The Fourth Session of the National People's Congress

The fourth Session of the 11th National People's Congress (NPC) was held in Beijing between 5 and 14 March, and was presided over by Wu Bangguo. In addition to the standard annual agenda, the main item on the agenda was the passing of the 12th Five-Year Programme on National Social and Economic Development. The final session approved the Premier's report on the work of the government, the Outline of the 12th Five-Year Programme, the report on the work of the NPC Standing Committee, the report on the execution of the 2010 National Economic and Social Development Plan and on the 2011 National Economic and Social Development Plan, the reports of the Supreme People's Court and the Supreme People's Procuratorate, and the report on the central and local budgets (XHNA, 14 Mar.).

Premier Wen Jiabao's report on the work of the Government

Premier Wen's report on the work of the government departed from the normal format of a review of the work of the past year, concentrating instead on the Five-Year Programme. It contained three main sections: a review of the 11th Five-Year Programme, an outline of the main tasks and objectives for the forthcoming 12th Five-Year Programme, and the more usual setting of the tasks for the coming year.

The 11th Five-Year Programme

Premier Wen noted that the last five years had been extraordinary ones in China's development: against a background of complex situations at home and abroad and a series of major risks and challenges, China's social productivity and comprehensive national strength had significantly increased. He highlighted (amongst other things) annual growth of 11.2 per cent over the period, major breakthroughs in science and technology, major achievements in national defence and military modernization, finding jobs for 57.71 million people in the cities, increases in per capita annual income of 9.7 and 8.9 per cent in the rural and urban areas, new progress in reform and opening up, a significant rise in China's international standing and the important and constructive role it played in international affairs.

He said that China had strengthened and improved its macroeconomic regulation and control. In the early years of the Programme they had dealt successfully with overheated investment, large trade surpluses, excess liquidity and inflation. The last two years had been dominated by the international financial crisis to which China had reacted with calmness and had resolutely implemented active financial polices and moderate easing money polices. They had kept to the strategic aim of expanding domestic demand, and seen increased consumer spending. This demand had been greatly supported by increased government spending of four trillion yuan, the central government portion of which had gone on housing and social programmes (43.7 per cent), infrastructure (23.6 per cent), innovation and energy conservation (15.3 per cent), and disaster reconstruction (14.8 per cent). They had paid special attention to agricultural development and spent nearly three trillion yuan on it, with an average growth rate of 23 per cent. Agricultural tax had been abolished, and a subsidy system for grain growers had been established with a system of minimum guaranteed prices. Grain output had risen continuously for seven years, and rural incomes had reached 5,919 yuan per capita. The government had promoted economic structural readjustment and improved the quality and efficiency of economic growth through: speeding up the pace of industrial restructuring and independent innovation (including rapid development of service industry and large scale infrastructure work); pushing forward energy conservation and emission reduction (bringing new clean energy on line and shutting down many backward heavy industry facilities), so that unit GDP energy consumption fell by 19.1 per cent; promoting of the development of regional economies, and introducing new measures for leapfrog development in Tibet and Xinjiang. The government had deepened reform and opening and enhanced internal drives for economic and social development, concentrating on improving fiscal and monetary institutions. The reform of the exchange rate for the yuan had been pushed forward in an orderly manner. Trade had risen by nearly 16 per cent a year and the trade surplus had fallen in the last two years. China had actively participated in global economic governance reform. High priority had been given to training and employment. The minimum wage had been raised and they had achieved breakthroughs in providing a social insurance system for both urban and rural areas. New measures had been taken to improve care for the elderly. Spending on education had risen at an annual rate of 22.4 per cent. Health services had been greatly improved. Finally, Wen noted the reforms that had been made to the administrations, promoting law-based and service-type government, promoting transparency and persisting in opposing corruption.

Wen said that these achievements had not come easily, and could be attributed to the correct leadership of the Party Central committee with Hu Jintao as General Secretary. He then covered, briefly, a number of outstanding problems noting that the process of development was still unbalanced, unco-ordinated and unsustainable. He listed the main difficulties as: resource and environmental constraints; loss of balance between investment and consumption; a relatively large gap in income distribution; poor science and technology; an irrational industrial mix; a weak agricultural foundation; lack of co-ordination over urban and rural development; pressures on employment; and many structural obstacles that still impeded scientific development. He also acknowledged that the government had failed to address properly a number of issues close to people's hearts: inadequate and uneven provision of education and medical resources; increasing inflation especially of house prices; increases in social tensions caused by illegal land acquisition; “glaring” food safety issues and serious corruption.

He then proceeded to draw a number of lessons for the future. Firstly, China should adhere to the path of scientific development. China was still in the initial stage of socialism and would remain there for a long time. It was therefore necessary to take economic development as the centre of their work. Second, it was necessary to “uphold organic unification of the government's regulation and market mechanisms.” Sound market mechanism and effective macroeconomic control were essential. China's response to the international financial crisis through strengthening and improving macroeconomic control, correcting market distortions and compensating market failure had prevented big ups and downs in the Chinese economy. Third, it was necessary to maintain co-ordination between the domestic and international situations. China and the world were becoming increasingly integrated and it was essential to strengthen their strategic thinking in order to be able to properly grasp development opportunities amid the changes in the international situation. Fourthly, they should continue to use reform and opening up as the basic driving force for social and economic development. They needed to be more resolute and courageous in pushing forward reforms and comprehensively carrying out economic, social, cultural and political reforms. These reforms should promote harmony and stability and make sure that the people were happy with their lives, and that society enjoyed peace and order.

Main Objectives and Tasks for the 12th Five-Year-Programme Period

Premier Wen described the period as crucial period for building a well-off society in an all-round way. The impact of the financial crisis was far reaching and was resulting in accelerated changes to global economic governance mechanisms, and breakthroughs in technological and industrial transformation. Developing countries, in particular the newly emerging market economics, were experiencing an increase in their comprehensive power. Over the next five years, China would grow at an annualized rate of 7 per cent based on significantly improving quality and efficiency of output. They would improve macro control to ensure price stability, and keep to the policy of expanding domestic demand. The transformation of the economic structure would be accelerated. Service industries would grow by four percentage points of GDP. The urbanization rate would rise from 47.5 per cent to 51.5 per cent. Modern agriculture would be vigorously developed.

On the social side, education would be prioritized to improve levels of education for all, and they would reach a level of expenditure on education of 2.2 per cent of GDP. Culture and physical education would be developed, and the medical and health systems would be further improved. There would be improvements in “social management” to ensure social harmony and stability as well as vitality. There would be great attention paid to resource saving, environmental protection and climate change. The use of non-fossil fuel in primary energy consumption would go up to 11.4 per cent; the energy consumption per unit of GDP would fall by 16 per cent, carbon dioxide emissions would fall by 17 per cent and other key pollutants would fall between 8 and 10 per cent. There would be measures to improve people's livelihood. Forty-five million new jobs would be generated in the urban areas; incomes would be improved and made fairer and per capita incomes would rise by more than 7 per cent annually. Basic medical and pension systems would be extended to all. The family planning policy would be continued.

There would be further improvements in the economic system with room for various types of ownership of the means of production in accordance the law. Tax and fiscal reform would be speeded up. Prices would be reformed, especially those of resource-type products to reflect supply and demand, the scarcity of resources and the cost of environmental damage. The government would be further reformed to allow for more supervision by the people, and it was essential to change the situation in which power was excessively concentrated and not subject to checks.

Work for 2011

The third and most substantive section of the report dealt with the tasks for the coming year. China had laid good foundations through last year's achievement, but the conditions facing China remained extremely complex, and the foundations of the global economy remained weak, although a slow recovery was expected. Developed economies would see sluggish growth and high unemployment, some nations still had to eliminate sovereign debt worries, and the US's loose monetary policy was causing fluctuations in global commodity prices and exchange rates. Emerging markets faced pressures from real estate bubbles and inflation, and international market competition was intensifying. Against this background the main targets for the year were: GDP growth of around 8 per cent; controlling of consumer price rises to around 4 per cent; adding nine million jobs in the cities and keeping urban unemployment to fewer than 4.6 per cent; further improvement in the external payments situation. To achieve these it was necessary to maintain macroeconomic policies that are stable but make them more flexible, specific and effective. The proactive fiscal policy would continue but the overall deficit rate would be down by 2 per cent. General expenditure needed to be controlled, especially government administrative expenses and perks. Structural tax cuts would continue, and there would be a comprehensive audit of local government debts. There would be prudent monetary policy, with a reasonable scale of social financing and a target for broad money growth of 16 per cent. The credit structure would be improved and the lending to the “two high” industries and industries with excess capacity would be strictly controlled.

He listed key aspects for the work in 2011:

(i) To maintain basic stability in the general level of prices. This issue bore on the people's livelihood and therefore directly affected social stability. It was necessary to eliminate the effects of structural and imported inflation, correctly guide market expectations, and curb the momentum of rising prices. The production and supply of major agricultural products would be ensured. Price regulation and market order would be strengthened.

(ii) To further expand domestic demand and household consumption. Expanding domestic demand was a long term strategic principle and the basic starting point of country's economic development. Government expenditure for improving and expanding consumption would continue to increase. Markets would be rectified and standardized to protect consumer rights and interests. More private capital would be encouraged. Capital demands for the big Five-Year Programme projects must be handled sensibly; “blind investment and redundant construction” must be prevented.

