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With institutional reform in various sectors, we were able to turn a highly concentrated planned economy into a vigorous socialist market economy. To set up and improve the socialist market economic system, we have installed a two-tier management system that is based on the household contracting system and features an integration of unified management with separate management. A basic economic system was established, with public ownership as the pillar and all forms of ownership developing together. A distribution system was installed mainly on the principle of distribution according to work, while allowing other modes of distribution. An economic management system has taken shape, enabling the market to play the basic role in resource allocation under the macro-regulation of the government. Along with deepening reform of the economic system, we have reformed political, cultural and social institutions, creating flourishing entities to suit China’s actual circumstances.

By opening our door wider, we have turned a closed or semi-closed society into a completely open one. This is a historic change. We have persisted in the basic policy of opening up to the outside world in our economic development and stepped up the growth of an open economy. Special economic zones have been established, followed by the opening of the coastal areas, areas along big rivers, the border regions and the hinterland, and finally, accession to the WTO. From “introducing foreign capital and technology into China” to “going global,” we were able to avail ourselves of both domestic and international markets and both Chinese and foreign resources. This has helped strengthen China’s international competitiveness. During the period from 1978 to 2007, the total import and export of China increased from $20.6 to $2.17 trillion, ranking the third in the world and becoming the No.1 country in terms of foreign reserves. The paid-up overseas investment amounted to nearly $1 trillion. International cooperation speeded up China’s economic development while contributing a lot to the world economy.

As we concentrated our efforts on economic development, our national capacity has improved significantly. Our GDP rose from 364.5 billion yuan in 1978 to 24.95 trillion yuan in 2007, the average annual growth rate being 9.8 percent, more than three times the world average during the same period. China’s economy now ranks fourth in the world in terms of GDP. By relying on our own efforts, we have been able to provide adequate food to a population of 1.3 billion. Our main agricultural and industrial output now ranks first in the world. Major world-class scientific and technological innovations continue to emerge. The high and new technological industries are developing vigorously. Rapid progress has been made in the construction of infrastructure including water conservancy, energy, transportation and telecommunication. The ecological environment keeps improving. Both the city and the countryside have taken on a new look.

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