Part One Programming Background

I. Sound Foundation

In February 2001, Outline of the Plans for the Tenth Five-Year Plan for National Economic and Social Development for Beijing Municipality was reviewed and approved at the 4th session of the 11th Beijing Municipal People’s Congress. Five years since then, under the leadership of the CPC’s Central Committee and the State Council, the whole municipality have followed the guidance of Deng Xiaoping Theory and the Three Represents and conscientiously implemented the concept of scientific development, centering upon the strategic blueprint of “New Beijing, Great Olympics,” institutional innovation, restructuring, environment optimization and comprehensive development. As a result, the major objectives and missions have been successfully accomplished for the Tenth Five-Year Plan.

New heights in economic developments: Average GDP growth rate registers 11.9 percent-; per capita GDP by permanent residents exceeds 5000 USD; economic structure is gradually optimized; the modern service industry becomes modernized, appearance of new and high-tech industry, modern manufacturing and agriculture witness a marked progress in line with the characteristics of Beijing’s capital functions; the proportion of the tertiary industry climbs up to 67.7 percent; economic growth is improved in terms of quality and efficiency; average annual growth of local financial revenues is more than 25.3 percent; and total energy and water consumption per 10,000 yuan (about US$1,250) GDP sees an average decline of 5.4 percent and 13.3 percent respectively.

New progress in social development: Science and technology are booming; R&D expenditure of the whole municipality accounts for about 22.1 percent of the GDP; scientific and technological progress is making more and more contributions to economic growth; the education system is gradually becoming well established, with 98 percent of the school age population in senior high school and 53 percent in higher education; the public cultural service is developing steadily, supported by the completion of a series of public cultural facilities of great influences; the public health system and integrated mechanism for disaster relief and emergency have been perfected gradually after the victory over SARS; the Olympic Games preparations continue smoothly; and nation-wide fitness activities are becoming more popular, with competence in competitive sports rising.

New patterns in urban development: Construction has been accelerated on Zhongguancun Science Park, the CBD, the Economy & Technology Development Zone of Beijing and other key functional areas, as important carriers for upgrading capital service functions, attracting high-end industrial conglomeration and expanding economic volume; efforts have been redoubled to coordinate urban-rural and regional development; and suburban infrastructure improvement has been sped up. The urban master plan has been completed and the guiding opinions for district and county function definitions and evaluation indicators have been formulated and implemented. A development pattern is taking shape with diversified features for districts and counties.

There has been an upgrade in the service capability. Accumulated investment in urban infrastructure has amounted to 226 billion yuan (about US$27.5 billion), up 63.5 percent compared with the Ninth Five-Year Plan period. Such major projects as the Fifth-Ring Road, Lianhuachi West Road and Metro Line 13 have been completed. The urban railway traffic mileage has risen to 114 kilometres. Ecological preservation has achieved remarkable improvements, with an urban forest coverage of 50.5 percent. Air pollution control has made obvious progress, as the proportion of days with a second-grade air quality or above reaches 64.1 percent, which is almost 16 percentage points higher than year 2000. Improvements have also been made in natural gas and thermal supply, and sewage and garbage treatment.

There have been new breakthroughs in reforms and opening up. Major progress has been made in administrative system reform, infrastructure construction financing system reform, state-owned assets regulatory system and SOE reforms, rural tax and fee reform, and urban management system. Various new forms of management have been exercised, such as franchising, construction contractor management and public hearing. New breakthroughs have been made in opening up to the rest of the world, while an accumulated US$12.32 billion of foreign capital having been utilized. The environment for development is constantly improving.

In reaching new levels of living standards, the active employment policy has been implemented to keep the urban registered unemployment rate at a comparatively low level; a multi-layer social security system has been initially established; the per capita disposable income of urban dwellers and the per capita net income of farmers has increased annually on average by 10.4 percent and 9.9 percent respectively; the proportion of service consumption has substantially risen, such as education, tourism and fitness, leading to a faster upgrade in consumption structure; and people are heading towards an affluent life.

The completion of the Tenth Five-Year Plan marks a new span in the capital’s development and lays solid foundations for realizing the strategic concept of "New Beijing, Great Olympics" and modernization. Facing the future, we are already standing at a great new height.

II. Development Trends

The 11th Five-year Period is critical in regard to the city’s efforts to achieve the strategic perception of “New Beijing, Great Olympics,” as well as the city’s modernization process. New trends are emerging in the domestic and international environment as well as in municipal development in the coming five years.

The capital economy is entering a new phase of development. Per capita GDP continues to grow; consumption and industrial structures are continuously upgraded, providing strong impetus for sustained and rapid development of the capital economy; the key to sustained and rapid development lies in the transformation of the growth mode; and emphasis is being placed on the expansion of total economic volume, structure optimization and synchronized upgrading of development quality and efficiency.

People’s lives are richer and more prosperous. With the improvement of material life and the transformation of development concepts, urban and rural residents are demanding more diversified and differentiated consumption; major trends show a better quality of life and the sharing of development opportunities and accomplishments; social fairness is drawing more attention, alongside production and life issues of disadvantaged groups, while promoting overall social welfare.

Scientific and technological progress accelerates industrial upgrading. The new technological revolution is gradually changing traditional economic situations and extending the industrial chain; industrial boundaries cross with each other; value-added parts of the chain and profit distribution have experienced shifts; industries are gradually integrated with each other; innovation becomes the dominant factor that determines the competitive edge, therefore, special attention should be given to indigenous innovation capacity and high-end industries’ development while promoting the overall industrial optimization and upgrading.