(iii) To consolidate and expand agriculture's status. It was necessary to increase farmers' income through many channels, while ensuring grain security was the primary target. The policy of a minimum grain purchase price would continue to be implemented, with the minimum prices being raised. More efforts must be made to alleviate poverty. There needed to be more focus on irrigation and water conservation.

(iv) To push forward the strategic adjustment of the economic structure in an accelerated manner. It was necessary to push the economy on to a path of internally generated growth, driven by innovation, as soon as possible. The establishment of a modern industrial system must be speeded up, through transforming existing industries, accelerating the development of new strategic industries, vigorously developing the service industry, strengthening the development of modern energy industries and comprehensive transport systems.

(v) To make greater use of science and technology, and improve the development of talented personnel. Education should remain a high priority, and spending on education would reach 4 per cent of GDP. Education should develop in an all-round way with special focus on schools for areas in which migrant workers lived, and the development of special education. Science and technology would be vigorously promoted, and new science and technology projects implemented.

(vi) To improve the building of society and protect the people's livelihood. There would be a strong focus on employment, with 42.3 billion yuan allocated for this purpose. College graduate employment and vocational and skill training would be enhanced. Labour laws should be better enforced, and the dispute handling mechanisms needed to be improved. Income distribution needed to be improved, there would be an increase in the pay of the low paid in both urban and rural areas, income tax would be used to adjust income distribution, and there would be a crackdown on illegal income. Work on the social security systems in urban and rural areas would be accelerated. The real estate market would be controlled, and more low-income housing would be built (with the person in charge being held responsible for the delivery of results). Health would be further reformed, through the implementation of the national drugs system, raising insurance coverage for basic care, and building a better health network. “Societal capital” would be encouraged to set up medical institutions. “Social management” would be improved giving the people more ability to seek redress and to oversee government administration. Public order would be improved. Food safety oversight systems would be overhauled.

(vii) To strengthen cultural construction. “We must strengthen the building of civic virtue, build shared ideals and beliefs of socialism with Chinese characteristics in the whole society, and accelerate the construction of ethical standards and codes of conduct that can pass on traditional Chinese values and meet the needs of socialist spiritual civilization.”

(viii) To promote reform in all fields. “We will continue to promote strategic adjustments of the state owned economy to perfect a mechanism for state capital to inject and withdraw in a rational flow.” There would be better supervision of state-owned assets, a pilot reform on value added tax, and reforms in resource tax. Budget management would be improved. There would be market orientated reforms in interest rates, and the use of the renminbi in international transactions would be expanded. Pricing mechanism for oil products, natural gas and all electricity would be perfected. Water price reform would be looked into carefully.

(ix) To open further to the outside world. China would continue to promote the Doha Round and oppose protectionism. The “foreign trade development mode” would be “earnestly transformed,” and China would look to rise up the value chain, and expand the export of brand-name products. Service trades would be developed. The “Go Global” strategy would be pursued and overseas investment greatly encouraged.

(x) To strengthen the work or good governance and oppose corruption. The issue of abuse of power and dereliction of duty by government workers would be the main target.

He concluded with brief passages on Hong Kong and Macau, on Taiwan and on international relations which added little to well-known positions.

The Outline of the 12th Five-Year Programme for National Economic and Social Development

The 12th Five-Year Programme for the National Economic and Social Development of the People's Republic of China was presented to the NPC in draft on 5 March and approved on 14 March, with 2,778 out of 2,875 deputies voting in favour. The final document contained 16 sections divided into 62 chapters. Its main features were outlined in Premier Wen Jiabao's report on the work of the government (see above), and the period was described as a crucial phase in building a well-off society in an all-round way, and a highly significant period for deepening reform and accelerating the transformation of economic growth modes. Some of the key targets are shown in Table 1 (XHNA, 14 Mar.)

Table 1:

Principal Targets of the Five-Year Programme

Source: collated from XHNA, 5 March and Wen Jiabao's report

The Budget and the Economic Plan for 2011

On 5 March, the Finance Minister, Xie Xuren, reported on the budget outturn for 2010 and the draft budget for 2011 (text in XHNA, 17 Mar.). He was in relatively upbeat mode. He said that the economy had developed steadily and rapidly and that society had remained harmonious and stable. Steady progress had been made in fiscal development and reform, the basic framework of a government budget system that comprised budgets for public finances, government-managed funds and state capital operations had been put in place, budgets for social security funds had been compiled on a trial basis and government budgets were successfully implemented. Revenues had increased to 8.958 trillion yuan (up 21.3 per cent) and national expenditure had been 9.318 trillion yuan (up 17.4 per cent), with a deficit of just over 1 trillion yuan.

Like Premier Wen, Xie set the coming budget against a background of an extremely complex situation domestically and a slow international recovery. The trends remained basically positive for China's economy, and the financial situation was healthy although there was still a significant imbalance between revenue and expenditure. He announced that the projected total revenue (central and local revenues together with a transfer of 150 billion yuan from the central budget stabilization fund) would be 9.112 trillion yuan, and expenditure was projected at 10.022 trillion with a total estimated deficit of 900 billion yuan, corresponding to 2 per cent of GDP in 2011, and a significant fall from the previous year's rate of 2.5 per cent of GDP. Revenues would rise at a slower rate than in 2010, and the need to complete on-going government-financed projects, improve and ensure the people's well-being, respond to inflationary pressure, and increase subsidies for those on low incomes would put considerable pressure on expenditure. Table 2 gives a more detailed breakdown of the overall figures.

Table 2:

Central and Local Budgetary Estimates for 2011 (figures in yuan)

The Minister said that China would continue to implement a proactive fiscal policy which would be manifested through: a) raising the incomes of urban and rural residents and expanding consumer demand; b) optimizing the investment structure and strengthening weak links in economic and social development; c) adjusting and improving tax policies; d) further optimizing the structure of government expenditures and ensuring and improving the well-being of the people; and e) vigorously supporting economic restructuring and balanced regional development. Table 3 gives a breakdown of the major items of budgeted expenditure.

Table 3:

Major Budgeted items of Expenditure, 2011

Overview

Preliminary estimates indicated that in 2010, GDP rose by 10.3 [8.7] per cent in terms of comparable prices to reach 39,798.3 billion yuan. Agricultural growth remained steady at 4.3 [4.2] per cent. Primary sector growth was significantly lower than that of both industry (12.2 [9.5] per cent) and services (9.5 [8.9] per cent) which both increased perceptibly over the previous year. Sectoral shares of GDP were 10.2 [10.6] per cent (primary), 46.8 [46.8] per cent (secondary) and 43.0 [42.6] per cent (tertiary).

Agriculture

2009 saw a further modest expansion of the grain-sown area by 890 thousand hectares (ha) to 109.87 million ha; the sown areas to oil-bearing crops increased (by 0.32 million ha) while the area under cotton declined again (by 0.1 [0.0.8] million ha), and that under sugar rose marginally by 0.03 million ha after a fall the previous year [–0.11 million ha]. The output of major farm crops is shown in Table 4.

Table 4:

Output of Major Farm Products

Total meat output rose by 3.6 [5.0] per cent to 79.25 m tons. Output of pork, beef and mutton all increased (by 3.7 [5.8], 2.7 [3.6] and 2.2 [2.4] per cent respectively). Total output of aquatic products was 53.66 m tons, or 4.9 per cent more than in 2009. Timber production rose by 3.1 per cent after a sharp fall the previous year (–14.4) dropped sharply and reached 72.84 million cubic metres.

Effective irrigation was extended to an additional 1.634 [1.471] million ha of arable land, in addition to which an extra 1.975 [1.826] million ha were brought under guaranteed water-saving irrigation facilities.

Industry

Industrial value-added grew by 12.1 [8.3] per cent in 2010. Further details are given in Table 5.

Table 5:

Rate of Growth of Industrial Value-added, 2010

Note

* i.e. all state-owned enterprises and those non-state-owned enterprises with an annual sales income over 5 million yuan.

The outputs of important industrial products are shown in Table 6.

Table 6:

Output of Major Industrial Products, 2010

Industrial profitability improved at an extraordinary rate in 2010. The overall rate of increase in profits in enterprises of above-designated size was 49.4 [7.8] per cent (January–November only). Within this figure were the following increases in profitability by different enterprise ownership category during the same period:

• • SOEs  49.4 [–4.5] per cent

• • collective enterprises  34.6 [10.3] per cent

• • share-holding enterprises  49.4 [4.2] per cent

• • private enterprises       49.4 [17.4] per cent

• • foreign (incl. Hong Kong, Macau and Taiwan invested enterprises)  46.3 [16.9] per cent

Construction industry growth remained high at 12.6 per cent compared to 18.2 the previous year, and construction enterprises generated profits of 342.2 billion yuan (25.9 per cent above the 2009 level).

Fixed investment

In 2009 the rate of expansion of fixed asset investment fell slightly to 23.8 per cent (from 30.1 per cent). Relevant disaggregated data are shown in Table 7.

