The work we accomplished during the past year mainly consisted of the following.

    1. Adopting more direct and effective policies and measures to stimulate increases in grain production and rural incomes. Our macroregulatory initiative started with efforts to strengthen agriculture. The major measures we took were reducing or exempting the agricultural tax, rescinding all taxes on special agricultural products except tobacco, directly subsidizing grain producers, providing subsidies to farmers in certain areas to purchase improved crop strains and agricultural machinery and tools, and setting a floor price for the purchase of major cereal varieties. Investment was substantially increased in agriculture and rural areas, particularly in major grain-producing areas. Altogether, the central government spent 262.6 billion yuan on agriculture, rural areas and farmers, an increase of 22.5 percent. We also promoted agricultural restructuring to increase rural incomes through multiple channels. The intensity of these policies and measures and the substantial benefits to the farmers have rarely been seen in recent years. This greatly aroused the enthusiasm of farmers, resulting in a rebound in grain production. Grain output for 2004 totaled 469.47 million tons, 38.77 million tons more than the previous year. The increases in grain production and farmers' incomes played a crucial role in maintaining overall economic stability. 

    2. Bringing excessive investment in fixed assets under control and strengthening weak links. We curbed expansion of investment demand and the haphazard investment and low-level, redundant construction in some industries mainly by maintaining strict control over the twin valves of approval for land use and availability of credit. We thoroughly rectified and standardized order in the land market and straightened out all types of development zones. We froze the transfer of land from agricultural to nonagricultural purposes for six months, formulated the Decision on Deepening Reforms for Tightening Land Management, and improved the system for managing land and resources. We increased the reserve requirements for commercial banks, raised the basic interest rates on deposits and loans for financial institutions and the ceiling for interest rates on loans, and strengthened the management of commercial banks in terms of capital requirements. We increased the required proportion of up-front capital for construction projects in the steel, cement, electrolytic aluminum and real estate industries. We straightened out projects under and awaiting construction in accordance with the law. Fixed asset investment across the country increased by 25.8 percent for the whole year, 17.2 percentage points less than the first quarter. The growth of money and credit slowed significantly.

    Efforts were focused on restructuring, and investment was increased in agriculture, water conservancy, energy, transportation, environmental protection and social undertakings. A 4,000-kilometer-long pipeline to divert natural gas from the west to the east was completed in its entirety and put into operation. Further progress was made on major projects such as the Three Gorges Dam Project, the West-to-East Electricity Transmission Project, the Qinghai-Tibet Railway, and the South-to-North Water Diversion Project. Coal production capacity was expanded by 120 million tons, installed power-generating capacity was increased by 50.55 million kilowatts, and an additional 1,433 kilometers of railways and 46,000 kilometers of highways were opened to traffic in 2004.  

    We continued to promote the development of the western region by starting construction on ten key projects involving investment of 80 billion yuan. The work of revitalizing Northeast China and other old industrial bases got off to a good start. With state support, 197 improvement or upgrading projects were undertaken. Work was begun to bring 15 sinkholes in coalmining areas under control.

 

    Improved regulation of economic activities alleviated shortages of coal, electricity, petroleum and transportation. Effective measures were adopted to increase supply, curb irrational demand and balance supply and demand, thus ensuring that the needs of economic and social development and people's well-being were met.