Market opening speeds up the formation of a new pattern of development. With the development of the market economy and further opening up, domestic and foreign economies have closer contact and interdependence. Cooperation and win-win on the basis of market competition is becoming a new tendency. Institutional environment has become the crucial factor that determines the element flow and development vitality. It is necessary to maintain traditional advantages and give more attention to optimize the development environment and regional economic cooperation with institutional innovation at its core. 

Urban development enters the crucial period of strategic adjustment. The general development of direction and functional allocation framework of the capital city has been determined, and the city service functions and basic strength have been preliminarily set up. The key now is to foster an effective guidance mechanism to promote the shift in strategic focus towards urban development. It is necessary to focus more on opening service function extension and resource allocation optimization while improving the general service level.

Social structure continues to undergo intensive transformation. The scale of population flow across regions is on the rise; interests of different groups are getting more diversified; information technologies are catalyzing profound changes in people’s values and behavior; the public awareness of participation is continuously strengthened. The key is to set up an effective mechanism of discovery, response and participation to keep social stability and enhance social harmony. It is necessary to focus more on interest balance and coordination while maintaining and promoting general interests. 

III. Historic Opportunities

As the capital, Beijing has the unique advantage of strong intellectual power pool, advanced science, technology and education, rich cultural resources, dense information resources and enormous market potentials, etc. These advantages will help future development through the following elements.

The 2008 Summer Olympics will be held in Beijing. This provides Beijing with a stage to display the charms of China and Beijing, and their relevant business opportunities to the whole world. The Games will help advance the economic and social development of Beijing, develop its urban management, promote all-dimensional, multi-level and broad-caliber exchanges and cooperation between Beijing and the rest of the world, and strengthen the international status and influences of Beijing.

The planning of the metropolitan region covering Beijing, TianjinMunicipality and HebeiProvince has been outlined and implemented. This will promote the strategic adjustment of the national pattern of regional development and lead to a larger range of production factor flows in the metropolitan region and rational allocation of resources. This will also further expand the market and industrial space, give a better play to the capital’s comparative advantages, advance industrial transformation and the adjustment of urban function layouts and alleviate population, resources and environmental pressures.

The country has implemented the strategy of indigenous innovation. This creates new opportunities for Beijing to make full use of its advantages, enhance the innovative service capacity oriented to the whole nation, and develop high-end, highly efficient and highly radiating industries.

International industrial shift has been accelerated. With the deepening of economic globalization, especially high-tech industries and the modern service industry, Beijing has a better opportunity to undertake an international industrial shift, develop headquarter-oriented economy, participate in international competition and upgrade the city’s globalization and comprehensive competitiveness on a higher level.

Ⅳ. Main Challenges

During the Eleventh Five-Year Program period, the municipal development is also constrained and challenged by some unfavorable factors. We should attach great importance to and properly handle these factors.

The conflict between population explosion and resources restriction is exacerbated. Beijing has serious lack of natural resources, whose per capita water resources is only 1/8 of the national average and land less than 1/5 of the average. Energy supply, which mainly relies on imports, is also stringent. In recent years, resource bottlenecks are getting more outstanding, with the rapid expansion of permanent residents.

The growth mode does not fit development requirements. The economic growth is still mainly investment-driven, with insufficient contribution from consumption. The growth mode is not highly intensive, with low competence of innovation and inefficient utilization of resources. The energy and water consumption per 10,000 yuan (about US$1,250) of GDP and land taking are far above that of cities in developed countries.

Urban-rural and regional developments are not coordinated. The issues of farmer, agriculture and rural areas are still urgent; the population and functions in downtown areas are excessively concentrated; places of historic interest need to be further protected; there are great disparities in infrastructure and social public service between downtown and suburban areas, between the plain and mountainous areas, and between the south and north parts of the municipality. 

There is still a long way to go in ecological quality. Restricted by Beijing’s natural ecological conditions as a northern China city and its rapid economic development, fundamental improvement in air quality and water environment is extremely difficult. What is most serious is the dirty and messy environment in the rural areas especially in the urban-rural fringe.

The institutional mechanism is not well consistent with the concept of scientific development. The government reforms and functional transformation are relatively lagging behind; social undertaking reforms are sluggish, there are also problems of low efficiency of SOEs, weak development of small and medium-sized enterprise and non-public sectors. There is an immature market regulatory system in accordance with the socialist market economy, and a defective environment for development.

The capacity to maintain social stability and urban security needs improving. Despite profound changes in social structure, composition and pattern, interest diversification and greater public awareness of rights safeguarding and political participation, the current social governance structure is not ready for these changes. Emergent and uncertain factors of urban security are increasing, posing new challenges for the administration and response capability of government departments at all levels. 

During the Eleventh Five-Year Program period, the capital city faces an environment where opportunities coexist with and outweigh challenges, and which is generally favorable for social and economic development. It is a critical period for Beijing to extensively develop service economy, knowledge economy and cycling economy, accelerate economic structure upgrading and growth mode transformation and optimization. It is an important period to speed up urbanization, enhance Beijing’s city function and quality, actively participate in and boost regional cooperation, and formulate modern international metropolitan framework. It is a new period to build a harmonious society in the national capital on the basis of new conditions and environment to a higher level. The awareness of opportunity and hardship should be strengthened to properly handle various challenges, to focus on economic development with undivided attention and to realize faster and better development of the capital economy.