Professor Klaus Schwab, Executive Chairman of the World Economic Forum, Ladies and Gentleman,
I wish to extend warm congratulations on the opening of the fifth Annual Meeting of the New Champions, or the Summer Davos, and a sincere welcome to you all. The Summer Davos has undergone five years of growth and established its principle of being oriented to the whole world, to the future, to innovation and to youth. Participants have had lively and dynamic exchanges at various forms of discussions, delivering to the world messages of hope, confidence and courage, particularly at the difficult times of the global financial crisis. The theme of this year's meeting Mastering Quality Growth represents people's shared desire for robust, sustainable and balanced economic growth, and I wish the meeting a great success.
Three years have passed since the outbreak of the international financial crisis. International organizations, governments, the business communities and academia are all taking a hard look at the root causes of the crisis and exploring ways to sustain the growth of both the global economy and national economies. With regard to China's economic development, some people have hailed its achievements, while others have expressed doubt. Some are optimistic about China's economic future, while some say that China is in trouble. But we in China remain clear-headed and are firm in our confidence.
The first decade of this century has seen major changes in the global political and economic landscape. It has also seen rapid industrialization and urbanization in China. Great progress has been made in China's comprehensive reform, opening-up and modernization endeavor during this decade.
Over the last decade, China's economy has been growing by 10.5 percent annually. Its GDP and trade volume respectively rose from the sixth and seventh place to the second in the world. China's industrial structure is being upgraded; the foundation of its agriculture has grown stronger; development in the central and western provinces has picked up speed; and a mode of regional development with each region tapping its distinctive strength has taken shape. Social services are thriving; and urban and rural incomes have risen substantially. China has taken on a completely new look as its total economic output and overall national strength significantly increased and people's living standards greatly improved.
We have continued to resolve challenging issues in development by carrying out reform and steadily improved the socialist market economy. An array of important reform measures have been introduced in taxation, finance, enterprises, rural areas and resource prices. They have enhanced the vitality of the micro-economy and macro-regulation and raised the efficiency of market allocation of resources. We have made full progress in expanding social services. Free nine-year compulsory education has been achieved nationwide. A basic social security system covering both urban and rural areas has been put in place. Construction of government-subsidized housing is being accelerated. The cherished goal of the Chinese people that everyone has access to education, employment and pay, medical and old-age care and housing is becoming a reality. We are removing bottlenecks hampering development and have released the initiative, enthusiasm and entrepreneurial spirit of the Chinese people. This, in turn, has fully activated factors such as labor, capital, knowledge, technology and management, which form the source of rapidly increasing social wealth.
We are pursuing a win-win strategy of opening-up to increase the openness of China's economy. Since joining the WTO in 2001, we have speeded up efforts to change the way of conducting foreign trade, improved the import and export mix, upgraded the processing trade and vigorously developed trade in services. We have pursued the dual strategy of introducing foreign capital and encouraging Chinese companies to invest overseas to achieve greater balance between the use of FDI and overseas Chinese investment. We have taken an active part in the reform of the global economic governance structure and the building of regional cooperation mechanisms, and worked to deepen bilateral and multilateral economic and trade relations. China today is a fully open market economy.
With its development entering a new stage, China is in a period of strategic opportunities. Peace, development and cooperation remain the trend of our times. The international environment is generally conducive to China's pursuit of peaceful development. Numerous factors continuous industrialization, urbanization and agricultural modernization, huge market potential, a relatively high savings rate, better R&D capacity, better education, a more skilled labor force, deepening reform and overall stability have created conditions and vast space for continued economic and social development. On the other hand, we are still facing a pressing problem, that is, development is not yet balanced, coordinated and sustainable, and there are many institutional constraints hindering scientific development. As the size of our economy grows, it will be difficult to keep high growth rate over a long period of time. However, the new developments, both internationally and in China, have not changed the fundamentals of China's development. We have the right conditions, and both the ability and confidence to maintain steady and fairly fast growth of the economy.