Table 7:

Fixed Investment Growth by Sector and Region

Urban investment in the primary sector slowed to a mere 18.2 per cent (49.9 in 2009); the corresponding figures for urban secondary and tertiary fixed investment were 23.2 [26.8] per cent, and 25.6 [33.0] per cent. Regional levels and rates of fixed investment in 2008 were as follows:

• • eastern regions:    11,597 billion yuan (up 21.4 [23.0] per cent)

• • central regions:     6,289.4 billion yuan (up 26.2 [35.8] per cent)

• • western regions:    6,187.5 billion yuan (up 24.5 [38.1] per cent)

• • northeastern regions:  3,072.6 billion yuan (up 29.5 [26.8] per cent)

Table 8 summarizes the net impact of capital construction investment on production capacity in 2009.

Table 8:

New Increases in the Production Capacity of Selected Industries, 2010

Transport and telecommunications

There was continued growth in both passenger and freight transport in 2010, as shown in Table 9.

Table 9:

Passenger and Freight Traffic in 2010

The turnover of post and telecommunication services increased by 20.6 [14.6] per cent. The total number of fixed-line subscribers fell again to 294.38 million [313.69]: 196.62 [211.787] million in cities, and 97.76 [101.9] million in rural areas. There were 111.97 [106.14] million new mobile phone subscribers, taking the total number of users to 859.00 [747.38] million at the end of 2010. Thus, the total number of telephone users reached 1,153 [1061.07] million; on average, telephone coverage reached 86.5 [79.9] for every 100 members of the Chinese population. The number of internet users rose from 380 to 457 million and broad-band users reached 450 [350] million.

China received 133.76 million international visitors in 2009 – up 5.8 per cent after a fall of 2.7 per cent. Of these, 26.13 [21.94] million were “foreigners” (an increase of 19.1 [–9.8] per cent) and 107.64 [104.54] million were “Chinese compatriots” from Hong Kong, Macau and Taiwan (up by 3.0 per cent). Foreign exchange earnings from international tourism totalled US$45.8 billion, up 15.5 per cent from 2009. Some 57.89 [47.66] million Chinese made overseas visits, of whom 51.51 [42.21] million undertook private visits (up 22 [5.9] per cent). Revenue from domestic tourism was 1,258 billion yuan (a rise of 23.5 [16.4] per cent).

Domestic trade

In 2009, real growth in the value of retail sales of consumer goods was 18.3 [15.5] per cent to reach 15,699.8 billion yuan (up by 18.7 [15.5] per cent in cities, and 16.2 [15.7] per cent in rural areas). More disaggregated estimates of sales growth are shown below (all figures in percentages):

• Retail sales                 18.4 [15.6]

• - motor vehicles               34.8 [32.3]

• - oil and grain                22.9 [13.0]

• - meat and eggs               21.7 [8.3]

• - “cultural” and office goods          23.5 [6.7]

• - telecommunications equipment        21.8 [−1.3]

• - household electrical and electronic equipment and audio-video-equipment         27.7 [12.3]

• - building and decorating materials       32.3 [26.6]

• - daily necessities              25.1 [15.6]

• - furniture                  37.2 [35.5]

• - clothing                  25.8 [20.8]

• - cosmetics                 16.6 [16.9]

• - gold, silver and jewellery           46.0 [16.8]

• Catering industry               18.1 [16.8]

Consumer prices showed an accelerating upward trend over the year and overall prices increased by 3.3 per cent (compared to a fall of 0.7 per cent last year). Food prices went up by 7.2 per cent. After falls in 2009, the prices of manufactured goods rose by 5.5 per cent, raw materials fuels and power by 9.6 per cent, and agricultural goods by 10.9 per cent. Housing prices in 70 cities were described as “picking up first and then slowing down.” House prices were growing at 9.5 per cent in January, peaked at 12.8 per cent in April and then tailed off gradually to a rate of 6.4 in December.

Consumer price changes for specific goods, or categories of goods, are shown in Table 10.

Table 10:

Change in the Consumer Prices of Selected Goods, 2010 [2009] (%)

Foreign trade and external relations

Foreign trade recovered dramatically (see Table 11) with exports up 31.3 per cent to US$1,577.9 billion, and imports up 38.7 per cent to US$1,394.8 billion. Overall, China enjoyed a merchandise trade surplus of US$183.1 billion, or US$12.6 billion less than in the previous year.

Table 11:

Levels of and Changes in Imports and Exports, 2010

A geographical breakdown of China's exports is shown in Table 12.

Table 12:

The Direction of China's Foreign Trade, 2010

Foreign investment picked up. Inflows of utilized foreign direct investment (FDI) rose by 17.4 [–2.6] per cent to reach US$105.7 billion. Manufacturing absorbed US$49.59 billion – an increase of 6 per cent, and the next largest category was real estate at US$23.99 billion, up 42.8 per cent. Chinese overseas direct investment (non-financial sectors) was US$59 billion, an increase of 36.3 per cent.

At the end of 2010, China's foreign exchange reserves totalled US$2,847.3 billion – US$448.1 billion more than a year earlier. At the end of the year the exchange rate was 6.6227 yuan to the dollar, a modest appreciation of 3 per cent.

Banking and insurance

The NBS Communiqué noted that at the end of 2009, savings deposits lodged in all kinds of financial institutions totalled 73.3 [62.2 ] trillion yuan, 19.8 [27.7] per cent higher than at the end of 2009. Savings by enterprises reached 25.29 trillion yuan – a rise of 12.7 [36.5] per cent. Savings by urban and rural households totalled 30.72 trillion yuan (up 16 [19.5] per cent).

There were significant increases in the money supply. The volume of cash in circulation (M₀) rose by 16.7 [11.8] per cent to 4.5 trillion yuan; the corresponding rates of increase for narrow (M₁) and broad (M₂) money were 21.2 [32.4] per cent, and 19.7 [27.7] per cent.

Welfare, living standards and employment

Per capita cash disposable income of urban households reached 19,109 [17,175] yuan in 2010 [2009] (a real rise of 7.8 [9.8] per cent over that of the previous year). Rural residents' average per capita net income was 5,919 [5,135] yuan: this represented a real increase of 10.9 [8.5] per cent. The number of rural residents living in poverty (i.e. with an annual net per capita income of less than 1,274 yuan) was estimated to be 26.88 [35.97] million.

There were also improvements in both urban and rural social security provision. By the end of 2010, 256.73 [234.98] million people (193.74 [177.03] million current employees and 62.99 [57.95] million retirees) were enrolled in basic pension programmes. Some 133.76 [127.15] million urban residents had joined unemployment insurance schemes, while 432.06 [400.61] million were covered by basic health insurance (including 45.83 [43.35] million migrant workers). Work accident insurance was provided for 161.73 [148.61] million people, including 63.29 [55.80] million migrant workers. Some 123.06 [108.6] million were enrolled in maternity insurance programmes. For the fourth year running, the number of people who received unemployment insurance payments fell – from 2.35 to 2.09 million. Finally, 23.11 [23.48] million urban residents were in receipt of minimum income relief from the government, while the corresponding figure for rural residents was 52.284 million up from 47.593 million in 2009.

Total employment in 2009 was 779.5 million (5.15 million more than in 2008). The net increase in urban employment was 11.68 [9.1] million, and total urban employment was 311.2 [302.1] million. The official rate of registered urban unemployment was 4.1 per cent – 0.2 per cent below that of 2009.

Population

China's total population at the end of 2010 was estimated to be 1,341.00 [1,334.71] million.

Resources and environment

The amount of agricultural land newly allocated to construction use rose by 18.4 per cent to 428,000 ha.

In 2010 the total stock of water resources rose by 17.7 per cent to 2,847 billion cubic metres, giving an average per capita availability of 2123 cubic metres [1,784.9]. At the end of the year, water storage in China's large reservoirs was 209.1 [180.5] billion cubic metres. Total water consumption increased by 0.4 [0.4] per cent to 599 billion cubic metres. Of this, consumption for living purposes increased by 2.9 [2.9] per cent, for industrial use it grew by 1.4 per cent [–0.6]; water consumption for farm use fell again after last year's rise by 0.6 per cent [0.6]. Per capita water consumption averaged 445.7 [440.9] cubic metres. Water consumption per 10,000 yuan of GDP and per 10,000 yuan of industrial value-added continued to decline by 9.1 [–7.6] and 9.6 [–8.2] per cent, respectively.

Based on monitoring of 408 sections of China's seven major water systems, 59.6 [57.1] per cent satisfied the national quality standard of Grades I–III for surface water, while 16.4 [18.4] per cent fell below Grade V level. There was a deterioration in the quality of oceanic water at the higher end of the scale with 62.8 per cent of stations meeting Grade I or II standards (down 10.1 per cent), and at the lower end there was an increase in the number at Grade IV or below now comprising 23.2 [21.1] per cent of all stations. Changes in the standards of air monitoring showed that 273 of 330 cities monitored had reached Grade II or above (previously 612 cities were monitored), and only four fell below Grade III.

Natural disasters caused 534 billion yuan worth of direct losses, up significantly from the previous year (252.4 billion yuan in 2009, 1,175.2 billion yuan in 2008, the year of the Wenchuan earthquake, and 236.6 billion yuan in 2007). A significant proportion of the losses were caused by flooding, and losses caused by droughts were down. There were 17 earthquakes of magnitude 5 and above.

