“We must press ahead with both economic reform and political structural reform, especially reform in the leadership system of our party and country,” Wen said at his annual press briefing following the closing ceremony of the yearly session of the National People’s Congress (NPC). “Reform has reached a critical stage. Without successful political structural reform, it is impossible for us to fully institute economic structural reform and the gains we have made in this area may be lost. The new problems that have cropped up in China’s society will not be fundamentally resolved, and such historical tragedies as the Cultural Revolution may happen again,” Wen told Chinese and foreign journalists at the Great Hall of the People in Beijing. He did not indicate what kind of reforms he had in mind, but stressed that they would have to be “gradually and orderly” and conform with “national circumstances”.

When asked about the case of Wang Lijun, the former Chongqing Vice Mayor who is under investigation, Wen said: “Over the years, successive governments and people in Chongqing made enormous efforts to promote reform and development and have achieved remarkable progress. The current party committee and government must seriously reflect on the Wang Lijun incident and the lessons from this incident.” Progress had been made in the investigation, Wen said, which would be handled strictly in accordance with the law. “We will give the people an answer to the results of the investigation and the handling [of the case], so that it can withstand the test of law and history,” he said. His remarks were seen as a rebuke to Chongqing Party Secretary Bo Xilai, who only hours later was removed from his post, although he apparently retains his seat on the Politburo. Bo Xilai has been replaced as Party Secretary of Chongqing by Vice Premier Zhang Dejiang, who also retains his post as Vice Premier.

Premier Wen Jiabao further remarked: “Since the founding of the People’s Republic of China, under the leadership of the party and the government, our country’s modernization drive has made great achievements. Yet at the same time, we’ve also taken detours and have learnt hard lessons. We have established the line of thinking and that we should free our minds and seek truth from facts and we have formulated the basic guidelines of our party. In particular, we’ve taken the major decision of conducting reform and opening up in China, a decision that’s crucial for China’s future and destiny.” The Premier also told the media he’s willing to make a trip to Taiwan as a tourist after his retirement. Wen said he placed hope on the next generation and had full confidence that they would do better than him.

Nearly 20 amendments have been made to the government’s work report, which Premier Wen had presented to the NPC Deputies on March 5. One major amendment is the inclusion of a pledge to “strengthen school safety management”, in addition to improving the safety of school buses. Other amendments included calls for the establishment of an ecological compensation mechanism to provide economic incentives for environmental protection and the enhancement of channels for the public to express their views. The CPPCC session closed on March 12 with 6,069 proposals being submitted to the government, of which 2,600 were related to economic matters. Some of them called for measures to increase the incomes of lower-class citizens and the establishment of annual salary increments. Some delegates called for underground banks that provide informal lending and fund-raising to be legalized. The budget report attracted the most ‘No’ votes in five years during the closing session of the National People’s Congress (NPC) on March 14. Among the 2,872 NPC deputies, 438 rejected the budget report. The number of ‘No’ votes for the government’s work report, presented by Premier Wen Jiabao, also reached a five-year high, with 90 deputies rejecting the document. The Procuratorate’s report received 393 ‘No’ votes this year – 41 fewer than last year, and the Supreme People’s Court’s report was rejected by 429 deputies, 46 fewer than last year.

The number of commercial cases handled by courts in China in 2011 remained about the same as the previous year at 1.67 million. The number of cases involving intellectual property rights (IPR) rose by 37.7% to 66,000. More reforms are needed to China’s judicial system to overcome problems over transparency and corrupt judges, Wang Shengjun, Chief Justice of the Supreme People’s Court (SPC) said in his annual report to the National People’s Congress (NPC). This year, efforts will be made to speed up civil cases involving small sums of money and to improve rules allowing citizens to observe trials, he said. The SPC will also seek to enhance enforcement of judgments, and improve judicial transparency, he added. Chief Prosecutor Cao Jianming said that economic crimes, social stability and corruption were the top priorities of the Supreme People’s Procuratorate last year and this year. Prosecutors nationwide charged 54,891 people last year for smuggling, fraud, illegal fund-raising, stock market manipulation, and ponzi schemes – an increase of 8.1% from 2010. They also probed 44,506 cases of work-related crimes, involving 2,524 officials above county level, 198 at prefecture level, and seven at provincial or ministerial level. Cases included those of former Railway Minister Liu Zhijun, former Executive Vice Governor of Jilin Province Tian Xueren, former Secretary General of Jiangxi province Wu Zhiming, and Deputy Governor of Shandong province Huang Sheng. Prosecutors last year investigated 4,217 bribery suspects, up 6.2% from 2010. 1,562 people were prosecuted for producing and selling fake and substandard medicine and food products. Also prosecuted were 6,870 people in intellectual property rights cases, and 17,725 for serious pollution and failing to protect energy and resources.

Chinese Premier Wen Jiabao delivered the report on the work of the government at the opening session of the National People’s Congress (NPC) in the Great Hall of the People in Beijing on March 5. The GDP growth target for this year is set at 7.5%, lower than the 8% target of last year and the real growth rate of 9.2% in 2011. Wen said the lower target was to make “economic development more sustainable and efficient, so as to achieve higher-level, higher-quality development over a longer period of time.” He also said that “China’s economy is encountering new problems. There is downward pressure on economic growth.” China’s GDP reached CNY47.2 trillion in 2011, while government revenue rose 24.8% to CNY10.37 trillion. For the second year in a row, the per capita disposable income of rural residents rose faster than that of urban residents, by 11.4% compared to 8.4%. The per capita net income of rural residents registered the fastest growth since 1985. China also significantly increased the minimum wage across the country. “China’s urbanization level exceeded 50%, marking a historic change in the country’s social structure,” the government report said.

