in mind while basing ourselves at the present, solve temporary and permanent issues, with emphasis put on tackling the problem to its root, and steadily advance various reforms, we should give greater play to the basic role of the market in the allocation of resources, thereby providing a strong institutional guarantee for continuing to maintain a development situation featuring a fairly rapid speed, relatively good efficiency and comparatively strong vigor.

The above article, carried on the front page of People's Daily on August 24, 2004, was translated by People's Daily Online