The death tolls from both work accidents and traffic accidents were down, 4.4 and 11.1 per cent respectively. The death toll per million tons of coal fell 16 per cent to 0.749 persons.

The preliminary 2010 estimates of energy consumption provided by the NBS communiqué are shown in Table 13.

Table 13:

Consumption of Energy, 2010

Vice Premier Li Keqiang's tour of Europe

Vice Premier Li Keqiang, accompanied by numerous “entrepreneurs” and businessmen, visited Spain, Germany and Britain from 4 to 12 January. A Xinhua commentary said that at a time when the world was gradually coming to terms with the aftershocks of the financial crisis and when recovery remained fragile, Li's tour would not only deepen the China–EU comprehensive strategic partnership and promote their co-operation in various fields, but cast a positive influence upon global economic recovery and development (XHNA, 3 Jan.).

Li visited Spain from 4 to 6 January, and had meetings with the Spanish Second Deputy Prime Minister and Minister of the Economy, Elena Salgado on 4 January. Li noted that the Spanish government had taken a number of measures to deal with the economic crisis and promised that China would buy more Spanish government bonds to help the country deal with market concerns. China and Spain established a comprehensive strategic partnership in 2005 (XHNA, 5 Jan.). The following day, he met the Spanish King, Juan Carlos. Li said that China had always held that Europe is an important force for ensuring world peace and promoting global growth, and that a united and strong Europe is beneficial for the world and in the interests of both China and Europe. The following day he met the Prime Minister Zapatero and the Foreign Minister, Trinidad Jimenez. He told the Prime Minister that they should co-operate in areas such as energy conservation and environmental protection, new energy and new materials. The two sides signed a series of agreements on economic and trade co-operation in the financial, petroleum and chemical, renewable energy, nuclear power equipment and food sectors worth US$7.5 billion (XHNA, 6 Jan.).

Li then travelled to Germany where he had talks with the Chancellor Angela Merkel, the President Christian Wulf, the Foreign Minister Guido Westerwelle and Economy Minister Rainer Bruederle. Li told a gathering of German businessmen that China welcomed more German companies to invest or establish new businesses in China, especially in areas like energy efficiency, environmental protection, high technology, modern agriculture and service industry, as well as new industries with strategic significance. He called for Germany to keep its market open and oppose trade protectionism along with China. He said that China would take a more open attitude to the outside world, and would continue to improve investment environment, and provide a fair, stable, orderly, transparent and predictable market environment for all foreign companies in China. He urged Germany to simplify visa procedures for Chinese businesspersons, and to help relax European Union (EU) restrictions on high-tech exports to China. China and Germany established their formal strategic partnership in 2010 and trade in 2010 was expected to reach US$140 billion (XHNA, 6 Jan.). During the visit, the two sides signed 11 agreements and commercial contracts worth some US$8.7 billion, covering such fields as automobile purchase, financial co-operation, energy and machinery (XHNA, 7 Jan.).

Vice Premier Li arrived in Britain on 9 January for talks with the Prime Minister David Cameron, the Deputy Prime Minister Nick Clegg, the chancellor of the Exchequer George Osborne, the Business Secretary Vince Cable and the Foreign Secretary William Hague. He first visited Edinburgh, where he met Scotland's First Minister, Alex Salmond, and then travelled down to London. Trade between Britain and China reached US$40.2 billion between January and October 2010 and was targeted to reach US$100 billion by 2015 (XHNA, 9 Jan.). The two sides signed 15 agreements and commercial contracts worth US$4.7 billion during the visit, covering such fields as low carbon, wildlife protection, deep-sea oil and gas exploration and development, as well as financial co-operation (XHNA, 11 Jan.).

Vice Premier Hui Liangyu's tour of Africa

Vice Premier Hui Liangyu visited Mauritius, Zambia, the Democratic Republic of Congo, Cameroon and Senegal from 6 January. In Mauritius he met the Prime Minister, Navinchandra Ramagoolam, and Deputy Prime Minister and Minister of Finance and Economic Development, Pravind Kumar Jugnauth. He signed an economic and trade co-operation agreement worth US$9 million, including a US$6 million grant and a US$3 million interest-free loan (XHNA, 8 Jan.). In Zambia he had meetings with Vice President George Kunda and President Rupiah Banda, and signed an agreement on Sino-Zambian economic and technological co-operation and a memorandum on agricultural co-operation (XHNA, 10 Jan.). In the Democratic Republic of Congo, he met Prime Minister Adolphe Muzito (XHNA, 11 Jan.). He met the Cameroon Prime Minister, Philémon Yang, on 13 January and witnessed the signing of four agreements including an economic and technological accord (XHNA, 13 Jan.). He also met President Paul Biya. He met the Senegalese Prime Minister, Souleymane Ndene Ndiaye, on 15 January and witnessed the signing of a number of bilateral co-operation agreements (XHNA, 16 Jan.).

Foreign Minister Yang Jiechi's tour of Africa

The Foreign Minister Yang Jiechi visited Zimbabwe, Gabon, Chad, Guinea, Togo and the United Arab Emirates (UAE) from 9 to 17 February. He visited the United Arab Emirates on 9 and 10 February and met the Abu Dhabi Crown Prince Shaykh Mohammed bin Zayed al Nahyan and the Foreign Minister. His visit to Zimbabwe was described as an endorsement of the relations between the two countries by the former Foreign Minister of Zimbabwe interviewed by Xinhua. He said that: “This is a visit which will mark a new diplomatic high watermark in Zimbabwe's international relations because to get the visit of an important and emerging super-power like China with such economic clout is a big vote of confidence on the part of Zimbabweans who have been pummelled by sanctions imposed by the West” (XHNA, 9 Feb.). On arrival in Harare on 10 February, Yang Jiechi said that China was committed to further improving its bilateral relations with Zimbabwe, and that the visit would produce positive results and take their friendship and co-operation to a higher level. He met President Mugabe and later publicly called on the West to lift the sanctions that they had imposed on Zimbabwe, saying that the Zimbabweans and other African peoples had the right to choose their own development path. A 50 million yuan grant was extended during his visit and Yang said that the two sides had agreed to on further co-operation in infrastructure, agriculture, water conservation and personnel training. Yang also met the Prime Minister, Morgan Tsvangirai, and the Foreign Minister (XHNA, 11 Feb.). He met the President of Gabon, Ali Bongo Ondimba, and the Gabonese Foreign Minister on 12 February, and they promised closer co-operation in trade, economy and infrastructure development (XHNA, 12 Feb.). In Guinea, he met President Alpha Conde and they discussed co-operation in water resources management, electricity generation, telecommunication, education, culture, mining, health and agriculture and infrastructure building. He also met his counterpart Edouard Niankoye Lama. China offered a grant of 150 million yuan, and an interest-free loan of 20 million yuan, as well as an increased number of scholarships to students (XHNA, 14 Feb.). In Togo, he met President Faure Gnassingbe and his counterpart, Elliot Ohin, and signed a loan agreement for about 4 billion CFA francs (Radio Togo, Lome, 15 Feb.). In Chad, he met President Idriss Deby Itno and discussed co-operation in infrastructure building, agriculture, health care and other fields. He also had talks with the Foreign Minister, Moussa Faki Mahamat (XHNA, 16 Feb.). On his way back home, he visited Armenia and had talks with President Serzh Sargasyan and the Prime Minister, Tigran Sargasyan. They agreed to develop co-operation in infrastructure, agriculture, telecommunications and trade. He also met the Foreign Minister Edouard Narbandian. They discussed co-operation in science, education, health, culture and tourism (XHNA, 17 Feb.).

Africa (Cote d'Ivoire, Liberia, Somalia, Sudan, Zambia)

The Foreign Ministry spokesman said on 11 January that China supported the UN Operation in Cote d'Ivoire (UNOCI) in “peacefully solving the Cote d'Ivoire issue.” He confirmed that there were six Chinese military observers at UNOCI but would not say whether China planned to send any more forces (XHNA, 11 Jan.). The Foreign Ministry spokeswoman said on 1 March that China supported the mediation efforts by the African Union to resolve the crisis. She reiterated that: “We hope the involved parties can properly handle the differences through dialogue and negotiation to realize political reconciliation and safeguard peace and stability in Cote d'Ivoire” (XHNA, 1 Mar.). On 30 March, Liu Baodong, then President of UN Security Council, voted in favour of a resolution applying sanctions against Laurent Gbagbo, who was refusing to hand over power as President of the country. China's Permanent Representative expressed China's grave concerns and called on parties to immediately cease violence and armed confrontation and seek to settle their differences through dialogue and consultations. He also expressed China's support for the efforts of the African Union and the Economic community of West African States to achieve a political settlement (XHNA, 30 Mar.).

Foreign Minister Yang Jiechi met the visiting Liberian Foreign Minister, Toga Grayewea McIntosh, on 30 March. He noted that the two countries had achieved remarkable results in co-operation in economy, trade, culture, education and health, and said that China would continue to support the peaceful reconstruction of Liberia (XHNA, 30 Mar.).