The 12th Five-year Plan period (2011-2015) is a critical stage for China to build a society of initial prosperity in all respects. Taking into full consideration the future trend and conditions as well as China's goals for 2020 and responding to the need for changing the model of growth at a faster pace, achieving scientific development and bringing the benefits of development to all the people, we have set the following goals and strategic tasks for these five years:
China will continue to follow the strategy of expanding domestic demand, with focus on improving the structure of demand and increasing consumer demand. Domestic demand is crucial for a big country to achieve sustainable growth. China has 20 percent of the world's population. With its per capita GDP exceeding $4,000, it has entered a key stage for upgrading consumption structure. To raise the quality of life for the urban and rural population and strengthen weak links in economic and social development will generate enormous domestic demand. We will endeavor to build a long-term mechanism for expanding consumer demand, create a favorable environment for consumption, improve consumer expectation, boost spending power and upgrade consumption structure. We will achieve all these by advancing urbanization, improving people's wellbeing and speeding up the development of service industries. We aim to make urbanization grow by 4 percentage points, and raise the share of the value added from service industries in GDP by 4 percentage points, so that demand will become a major force driving economic growth.
China will continue to develop education as a priority, promote economic development on the basis of improving the quality of human capital. For a major developing country like China, boosting education and improving the quality of human resources will make its economy more competitive. We will act quickly to achieve economic growth by increasing the quality of human capital. This will enable us to catch up with the progress in technology and change the model of growth, and it holds the key for us to adapt to demographic changes. We will fully implement the outline of the national medium- and long-term plan for education and promote balanced development of education at different levels and of various types. We will ensure equitable education for all, promote well-rounded development of people, train innovation-oriented talents, and advance education in a scientific manner. And we will move faster to make China not only a big country but also a strong one in both education and human resources. This will provide strong intellectual impetus for sustaining China's development.
China will continue to build an innovation-driven society, speed up the development of an innovation system, and enhance the role of science and technology in economic and social development. R&D is crucial in guiding our efforts to accelerate the change of growth model. During the 12th Five-Year Plan period, we will give greater priority to R&D, deepen reform of science and technology institutions, and address the root causes of R&D not fully meeting the need of economic development. We will increase input in science and technology and raise the share of the budget for R&D in GDP from 1.75 to 2.2 percent. We will follow closely the latest progress in overseas frontier technologies, strengthen basic research and the research of high technologies of strategic importance, and pool resources to make breakthroughs in developing core technologies. We will enhance the capacity to create, utilize, protect and manage intellectual property rights and bring into play the creativity of the whole society. We will accelerate the upgrading of traditional industries by using new technologies, new materials, new techniques and new equipment. We will vigorously develop strategic emerging industries, with a focus on industries related to energy conservation, environmental protection, new-generation information technology, biotechnology, high-end equipment manufacturing, new energy, new materials and new energy vehicles. Our goal is to develop new pillar industries so as to gain initiative for development in the new scientific revolution and industrial revolution.
China will continue to save resources and protect the environment, follow the path of sustainable development, use resources in a more efficient way, and develop a stronger capacity for tackling climate change. Conservation of resources and environmental protection is crucial to sustainable development, and this is one of China's basic state policies. We will speed up the building of an industrial structure, a mode of production and a model of consumption that are conducive to sustainable development. During the 12th Five-Year Plan period, we will raise the share of non-fossil energy in primary energy consumption to 11.4 percent, reduce energy consumption and CO2 emission per unit of GDP by 16 percent and 17 percent respectively, and cut the total discharge of major pollutants by 8-10 percent. We will improve laws, regulations and standards, strengthen performance-based accountability, overhaul the pricing mechanism for energy and resources and increase fiscal, taxation, financial and other policy incentives. We will promote circular economy, develop low-carbon industrial, construction and transportation systems, promote energy, water, land and material conservation and integrated resource utilization, preserve and repair the eco-system, increase forest carbon sink, and build stronger capacity for tackling climate change.
