At the same time, we should also be keenly aware that the world economy is still undergoing profound adjustment, the divergence of economies is pronounced, growth of the global economy and trade are sluggish, geopolitical risks are on the rise, the foundation for economic recovery is still weak, and external instabilities and uncertainties are increasing. In this current period of development, China must simultaneously manage the slowdown in economic growth, make difficult structural adjustments, and absorb the effects of previous economic stimulus policies. As the adverse effects of a sustained slowdown in economic growth continue to persist and deep-seated and longstanding problems, especially structural problems, become more serious, the conditions for China's development may become even more complex and the difficulties even more formidable.
First, the downward pressure on China's economy is mounting. The slowdown in the growth of demand is continuing. With international demand remaining weak, the situation in relation to foreign trade has become more challenging and complex. Affected by the persistently low prices of manufactured goods and the rising costs of labor and other factors of production, growth in investment is slow, particularly in the area of manufacturing. As downward pressure on China's economy begins to affect employment and personal income, it may also spread to and affect private consumption.
Second, the difficulties faced by the real economy are building. Having been pressed by insufficient demand as well as a rise in overall costs, the ability of enterprises in some industries to make a profit has decreased, and with losses in some industries increasing the number of enterprises facing difficulty is also rising. This has resulted in layoffs and hidden unemployment within some enterprises and industries.
Third, structural problems are becoming more prominent. Weak effective demand has been coincident with insufficient effective supply, and the transition from the old to the new drivers of growth has been unbalanced. The delayed adjustment of the supply system has resulted in supply-side structural problems becoming more pronounced, and effective supply has not yet adapted to aggregate demand or to changes in the structure of demand, while structural overcapacity is still a significant problem.
Fourth, ecological and environmental problems are still grave. Air pollution remains serious, with the frequent occurrence of heavy smog in some cities and areas. The quality of the water environment is relatively poor and the over-abstraction of groundwater is severe in some regions; while other regions face an arduous task in bringing soil pollution under control. The construction of environmental infrastructure lags behind.
Fifth, challenges and risks in other areas are accumulating and intertwining. The growth of government revenue is slowing down; the imbalance between revenue and expenditures is becoming more pronounced; and there are risks and hidden dangers in local government debt. The amount and ratio of non-performing loans reported by banks have increased; the debt ratios of enterprises are also rising; illegal fund-raising is becoming more frequent; and hidden financial risks are mounting. At the same time, there are also new problems to be addressed in relation to workplace safety and the people's well-being.
We must attach great importance to these issues, carry out a full evaluation of the difficulties and challenges that have arisen as a result of downward pressure on the economy, and become more aware of potential dangers and the bottom line. We need to maintain our strategic focus while taking timely steps to undertake early warning initiatives, formulate contingency plans, and exercise anticipatory regulation; such measures will ensure that we can respond effectively to these problems and resolve them.
II. Guiding the New Normal and Applying the New Development Philosophy in 2016
This is the first year of the decisive stage in finishing building a moderately prosperous society in all respects and it is also an important year for surmounting the difficulties we face in the push toward structural reform. Effectively carrying out our economic work for this year is hugely important to ensuring that we can finish building a moderately prosperous society in all respects within the 13th Five-Year Plan Period (2016-2020).
1. General Requirements
We need to fully implement the guiding principles of the 18th National Party Congress and the third, fourth, and fifth plenary sessions of the 18th CPC Central Committee; follow the guidance of Deng Xiaoping Theory, the Theory of Three Represents, and the Scientific Outlook on Development; and fully put into practice the guidelines from General Secretary Xi Jinping' s major political addresses. We need to strengthen and improve the Party' s leadership over economic work; coordinate China's domestic and international efforts; act in accordance with the overall plan for promoting all-round socialist economic, political, cultural, social, and ecological development and the Four-Pronged Comprehensive Strategy*; and keep firmly in mind and put into practice the philosophy of innovative, coordinated, green, open, and shared development. We need to adapt ourselves to the new normal in China's economic development; adhere to the reform and opening up policy as well as the general principle of seeking progress while keeping performance stable; and continue to ensure steady economic growth, make structural adjustments, improve the standard of living, and guard against risks. We need to follow the general guidelines of keeping macro policies stable, industrial policies targeted, micro policies flexible, and reform policies practical, while also making sure social policies meet people's basic needs. The economy needs to continue operating within an appropriate range. We must be strategically prepared for a prolonged struggle, and tactically well prepared so that the challenges we may face can be overcome. We will intensify structural reform-as we increase aggregate demand by an appropriate degree, we will also work to cut overcapacity and excess inventory, deleverage, reduce costs, and strengthen points of weakness in order to improve the quality and efficiency of the supply system. Moreover, we will increase the effectiveness of investment, accelerate the fostering of new driving forces for development, upgrade and improve traditional comparative advantages, and strengthen the drivers for sustainable growth so that China's overall productivity improves and its economic and social development gets off to a good start for the 13th Five-Year Plan period.
2. Major Targets
Acting in line with the general requirements listed above and taking into account both what is necessary and what is possible, we have set forth the main targets for China's economic and social development in 2016 as follows:
- Ensuring steady and sound economic development
GDP is projected to grow by 6.5-7%. In setting this target, we have made the following considerations: First, such a rate is necessary for laying a good foundation for achieving the goal of finishing building a moderately prosperous society in all respects during the 13th Five-Year Plan period. To attain this goal by 2020, the economy needs to grow at an annual average rate of above 6.5% during the 13th Five-Year Plan period. Should the economy grow slower than 6.5% this year, growth rates for the next four years would have to be higher. This year's target of GDP growth between 6.5% and 7% will help us to gain the initiative and avoid increasing pressure for higher growth rates over the next few years. Second, this rate will help to effectively stimulate employment. In view of the correlation between economic growth and employment, a growth rate of between 6.5% and 7% should be able to create more than 10 million urban jobs. Third, such a rate is conducive to guiding market expectations and boosting confidence. As an elastic range of acceptable economic growth rates, this target is in line with China's potential growth rate and market expectations, which will allow it to play a positive role in helping to bolster confidence. At the same time, we are also aware that China will face a more complicated development environment this year and the slowdown in our economic growth has not yet been reversed. This means that stronger policies and greater efforts will be required if we are to achieve the targeted growth rate.