Li Baodong, China's Permanent Representative to the UN Security Council, said that a comprehensive strategy for realizing peace, security and development in Somalia should be reached as soon as possible. China hoped the Somali transitional government would complete its constitutional process and other transitional tasks as scheduled within the framework of the Djibouti Agreement, and conduct dialogues with relevant parties on post-transitional arrangements with a view to achieving consensus at an early date. He called for more financial and material aid to be provided with Somalia having a greater say in the distribution of financial assistance (XHNA, 10 Mar.).

China announced that it would be sending a mission to observe the referendum in Sudan. The Foreign Ministry spokesman said on 4 January that: “China will work with the international community and continuously play a positive and constructive role in promoting peace, stability and development in Sudan and this region at large” (XHNA, 4 Jan.). The Chinese observers were reported to have described the voting as “orderly and peaceful” (XHNA, 11 Jan.). The results were announced on 7 February with 98.3 per cent of voters voting for the independence of southern Sudan. China's Foreign Ministry spokesman said that: “China respects the choice of Sudan people and appreciates the unremitting efforts of both the north and the south to promote the peace process between the two sides.” He said that China hoped that outstanding issues would be handled through dialogue and consultation and that: “China expects full implementation of the Comprehensive Peace Agreement (CPA) as well as long peace and stability in Sudan” (XHNA, 8 Feb.).

The Foreign Ministry spokesman denied on 6 January that arrest warrants had been issued for two Chinese diplomats in Zambia who were reported to have provided guarantees for two Chinese mine managers charged with attempted murder. He dismissed the reports as misleading following the failure of the two managers to appear in court in Zambia to face the charges against them (XHNA, 6 Jan.).

Australasia (Australia, New Zealand, Tonga)

Foreign Minister Yang Jiechi extended China's condolences over the floods to the Australian Foreign Minister, Kevin Rudd. The Chinese Red Cross gave US$50,000 in emergency aid to the Red Cross Society of Australia (XHNA, 6 Jan.).

China extended condolences to New Zealand over the earthquake in Christchurch (XHNA, 22 Feb.). It sent a rescue team to help at the request of the New Zealand government and the Chinese Embassy in New Zealand launched an emergency response for Chinese nationals caught up the disaster (XHNA, 24 Feb.). The Chinese Foreign Minister said on 28 February that he hoped that New Zealand could speed up its efforts to search for and rescue Chinese nationals still trapped in the rubble (23 were still missing). The Chinese also offered US$ 500,000 in disaster relief (XHNA, 28 Feb.). China sent a team of forensic specialists to help identify the bodies of victims on 2 March (XHNA, 2 Mar.).

Vice President Xi Jinping met King George Tupou V of Tonga on 25 January and promised that China would further its political and economic co-operation with Tonga on the basis of mutual respect and equality (XHNA, 25 Jan.).

Central Asia (Kazakhstan, Mongolia, Tajikistan)

The President of Kazakhstan, Nursultan Nazarbayev, visited China from 21 to 23 February. He had talks with President Hu Jintao, Premier Wen Jiabao and with Wu Bangguo, Chairman of the National People's Congress Standing Committee. He visited Tianjin after his meetings in Beijing. Presidents Hu and Nazarbayev undertook to boost their strategic partnership and bilateral co-operation, and witnessed the signature of a series of co-operation agreements on cross-border water resource protection, high-speed railway construction, and joint projects on petroleum, oil and gas resources. The high-speed rail would link Almaty and Astana, a distance of 1,050 kilometres, and was expected to be completed by 2015. Bilateral trade reached US$20 billion in 2010, an increase of 45 per cent (XHNA, 22 Feb.).

Foreign Minister Yang Jiechi visited Mongolia on 24 and 25 February. He had talks with President Elbegdorj Tsakhia on 24 February, and with the Mongolian Foreign Minister Gombojav Zandanshatar. He also witnessed the signature of three agreements involving fire prevention in border regions and an exchange of notes about Mongolia's establishment of a general consulate in Hong Kong. Yang said that the Chinese and Mongolian peoples shared a long history of friendly exchanges and that developing long-term friendly, mutually beneficial and co-operative ties was an important policy of China's (XHNA, 24 Feb.).

It was reported that Tajikistan and Xinjiang had signed an agreement allocating 2,000 ha of land in Tajikistan to Chinese farmers to grow rice. On 12 January, the Tajik parliament ratified the protocol on the delimitation of the border with China, which gave China 1,100 sq km of territory. This aroused considerable local opposition (Interfax News Agency, Moscow, 18 Jan.).

East Asia (Japan, North and South Korea)

Kyodo News Service reported that the Director General of the Asian and Oceanian Affairs Bureau of The Japanese Foreign Ministry had met a number of senior Chinese officials on 30 January for talks on the Korean Peninsula and the bilateral discussion on the joint development of gas fields in the East China Sea (Kyodo News Service, 31 Jan.). The Chinese Vice Foreign Minister, Zhang Zhijun, visited Tokyo for a round of strategic dialogue, the first since 2009, with Japanese Vice Foreign Minister, Kenichiro Sasae, on 28 February. They agreed to work towards repairing the relationship, deepen co-operation and settle sensitive issues appropriately (Kyodo News Service, 28 Feb.).

Following reports that the Japanese Coast Guard might be seeking damages from the Chinese fishing boat captain who rammed their vessel in September 2010, the Chinese Ministry of Foreign Affairs stated that Japan had no right to do so, and reiterated that the Diaoyu Islands had been an integral part of China's territory since ancient times and that the Japanese government should deeply reflect on its actions in the incident (XHNA, 12 Feb.). There continued to be regular reports of Chinese military and other activity in the vicinity of the Senkaku/Diaoyutai Islands and in the East China Sea, involving approaches by Chinese aircraft, helicopters, patrol boats (Kyodo News Service, 3, 7, 9, 28 Mar.). China denied reports that it had unilaterally started gas production in the Chunxiao field which is the subject of competing claims and a pending agreement between the two sides (Kyodo News Service, 9 Mar.).

The Chinese Foreign Ministry spokesman said that the dispute between Japan and Russia over the “Northern Territories” was a bilateral one between the two sides and that China hoped they would handle the issue properly through talks. He denied any knowledge of a joint investment by China and Russia in the islands (XHNA, 17 Feb.).

China reacted quickly to the news of the devastating earthquake in Japan on 11 March. Premier Wen Jiabao extended his condolences and offered help on 11 March. A Chinese rescue team started operating on 14 March and China provided US$4.57 million of emergency aid (XHNA, 14 Mar.). Chinese experts played down any possible effects that the nuclear leakage from Fukushima might have, although there was rush of panic buying of salt in the week following the earthquake. President Hu sent a message of condolence to the Emperor on 14 March. The Foreign Ministry spokeswoman said on 15 March that China would continue to provide necessary assistance and expressed the belief that the people of Japan would be able to “tide over the difficulty as this.” There were initially no reports any Chinese casualties, and some 3,000 Chinese were evacuated from the area (XHNA, 17 Mar.).

The Foreign Ministers of Japan, South Korea and China met in Kyoto on 19 March and discussed working together in response to the earthquake. They also discussed the North Korean nuclear issue (Kyodo News Service, 19 Mar.). According to Xinhua, the Foreign Ministers of the three countries maintained that Sino-Japanese-South Korean co-operation not only is conducive to the common development of the three countries, but also to the peace, stability and prosperity in the region and the world at large. The three sides discussed co-operation in political, economic, social, human and disaster control areas as well as in management of world affairs. They pledged that they would work hard together to ensure positive co-operation results and to explore new areas and new ways for co-operation (XHNA, 19 Mar.)

The Chinese press noted the visit of Stephen Bosworth, the US envoy on North Korea, to the region to discuss the North Korean issue. It said that his trip was expected to lay the foundations for the forthcoming meeting between Presidents Hu and Obama in Washington and came following a declaration by Pyongyang that it was interested in returning to the negotiating table while claiming at the same time that it had developed a new highly sophisticated uranium enrichment facility (XHNA, 4 Jan). He visited Beijing on 5 and 6 January for talks with Vice Foreign Minister Zhang Zhijun and Wu Dawei, China's special representative on Korean affairs, and the Chinese Foreign Ministry commented that: “The Six-Party Talks have been stalled for two years. We hope the parties concerned make concerted efforts to resume the talks as soon as possible” (XHNA, 6 Jan.).

The Chinese Minister of Public Security, Meng Jianzhu, visited North Korea as part of a wider Asian tour on 13 February. During the visit he had talks with his opposite number, Ju Sang Song, signed an agreement on co-operation between his Minister and the Ministry of People's Security of the National Defence Commission of the DPRK, and donated unspecified aid materials (KCNA, 13 Feb.). He met Kim Yong-nam, President of the Supreme People's Assembly on 14 February, as well as Ri Yong Ho, Chief of the Korean People's Army General Staff (XHNA, 14 Feb.). He met Kim Jong Il on 15 February.

