Full Text: Report on the Work of the Government(8)

6. Deepening reform in key areas and enhancing the vitality of economic and social development

We lost no opportunity to carry out reform and achieved great progress in a number of key areas.

We vigorously reformed the fiscal and taxation systems, improved the system of transfer payments and established a mechanism for ensuring basic funding for county-level governments across the country. County- and township-level governments became more capable of providing basic public services. We put in place the basic framework of a system of budgets for public finances, government-managed funds, state capital operations and social security funds, and all extrabudgetary funds were placed under budgetary management. We unified the corporate tax systems for domestic and overseas-funded enterprises, implemented VAT reform, reformed pricing of refined oil products and related taxes and fees, carried out pilot projects to replace business tax with VAT, and reformed the resource tax system. This strengthened the role of the fiscal and taxation systems in accelerating the change of the growth model.

We comprehensively deepened reform of the financial system. Specifically, we smoothly completed the transformation of large state-owned commercial banks into joint-stock companies and carried out reform of policy-based financial institutions in an orderly way. We made notable achievements in reforming rural credit cooperatives, implemented new oversight and supervision standards in the banking industry, launched the ChiNext stock market, and introduced stock index futures and securities margin trading. We deepened reform of the insurance industry and opened it wider. We improved the mechanism for setting the RMB exchange rate, made steady progress in making interest rates more market-based and promoting the RMB's convertibility under capital accounts, established a macroprudential policy framework, and expanded the use of the RMB in cross-border trade and investment. China's banking, securities and insurance industries became significantly more resilient to risks and internationally competitive, and they underpinned our successful response to the global financial crisis.

Reform of state-owned enterprises deepened, their performance improved and their competitiveness was significantly enhanced. We formulated the Guidelines on Encouraging and Guiding the Sound Development of Nongovernmental Investment and rules for their implementation, and the environment for the development of the non-public sector of the economy improved. We adopted a system for compensating for ecological damage and carried out trials for trading pollution discharge and carbon emission rights. We carried out function-based reform of public institutions.