China will put people's interests first, pay more attention to improving people's wellbeing and pursue common prosperity. Everything we do is to enable all to have better lives, and this is the criterion to measure the performance of our work. Our goal is to bring the benefits of development to all, improve people's wellbeing and advance social progress in all respects. We will give priority to job creation and create equitable job opportunities for all. We will adjust income distribution, ensure that personal income grows in step with economic growth and that labor remuneration grows in step with increase of productivity. We will gradually raise the share of personal income in national income distribution and the share of labor remuneration in primary distribution. We expect that per capita urban disposable income and per capita rural net income will both grow by more than 7 percent annually. We will put in place systems providing basic old age care and medical and healthcare for the whole population, and extend the coverage of government-subsidized housing to 20 percent of the urban population. China will continue to deepen reform and opening-up and resolutely remove institutional hurdles to pursuing sustainable development. China owes its rapid development in the past 30 years and more to reform and opening-up, and this will be equally true for its future development. We will continue to advance both economic and political structural reform. We will uphold and improve the basic economic system, speed up fiscal, taxation and financial reform, reform of prices of factors of production, reform of monopoly sectors and other important fields, and strive to make major progress in these reforms. We will exercise governance pursuant to law and address the institutional causes for over concentration of power and lack of checks on it. We will protect people's democratic rights and their lawful rights and interests so as to uphold fairness and justice.
China cannot develop in isolation from the world and the world also needs China for its development. Here, I wish to reiterate that China's opening-up to the outside world is a long-term commitment which covers all fields and is mutually beneficial. This basic state policy will never change. We will continue to get actively involved in economic globalization and work to build a fair and equitable international trading regime and financial system. We will continue to improve foreign-related economic laws, regulations and policies so as to make China's investment environment in keeping with international standard, transparent and more business friendly.
While the world economy is slowly recovering, uncertainties and destabilizing factors are growing. Both the advanced and emerging economies have experienced a slowdown in growth. Sovereign debt risks are growing in some countries, causing turbulence in the international financial market. Unemployment in major advanced economies remains high, while emerging economies are facing upward inflationary pressure. All these show that world economic recovery will be a long-term, difficult and complicated process. In addressing the Davos forum in early 2009, I said that the crisis is a global challenge. To overcome it, we need to have confidence, strengthen cooperation and live up to our responsibility. The crisis also puts to test the international community's sincerity for and commitment to cooperation, and it puts to test our wisdom. I still hold this view today. With so many uncertainties facing global economic recovery, the international community must have more confidence, enhance cooperation and jointly tackle the challenges. We should strengthen dialogue and coordination on macroeconomic policy and accelerate the building of a just, equitable, sound and stable new world economic order. Governments should fulfill their responsibilities and put their own house in order. The major developed economies should adopt responsible and effective fiscal and monetary policies, properly handle debt issues, ensure the safety and stable operation of investment in the market, and maintain the confidence of investors around the world.
China's economy is generally in good shape. Since the beginning of this year, its growth has taken an orderly shift from being driven by policy stimulus to self-generating strength, moving in the right direction of macroeconomic regulation. In the first half of this year, its GDP grew by 9.6 percent, and its trade surplus decreased by 17.6 percent, thanks to increasing domestic consumption. A total of 6.55 million urban jobs have been created. Price rises as a whole are under control, market supply of important goods is ensured and structural adjustment of economic sectors is moving forward. Business profits and government revenues are increasing quite fast. People's income has steadily increased, and their lives have further improved. Since the second quarter, the economic growth has dropped somewhat, but this is mostly the result of proactive macro regulation and is not beyond our expectation. We will address the pressing challenges and continue to implement a proactive fiscal policy and a prudent monetary policy. We will maintain continuity and stability in macroeconomic policy and make policy responses more targeted, flexible and forward-looking in light of changes in the economy. We will maintain control over the intensity, pace and focus of macroeconomic regulation and strike a balance among maintaining stable and fast economic growth, adjusting economic structure and managing inflation expectation. This will enable us to maintain general stability of prices, prevent major economic fluctuations and meet this year's goals for economic and social development.
I am confident that China's economy will grow over a longer period, at a higher level and with better quality and make new contribution to robust, sustainable growth of the global economy. We sincerely welcome foreign companies to actively involve themselves in China's reform and opening up process and share the opportunities and benefits of China's prosperity and progress.