The Chinese Foreign Minister, Yang Jiechi, visited South Korea on 23 and 24 February, and met South Korean President Lee Myung-bak for talks on the Korean peninsula. He said that China hoped to see positive outcomes from the inter-Korean dialogue and would continue to work with South Korea to contribute to maintaining peace and stability in the region. He said that China's starting points on the Korean question were based on principles, including achieving denuclearization of the Korean peninsula and long-term stability in northeastern Asia, as well as maintaining and promoting common interests of the countries in the region and their peoples. Yang also had talks with the Foreign Minister Kim Sung-hwan (XHNA, 23 Feb.). The Foreign Ministry spokesman said on 24 February that China participated in the resolution of the DPRK nuclear issue with a constructive attitude, including discussions at the UN Security Council, and efforts to promote relevant discussions that are conducive to easing the situation on the peninsula, and that are helpful to the diplomatic efforts towards holding peace talks. He added that: “We hope relevant parties will seize the positive momentum at present, head towards the same direction, take necessary measures, restart the Six-Party Talks at an early date, and resolve relevant issues under the Six-Party Talks framework” (XHNA, 24 Feb.).

Latin America (Brazil)

The Brazilian Foreign Minister, Antonio Patriota, travelling with the Minister for Development, Industry and Foreign Trade, visited China from 2 to 4 March. He had meetings with Premier Wen Jiabao, Vice Premier Wang Qishan and Foreign Minister Yang Jiechi. Premier Wen described Brazil as a sincere friend and strategic partner of China (XHNA, 3 Mar.).

Middle East (Bahrain, Egypt, Iran, Libya, Tunisia)

Commenting on the demonstrations in Bahrain, China's Foreign Ministry spokeswoman said that China welcomed its leaders' efforts to ease tension through dialogue and believed that they had the wisdom and ability to calm the situation down. She added that “All Middle Eastern nations are China's friends … China has always developed its friendly and co-operative ties with these nations based on mutual respect, equality and mutual benefit” (XHNA, 3 Mar.).

China's initial reaction to the events in Egypt was cautious. The Foreign Ministry spokesman said on 30 January that China had been watching the situation closely and that “we hope Egypt can restore social stability and normal order at an early date” (XHNA, 30 Jan.). Meanwhile it was successfully organizing the evacuation of its citizens from the area. China sent two planes to Egypt on 31 January to rescue stranded Chinese citizens, and dispatched a task force of officials from the Foreign Ministry, the National Tourism Administration, the Ministry of Public Security and the Civil Aviation Administration to help (XHNA, 31 Jan.). They returned to China on 1 February carrying 480 Chinese nationals. A further 424 were said to remain stranded at the airport and another 300 were still in Cairo and other tourist spots. Xinhua noted that mass anti-government demonstrations had broken out in Egypt on 25 January, and that many international flights had been cancelled (XHNA, 1 Feb.). By 3 February “almost all” Chinese citizens, a total of 1,848, had been repatriated (XHNA, 3 Feb.).

A People's Daily commentary on 31 January argued that Washington was quietly preparing to ditch its long-term ally, President Mubarak, in favour of a new secular leader who would promote democracy and modernization in Egypt. However, the paper suggested that the greater likelihood was that a radical and tightly knit organization like the Muslim Brotherhood would seize power, which would be Washington's worst nightmare. It concluded that “the US must be playing with fire if its long-term and desperate will to usher in political reforms to the region turn out to set a political stage for the radical and even extremist forces. And if Uncle Sam's cleverness overreaches itself, he will be hoisted with his own petard” (People's Daily, 31 Jan.).

Following the announcement of President Mubarak's decision not to seek re-election, Xinhua noted that mass protests had led to more than 100 people being killed and thousands injured. Opposition groups had reacted differently to the offer of negotiations with government with most agreeing to it, but the Muslim Brotherhood rejecting it, and Xinhua noted that it was unclear whether the promised constitutional reforms would take place before the elections in September and whether the new government could solve the problems of corruption, unemployment, poverty and rising prices. It also noted that President Obama had called for an orderly and immediate power transition (XHNA, 2 Feb.). Chinese commentary highlighted the danger of chaos. President Mubarak was quoted as saying that he wanted to resign but could not do so because of fear that the country would sink into chaos (XHNA, 3 Feb.). China's formal position remained that it supported Egypt's effort to maintain social stability and restore normal order, and it carefully avoided political prescriptions. The MFA spokesman said on 10 February that: “China holds that Egypt's affairs should be decided independently by the country without foreign interference” and that “We believe Egypt has the wisdom and capacity to find proper solutions and get through the current tough time” (XHNA, 10 Feb.). It held very much to this following the announcement of President Mubarak's resignation, repeating that China hoped that the “latest developments” would help restore national stability and social order at an early date. Xinhua commentary noted that Egypt faced an uncertain future, and that it was unclear what the opposition groups might now want. It noted that the protests had dealt a heavy blow to Egypt's economy, and suggested that Egypt's future hung on three big questions: would the paralyzing protests soon recede, would the military be able to control the situation, and would the Presidential elections take place as scheduled (XHNA, 12 Feb.). The theme of the serious impact that the disturbances had on the economy, society, and people's livelihoods in the areas concerned was a recurrent one in the Chinese media.

China took part in the in the talks between Iran and the UN Permanent Security Council Members and Germany in Istanbul on 20 and 21 January. China's negotiator, Wu Hailong, expressed optimism about the outcome, despite the lack of substantive progress in the December talks in Geneva (XHNA, 19 Jan.). On 9 March, Li Song, Director General of the Department of Arms Control of the Chinese Ministry of Foreign Affairs, told the International Atomic Energy Agency (IAEA) Board of Governors meeting in Vienna that China hoped that the IAEA would continue taking an objective, impartial position and play a constructive role in promoting a proper settlement of the Iranian nuclear issue. He said that the six countries and the EU had held two rounds of dialogue with Iran since last December. Although no substantial progress was made, all the parties confirmed the basic line of “seeking consensus through dialogue and co-operation,” deepened their understanding of one another's stands, and expressed an enthusiastic will to continue with the dialogue. This undoubtedly was of momentous significance to pushing forward the diplomatic settlement process. He stated that China was willing to work with all other parties to continue playing a constructive role in properly resolving the Iranian nuclear issue by proceeding from the overall interest of upholding the international non-proliferation regime and peace and stability in the Middle East (XHNA, 9 Mar.).

As the protests spread to Libya from 16 February, China issued warnings to its citizens about the disturbances which had led to some damage to Chinese businesses. Chinese businessmen were warned to pay greater attention to their security and those planning to visit Libya were advised to defer their plans (XHNA, 21 Feb.). The Chinese embassy in Egypt was put on alert to help Chinese nationals fleeing Libya, and the Foreign Ministry spokesman said that China hoped that Libya could restore social stability and political order as soon as possible. He noted that Chinese firms had been attacked and Chinese nationals injured in the unrest, and said that the Chinese embassy in Libya had been instructed to take every measure necessary to protect the safety of Chinese citizens and organizations in Libya (XHNA, 22 Feb.). A special operation under Vice Premier Zhang Dejiang was set up to evacuate Chinese nationals, which decided to send chartered aircraft and ships to Libya immediately (XHNA, 22 Feb.). This was an impressive operation involving evacuation by land, sea and air both directly to China and to neighbouring countries. It required considerable co-ordination with other countries, and the chartering of ships and aircraft. For the first time, China deployed military assets in the region to help with the evacuation. Four Ilyushin IL-76 transport planes were sent to evacuate people via Sudan, and the frigate Xuzhou, which had been on anti-piracy duty in the Gulf of Aden, was sent to Libya to oversee and protect the sea evacuation (XHNA, 28 Feb.). The operation lasted until 5 March and involved the biggest land, air and sea operation undertaken by the Chinese government since 1949. A total of 35,680 Chinese nationals were evacuated and all were repatriated to China by 5 March (XHNA, 5 Mar.).

At the political level, China voted in favour of Security Council Resolution 1970 on 26 February which expressed grave concern at the situation in Libya, imposed an arms embargo, imposed sanctions on Colonel Ghaddafi and members of his family, including a travel ban and asset freezes and gave the International Criminal Court jurisdiction over crimes committed in Libya after 15 February. The Chinese UN representative said that China was very concerned about the turbulent situation in Libya and thought the pressing tasks were to immediately cease the violence to prevent further bloodshed and civilian casualties, to restore social stability and normal order as quickly as possible, and to resolve the current crisis by peaceful means such as dialogue. He went on to explain that: “In view of the extremely special situation in Libya at the moment and the concerns and positions of Arab and African countries, the Chinese mission voted in favour of Resolution 1970, which was adopted a moment ago by the Security Council” (XHNA, 27 Feb.). China continued to be “highly concerned” about developments in Libya while holding to the line that the disputes should be settled peacefully, and that any further action by the international community hinged on whether it would help bring stability to Libya at an early date and whether it put an end to the violence. China abstained from the vote on UN Security Council Resolution 1973 on 17 March which had called for “all necessary measures” excluding ground troops to protect civilians and civilian populated areas under threat of attack. China explained that it and others had abstained “considering the concern and stance of Arab countries and the Africa Union as well as the special situation in Libya,” and had serious difficulties with parts of the resolution (XHNA, 18 Mar.). China continued to voice reservations and regret over multinational military action in Libya on the grounds that it did not agree with resorting to force in international relations, and that some of the strikes were causing civilian casualties. China called for immediate cease fire and for the problems to be resolved in a peaceful manner, and that the future of Libya should be determined by the Libyan people themselves (XHNA, 24 Mar.).

