Facing the new normal state of the global and the Chinese economy, we have remained level-headed and taken steps to tackle deep-seated challenges. We focused more on structural readjustment and other long-term problems, and refrained from being distracted by the slight short-term fluctuations of individual indicators. In July and August, electricity consumption, freight volume and other indicators fluctuated somewhat. That was inevitable and within our expectation. It was because the domestic and international economic situation was still complex and volatile and base figures for the second half of last year were relatively high. When observing the Chinese economy, one should not just focus on its short-term performance or the performance of a particular sector. Rather, one should look at the overall trend, the bigger picture and the total score. Judging by the principle of range-based macro-control, we believe the actual economic growth rate is within the proper range, even if it might be slightly higher or lower than the 7.5 percent target. In particular, we should realize that an important goal of maintaining stable growth is to ensure employment, and the floor of the proper range is to ensure relatively adequate employment. As the economic aggregate continues to expand, and in particular, as the service sector develops rapidly, growth will mean more jobs and there will be greater tolerance to fluctuations. We should also be clear that China's economy is highly resilient and has much potential and ample space to grow, and we have a full range of tools of macro-control at our disposal. The measures we have taken are good both for now and for longer-term interests, and will therefore enable us to prevent major fluctuations and make a "hard landing" even less possible. However, this is not denying that our development faces difficulties and challenges. On the contrary, we are indeed confronted with enormous difficulties and challenges.

In the four months ahead, we will coordinate the efforts to stabilize growth, promote reform, readjust the structure, improve people's livelihoods and prevent risks. We will continue to improve and innovate in the thinking and approaches of macro-control, strengthen targeted macro-control on the basis of range-based macro-control, promote structural reform and readjustments, carry out reforms in key areas of systemic importance with every determination to forge ahead and focus on addressing long-term problems. First, we will continue to press ahead with revolutionizing the government itself and further intensify efforts to streamline administration and delegate powers. We will deepen fiscal and taxation reform, promote reform of the budgetary management system so as to use public funds in an equitable and effective way, and continue to expand the pilot programs for business tax to VAT reform which is conducive to the development of the service sector, particularly the R&D companies. We will deepen financial reform, promote the pilot programs for non-state owned banks, sort out and standardize the limit requirements on access to the financial sector and develop a multi-tiered capital market. We will deepen the reform of state-owned enterprises. We will deepen price reform and improve the pricing mechanisms for energy products, medicine and medical services. We will deepen reform of the investment system and implement government purchase of service contracting, public-private cooperation models and franchise operation system. Second, we will continue to focus on tackling the deep-seated structural problems, further increase the effective supply of public goods to generate effective demand, strengthen weak links in investment, increase household consumption and nurture new growth areas. Third, we will continue to ensure efficient use of both the existing and the increase of fiscal and financial resources and further scale up support for the real economy and emerging industries and businesses, for the greater benefit of rural areas, agriculture and farmers, as well as micro-businesses and the service sector. These efforts are aimed at turning the gains of reform into new dynamism of development that would bring more benefit to the people. We have all the confidence, ability and resources to overcome the difficulties and realize the major goals of China's economic and social development in 2014.

Ladies and Gentlemen,

China is still a developing country. We must give top priority to economic development. Only development will deliver progress. Ultimately, it is only development that will resolve all the problems in China. We cannot advance without changing the growth model, nor can we advance without adequate development. Of course, the development we pursue should be one that promotes employment, increases incomes, improves economic performance and boosts energy conservation and environmental protection. It should be scientific development, namely, sound and balanced development that is in keeping with the laws governing economic activities, social development and nature.

Currently, there are many destabilizing and uncertain factors in the global economy, and China's economic development also faces an array of overlapping and deep-seated problems. It is in a critical stage where its path upward is particularly steep. In the latter half of the year and beyond, we will further accelerate the transformation of the development model, push forward structural readjustment through structural reform, make good use of the "golden key" of innovation and promote institutional innovation as well as innovation in science and technology. By so doing, we will be able to maintain a medium-high growth rate, move toward medium-high level of development, create more value and upgrade the Chinese economy.

We will accelerate the pace of institutional innovation. Innovation has been the ultimate cause of the leapfrog development of the Chinese economy. China's innovation involves not only technology but more of institution, management and growth models. China's reform and opening-up for the past three decades and more has in itself been a huge innovation drive, and the huge, untapped potential of innovation and development in the future still lies in institutional reform. Just imagine how big a force it could be when the 800 or 900 million laborers among the 1.3 billion population are engaged in entrepreneurship, innovation and creation. I believe the key to realizing that is to further liberate our mind, further liberate and develop the creativity of society, further energize businesses and the market, and remove all institutional obstacles to development so that everyone interested in starting a business is given more space for entrepreneurship and the blood of innovation could flow unhampered in a society where everyone is full of the spirit of self-development. When reform and innovation fuels the massive wave of entrepreneurship by the people and at the grassroots level on the land of the 9.6 million square kilometers of China, the enormous power of the diligent and resourceful Chinese people will be fully unlocked and the engine driving China's sustained economic development will constantly regenerate itself and remain powerful.

China's effort to comprehensively deepen reform is an ongoing process. The government is taking the lead in conducting a "self-targeted revolution". Just like an arrow shot, there will be no turning back. We will deepen the reform in the administrative approval system. We hope to complete the task of removing and delegating items subject to government approval, originally planned for five years, in a shorter period of time. This is to unleash the potential of the market and the driving force for development. If streamlining administration and delegating power is like taking a proactive move in the chess game, then introducing new systems is like a "serial blast". On the one hand, we should provide the list of government powers which defines the scope of what the government should do. Items not found on the list will be deemed as not permissible. Only in this way could we prevent the abuse of government power, reduce rent-seeking and ensure that the government better performs its duty of serving the people. On the other, a negative list should be formulated which defines areas off-limits to businesses. Items not found on the list will be deemed as permissible. Only by so doing could we build open and transparent systematic arrangements with stable expectations and bring about enterprises' vitality to the fullest extent. Moreover, we should formulate a list of government responsibilities to define how the government should regulate the market. All items on the list should be fulfilled by the government. Only by so doing could we build and sustain a market environment that favors honest operations and fair play, energizes businesses and encourages innovation and creativity. The government should enhance ongoing and ex-post oversight and perform its role well both as a referee of the market order and as a guardian of reform and innovation. As a saying goes, only by weeding out the barnyard grass can rice grow properly. Being lenient to law breakers is tantamount to doing wrong to law abiding people. It could even result in "bad money driving out the good". We will mete out stringent punishment to companies, domestic or foreign, that are involved in producing counterfeit, fake and shoddy products, engaging in fraud and deception, and stealing trade secrets. Protecting intellectual property rights is in fact protecting the kindling of innovation and creativity and the rights and interests of innovators. We will penalize serious IPR infringement to the fullest extent in accordance with the law, including imposing heavy fines to make law breakers pay insufferable prices, so as to propel innovation. (more)