China’s exports and imports grew by 20.3% and 24.9% in 2011, respectively, and the trade surplus further decreased. This year foreign trade is expected to rise by 10%. Measures would be taken to increase imports. Total utilized foreign direct investment (FDI) last year was USD116 billion, while China’s non-financial outward direct investment (ODI) reached USD60.1 billion. Wen said the Chinese government would “encourage more foreign investment in advanced manufacturing, new and high technologies, energy conservation, environmental protection, new service industries, and the central and western regions.”

Ensuring general price stability was the Chinese government’s top priority in the past year, Premier Wen said. The inflation target set in March last year was 4%, but the actual increase was 5.2%. The inflation rate did however decline monthly since August. This year’s inflation target was also set at 4% with the growth of the M2 money supply at 14%. Regulation of the real estate market was tightened, significantly curbing speculative or investment-driven housing demand. Wen Jiabao also said that government debt in China was now at a controllable and secure level. Measures will be taken to prevent the further increase of local government’s debts, although the Premier emphasized that “these debts have played a positive role in promoting economic and social development and produced a large amount of quality assets.” He acknowledged they “also contained risks and hidden dangers”. The yuan would be kept basically stable and the government would “work steadily to make the RMB convertible under the capital account and expand the use of RMB in cross-border trade and investment.” The fiscal deficit was targeted at 1.5% of GDP, up from the 1.1% of GDP last year.

Expanding consumer demand will be an important task for the government this year. “We will vigorously adjust income distribution, increase the incomes of low- and middle-income groups, and enhance people’s ability to consume,” said Wen. China’s grain output increased for the 8th consecutive year, “which has rarely been seen in history,” Wen added. Grain output in each of the past five years exceeded 500 million tons. Premier Wen Jiabao also acknowledged there still were problems in economic development. Regulation of the real estate market is in a crucial stage, he said. Total energy consumption is growing excessively fast. “Targets for conserving energy, reducing emissions, and controlling prices are not being met. Problems concerning land expropriation, housing demolition, workplace safety, food and drug safety, and income distribution are still very serious and the people are still very concerned about them.” “We will show the world with our actions that China will never seek economic growth at the expense of its ecological environment and public health,” Wen said.

Premier Wen Jiabao and President Hu Jintao will step down at the next NPC session in March 2013. Next year’s NPC will have roughly one deputy representing every 670,000 citizens, marking the first time that urban and rural residents will have equal representation, NPC Spokesman Li Zhaoxing said. Prior to 1995, there was an NPC deputy for every 800,000 rural residents and one for every 100,000 urban residents. This ratio was reduced to four-to-one in 1995, and finally removed in a revision of the Electoral Law in March 2010.

Written reports on the plan for national economic and social development by the National Development and Reform Commission (NDRC) and on the central and local budgets by the Ministry of Finance were distributed to the NPC delegates for deliberation. They add more economic and financial details to Premier Wen’s government report. The NDRC said China’s total fixed-asset investment rose 23.6% in 2011, 5.6 percentage points higher than the target. Retail sales of consumer goods rose 17.1%, 1.1% higher than the target. Chinese banks granted CNY7.47 trillion of yuan loans last year, CNY390.1 billion less than in 2010. M2 rose 13.6% last year, 2.4 percentage points less than the target. Total government expenditures on agriculture, rural areas and farmers rose 21.2% last year and the total acreage of farmland increased by 313,300 hectares.

The NDRC said it eliminated “backward production facilities at cement plants with a total capacity of 150 million tons, iron foundries of 31.22 million tons, coking works of 19.25 million tons and coal mines of 24.63 million tons, and closed down small-capacity thermal power generating units with a total capacity of more than 7 million kilowatts, thereby exceeding all the planned targets.” China last year added 2,167 kilometers of newly built railways and 71,400 km of highways were opened to traffic. Five new civilian airports were put into service.

Energy consumption per unit of GDP dropped 2.01% last year, short of the planned target. An additional 12.21 million urban jobs were created in China in 2011, 3.21 million more than the target and the employment rate for new college and university graduates was 77.8%, up 1.2 percentage points from the previous year. The urban per capita disposable income and rural per capita net income reached CNY21,810 and CNY6,977 respectively, while the average monthly wage of rural migrant workers reached CNY2,049, an increase of 21,2% over 2010.

The NDRC said most of the targets in the 12th Five Year Plan for 2011 were met, but three notable exceptions were energy consumption per unit of GDP, the proportion of value-added of the service sector in GDP, and spending on R&D as a percentage of GDP. The Commission noted that “since September 2011, there has been a continued slowdown in our country’s export growth, and there will be greater difficulties this year.” Upward pressures on prices would remain relatively high. NPC Spokesman Li Zhaoxing said China is to boost military spending by 11.2% this year to CNY670.3 billion. China’s military spending amounted to 1.28% of its gross domestic product (GDP) in 2011, down from from 1.33% in 2008.