The Chinese Foreign Ministry spokesman responded to the downfall of the Tunisian President, Zine El Abidine Ben Ali, saying that “Tunisia is China's friend. China is concerned with what is happening in Tunisia and hopes stability in the country is restored as early as possible,” adding that “a stable society was in the fundamental interests of the people” (XHNA, 15 Jan.). Vice Foreign Minister Zhai Jun visited Tunisia in March and met the Prime Minister Beji Caid-Essebsi on 7 March. He said that China respected the choice of the Tunisian people and was willing to cement and develop the traditional bilateral relationship of friendship and mutually beneficial co-operation. He also thanked the Tunisian government for its assistance in evacuating Chinese citizens from Libya (XHNA, 7 Mar.).

Russia

State Councillor Dai Bingguo visited from 23 to 25 January for the fifth round of Sino-Russian Strategic Security talks, initiated in 2005 (XHNA, 23 Jan.). He met President Medvedev on 24 January. The dialogue was held with Russian Security Council Secretary, Patrushev, on 24 January. They agreed that it was an important channel for both sides to communicate promptly and effectively with each other and to co-ordinate their stands on major strategic and overall issues (XHNA, 24 Jan.)

The pipeline from Skovorodino to Daqing opened in January and delivered 1.318 million tonnes of crude oil in the first month of operation. It is designed to deliver 15 million tonnes a year from 2011 to 2030 (XHNA, 2 Feb.)

Chinese and Russian local authorities held discussions on the joint development of Heixiazi Island, in the Ussuri River (the scene of border clashes in 1969) and turning it into a visa-free eco-tourist zone (XHNA, 28 Feb.)

South Asia (Pakistan)

Following the assassination of the governor of Punjab, the Chinese Foreign Ministry spokesman said on 5 January: “China is shocked by the incident. We extend our sympathies to the family of Salman Taseer, the governor of Pakistan's Punjab, the country's largest province.” … “We believe the Pakistani government will properly handle the incident and maintain national stability and unity” (XHNA, 5 Jan.).

South East Asia (ASEAN, Burma, Cambodia, Philippines, Vietnam)

Chinese and ASEAN Foreign Ministers met in Kunming on 25 January to discuss bilateral strategic co-operation. They agreed to step up efforts to open road and sea routes, and strengthen telecommunications and other infrastructures; they agreed to increase people-to-people exchanges and China promised to give 10,000 government scholarships to ASEAN students by 2020. Foreign Minister Yang Jiechi addressed the meeting. He noted that China and ASEAN now co-operated in more than 20 areas and had 11 ministerial-level meeting mechanisms. Trade increased 38 per cent in 2010 following the establishment of the China–ASEAN Free-Trade Zone (XHNA, 25 Jan.).

Xinhua described the election of its President and Vice Presidents by the Parliament in Burma as marking the imminent transition from a military government to civilian rule and the entering of a new era. It noted that the new President, U Thein Sein, and the Vice Presidents were members of the Union Solidarity and Development Party formed in April 2010 and functioning as a “strong political party with high-ranking government officials playing the core of the leadership.” Xinhua said that: “this kind of political development possesses Myanmar characteristics and conforms to Myanmar's current political life which contributes to the transfer of power and the take-over and peaceful transition from the military government to a civilian one as well as the country's stability and the continuation of its state policy.” It noted that the West was still enforcing sanctions on Burma although “facts have proved that Western sanctions on Myanmar did not work” (XHNA, 4 Feb.).

China called for restraint in the border dispute between Cambodia and Thailand, which had seen clashes on 4–7 February resulting in a number of deaths. The Foreign Ministry spokesman said on 10 February: “Cambodia and Thailand are China's friendly neighbours. After clashes broke out, China has maintained close contact with the two sides and has persuaded them to resolve disputes through consultation” (XHNA, 10 Feb.). China made it clear that it supported mediation efforts made by ASEAN and called on the two sides to maintain calmness, exercise restraint, put an end to the military confrontation as soon as possible, and resolve their conflicts through consultation to prevent the further escalation of the situation (XHNA, 12 Feb.).

The Philippine press reported that China had agreed to postpone the execution of three Filipinos convicted of drug trafficking. Vice President Binay had visited China to secure a stay of execution. The Supreme People's Court had decided that the executions due to take place in Xiamen and Shenzhen would be postponed, within the scope of Chinese law. The report noted that: “Mr Aquino did not send a representative to the Nobel Peace Prize ceremony in December honouring a jailed Chinese dissident, and two weeks ago, the Philippines deported to Beijing 14 Taiwanese facing fraud charges in China despite protests from Taipei” (Philippine Daily Enquirer website, 19 Feb.)

The Vietnamese Foreign Ministry protested against China's exercises in the Paracels on 3 February saying that: “The military exercise of the Chinese Navy's South Sea Fleet at Hoang Sa archipelago seriously violated Vietnam's sovereignty over the archipelago, went counter to the ASEAN–China Declaration of the Conduct of Parties in the East Sea and negatively affected peace and stability in the region” (Vietnam News Agency, 17 Feb.). President Hu Jintao met the special envoy from Vietnam, Hoang Binh Quan, who had come to brief on the results of the Vietnamese Party Congress in January. Hu said that China wanted to improve exchanges and co-operation with Vietnam, and congratulated the Vietnamese on a successful Congress. He said that China viewed its relations with Vietnam from a strategic and long-term point of view (XHNA, 18 Feb.)

Taiwan

The “early harvest programme” of the Economic Co-operation Framework Agreement went into force on 1 January, with China dropping tariffs on 539 Taiwanese goods and Taiwan dropping tariffs on 267 Chinese goods (XHNA, 1 Jan.). Cross-Strait trade reached US$131.7 billion in the first eleven months of 2010, an increase of 39.7 per cent. China approved 2,727 Taiwanese investment projects and 47 Chinese corporations invested in Taiwan. US$4.68 million Taiwanese residents visited China and 1.16 million Chinese visited Taiwan in 2010 (XHNA, 11 Jan.). The spokeswoman for the Taiwan Affairs Office said on 26 January that China would support the government of Hong Kong seeking an economic co-operation agreement with Taiwan, which she said would conform to the common interests of people on both sides of the strait (XHNA, 26 Jan.). The first meeting of the Cross-Strait Co-operation Committee, the body set up to oversee the implementation of the Economic Co-operation Framework Agreement, was held in Taoyuan in Taiwan on 22 February. It decided to establish six working groups on trade in goods, trade in services, dispute settlement, investment, industrial co-operation and custom co-operation. It also announced the start of negotiations on agreements concerning trade in goods and services and a cross-Strait mechanism for settling disputes (XHNA, 22 Feb.).

A conference on Taiwan work was held in Beijing on 29 and 30 January. Jia Qinglin, Chairman of the People's Consultative Conference presided over the meeting and delivered the keynote speech. He told the delegates to study Hu Jintao's speech of 31 December, hold firm to the main theme of peaceful development of cross-Strait relations and create favourable conditions for the great cause of the motherland's peaceful reunification. He said that work last year had gone well and opened up a new situation for the development of relations. He noted that the Economic Co-operation Framework Agreement had paved the way for the normalization of relations and the institutionalization of economic co-operation. The conference noted that:

State Councillor Dai Bingguo also addressed the meeting and Wang Yi, Director of the Taiwan Affairs Office, made a work report (XHNA, 30 Jan.). The spokesman for the Taiwan Affairs Office said that China appreciated the remarks made earlier in the month by Ma Ying-jeou when he said that Taiwan would stick to the 1992 consensus and that the Taiwan authorities would replace “China” with “the Chinese mainland” in official documents (XHNA, 23 Feb.).

Taiwan protested strongly against the Philippine government's decision to deport 14 Taiwanese fraud suspects to China. Taiwan claimed that this was a violation of the jurisdiction principle of nationality and of the Philippine government's own procedures (CNA, 2 Feb.). Taiwan police officials went to Beijing on 24 February to discuss this case and joint investigations of fraud cases involving Chinese and Taiwanese suspects in which the victims were all Chinese citizens. The Taiwanese police were briefed on the progress of the case and shown evidence against the suspects. Relatives of the suspects were given permission to visit them in Beijing, in accordance with the cross-Strait agreement on joint efforts to fight crime and judicial assistance (CNA, 28 Feb.).

The Governor of Liaoning, Chen Jianguo, led a large provincial delegation of 800 businessmen and others to visit Taiwan in February for eight days. The Mayors of Nanjing and Kunming also visited in February (CNA, 15 Feb.). Chen Yunlin, President of the Association for Relations Across the Taiwan Straits (ARATS), led a trade delegation to Taiwan from 23 to 28 February to study Taiwan's trade and economic climate, and to hold talks with the relevant authorities and businessmen. The delegation visited port facilities, industrial parks, companies and farmers' association in Taipei, New Taipei City, Yunlin, Chiayi and Kaohsiung (CNA, 18 Feb.). Shao Qiwei, Head of China's National Tourism Administration, visited Taiwan in February. He said that he hoped co-operation over tourism would increase and that he hoped that five million mainland tourists would be soon visiting Taiwan every year (in 2010 there were 1.63 million visits) (CNA, 23 Feb.).

The Taiwan Minister of the National Science Council, Lee Lou-chang, visited China in January to discuss co-operation in new energy, disaster prevention, bio-resources and biomedical sciences and to take part in a cross-Strait forum on scientific technology and innovation. He was the first Science Minister to visit China (CNA, 14 Jan.).

Four Chinese fishermen were detained by the Taiwan coastguard after fishing illegally in waters of Lesser Kinmen on 13 January. A statement issued by the Fujian provincial authorities called for their immediate release and said that they had been fishing in a traditionally shared fishing area, and that the Chinese had often shown hospitality and assistance to Taiwanese fishing in the area (XHNA, 14 Jan.).

United States

Foreign Minister Yang Jiechi visited the United States from 4 to 7 January, as part of the preparations for Hu Jintao's visit later in the month. He met President Obama on 4 January for discussions on the visit and on bilateral relations. He also had meetings with Thomas Donilon, National Security Adviser, and Senators Richard Lugar and Charles Boustany (XHNA, 5 Jan.). The following day, he met Timothy Geithner, Secretary of the Treasury, and Gary Locke, Secretary of Commerce. He discussed bilateral relations further with Hillary Clinton Secretary of State, on 5 January (XHNA, 6 Jan.). He also visited New York and had a meeting with the UN Secretary General Ban Khi Moon on 6 January (XHNA, 6 Jan.).

The US Defence Secretary, Robert Gates, visited China from 9 to 12 January, a visit which had been postponed by the Chinese following the announcement last year of the US arms package to Taiwan. Gates had a meeting with President and Chairman of the Military Commission, Hu Jintao, Xi Jinping, Vice Chairman of the Military Commission, Xu Caihou Vice Chairman of the Military Commission, Liang Guanglie, Minister of Defence, and Yang Jiechi, Foreign Minister. It was widely seen as presaging a warming of military ties which had been difficult in the previous year, but Chinese academics warned that issues like US arms sales to Taiwan, and frequent reconnaissance by the US naval ships and aircraft in the waters and airspace of China's exclusive economic zones, remained obstacles in the relationship from a Chinese perspective (XHNA, 9 Jan.). Defence Minister Liang Guanglie, reiterated China's position on arms sales following his meeting with Secretary Gates saying that they “jeopardized China's core interests” and that China did not wish to see such things happening again or further damage the relations between the two countries and their armed forces. The two sides agreed to expand common interests, deepen dialogue and exchanges, and avoid misunderstandings and miscalculations, to bring military ties back onto a sound track (XHNA, 10 Jan.). Secretary Gates met President Hu Jintao on 11 January. The visit was overshadowed in some respects by foreign press reports of the first test flight of China's alleged new “stealth” fighter, the Jian-20, widely interpreted as a deliberate demonstration of China flexing its new military muscle. In the press conference during the visit, Defence Minister Liang Guanglie stated that “The security situation facing China cannot be ignored. Our development of weaponry is by no means targeted at any country and will by no means threaten any other country,” and the following day a Defence Ministry spokesman said that: “The development of China's military hardware is not aimed at any other country or any specific target and the timing was a matter of routine working arrangements,” and denied that there was anything other than routine to the timing of the test (XHNA, 11 Jan.). Secretary Gates was also taken to visit the Headquarters of the PLA Second Artillery, China's strategic missile force (XHNA, 12 Jan.). As a result of the visit, it was agreed that: (1) General Chen Bingde, member of the Central Military Commission and chief of the General Staff, would visit the United States at an appropriate time in the first half of 2011 at the invitation of US Navy Admiral Mike Mullen, chairman of the Joint Chiefs of Staff; (2) the armed forces of the two countries would carry out co-operation in counterterrorism, peacekeeping, escorting, humanitarian rescue, and other nonconventional security realms; (3) maritime security consultation and a work meeting of Chinese and US defence ministries would be held in the first half of 2011; (4) the two sides agreed to set up a joint working group to study the guiding principles and framework for developing relations between the armed forces of the two countries (Zhongguo Xinwen She, Beijing, 11 Jan.)

US Deputy Secretary of State James Steinberg, Jeffrey Bader, the National Security Council China Director, and Sung Kim, the US Special Envoy for the Six Party Talks, visited China for consultations with State Councillor Dai Bingguo on 28 January. They also met Foreign Minister Yang Jiechi and Vice Foreign Ministers Cui Tiankai and Zhang Zhijun. They discussed bilateral and other issues, including Korea, in a productive way. Steinberg was on his way home from visits to Japan and South Korea (XHNA, 28 Jan.)

President Hu Jintao paid a state visit to the United States from 18 to 21 January. In a written interview published in advance of the visit in the US press, President Hu put forward four points for the advancement of China–US relations:

He left for the US on 18 January accompanied by: Vice-Premier Wang Qishan; Ling Jihua, member of the Secretariat of the Chinese Communist Party (CCP) Central Committee and director of the General Office of the CCP Central Committee; Wang Huning, member of the Secretariat of the CCP Central Committee and director of the Policy Research Office of the CCP Central Committee; State Councillor Dai Bingguo; Foreign Minister Yang Jiechi; Minister in charge of the National Development and Reform Commission (NDRC) Zhang Ping; Finance Minister Xie Xuren; Commerce Minister Chen Deming; Vice Foreign Minister Cui Tiankai; director of the President's Office Chen Shiju (XHNA, 18 Jan.)

After arriving in Washington, he had a small private dinner with President Obama before the formal talks on 19 January. The two sides issued a joint statement following the talks, which covered a wide range of issues including strengthening bilateral relations, addressing regional and global challenges (noting specifically the problems of Korea, Iran and Sudan), building a mutually beneficial economic partnership, and co-operating on climate change, energy and the environment. The text noted their commitment to building a positive co-operative and comprehensive relationship. On Taiwan, the Chinese emphasized that it was an issue concerning China's sovereignty and integrity and called on the US to honour its commitments and appreciate and support the Chinese side's position. The US reiterated that it followed a one-China policy and abided by the principles of the three communiqués. President Obama added a reference to the Taiwan Relations Act when describing the US position in the press conference (text of the statement in XHNA, 19 Jan.).

Hu came up with a five-point prescription for improving relations in the talks. First, they should develop a political relationship of equality, mutual trust and seeking common ground while reserving differences. Second, they deepen their comprehensive, co-operative, mutually beneficial and win-win economic ties and he called on the US to relax restrictions on high-tech exports, and recognize China's market economy status. Third, they should jointly meet challenges through global co-operation. Fourth, they should further their friendship through the extensive involvement of both peoples. Fifth, they should establish a pattern of high level contacts featuring in depth communication and candid dialogue (XHNA, 19 Jan.)

In the press conference after the meeting, which President Hu described as having been conducted in a “candid, pragmatic and constructive atmosphere,” he went on to answer questions on human rights among other topics. He said that: “China recognizes and respects the universality of human rights. And at the same time, we do believe that we also need to take into account the different national circumstances when it comes to the universal value of human rights.” He also noted that China was a developing country with a huge population and in a crucial stage of reform, facing many challenges in economic and social development, and that a lot still needed to be done in China in terms of human rights (XHNA, 19 Jan.). In the context of the visit, China agreed to buy a large package of US goods worth US$45 billion, including 200 aircraft from Boeing. The two sides also agreed to extend the two Chinese pandas' stay in the US national zoo, under a new co-operative research agreement. President Hu also had talks with the Vice President, Joseph Biden, and Congressional leaders. He concluded by visiting Chicago.

Western Europe (Austria, France, Germany)

The Austrian Vice Chancellor and Finance Minister, Josef Proll, together with the Foreign Minister, Michael Spindelegger, visited China in February. They had talks with Premier Wen Jiabao on 23 February, and Spindelegger had talks with Foreign Minister Yang Jiechi on 22 February (XHNA, 22 and 23 Feb.). Vice Chancellor Proll met Vice Premier Zhang Dejiang on 24 February and they discussed co-operation in the fields of environmental protection, machine manufacturing and high technology (XHNA, 24 Feb.). The Foreign Minister made a point of having a meeting with the artist Ai Weiwei to hear at first hand the pressure he was subjected to by the authorities (Austrian Foreign Ministry website, 24 Feb.).

President Sarkozy paid a flying visit to China to attend a G20 seminar on the international monetary system in Nanjing on 31 March. He met President Hu on 30 March to discuss bilateral ties and regional and international issues of common concern. President Hu apparently voiced China's concerns that the military action being undertaken in Libya might harm civilians and violate the spirit of Security Council resolution 1973 (Agence France Presse, 30 Mar.). The Xinhua account of the meeting noted that President Hu had said that:

The German Vice Chancellor and Minister of Foreign Affairs, Guido Westerwelle, visited China from 31 March to 2 April to chair the first round of the ministerial-level China–Germany Strategic Dialogue with Foreign Minister Yang Jiechi. He also had meetings with Premier Wen Jiabao and Vice Premier Li Keqiang. Bilateral trade was US$140 billion in 2010 (about one third of China's trade with the EU). He also attended the opening of a major exhibition on the “Art of the Enlightenment” in the newly refurbished National Museum. In their talks the two sides agreed to set up a senior inter-governmental comprehensive dialogue mechanism to be co-chaired by Premier Wen Jiabao and Chancellor Angela Merkel in July (XHNA, 1 April).