The aforementioned basic targets and basic policies for building a socialist economy, politics and culture with Chinese characteristics are well integrated and inseparable. They constitute the basic program of the Party for the primary stage of socialism. This program is an important part of Deng Xiaoping Theory, and elaboration of the Party's basic line in the economic, political and cultural fields and a summary of the major experience gained over the years.

The period from the present to the first decade of the next century will be crucial for China to realize its strategic objective of the second step before marching toward that of the third step. We must promote the fundamental shift of the economic system and of the mode of economic growth, fulfill the Ninth Five-Year Plan and attain the long-range objectives through the year 2010 so as to lay a solid foundation for achieving basic modernization by the middle of the next century. During this period, we must solve two major problems, that is, how to establish a more or less ideal socialist market economy and how to maintain sustained, rapid and sound development of the national economy. Keeping to the orientation of building a socialist market economy, we must strive for new breakthroughs in some major aspects of our reform and make substantial progress in optimizing the economic structure, developing science and technology and raising the level of opening up, so as really to find a way to coordinated development of the economy featuring a fairly high speed, fairly good performance and constant improvement of the quality of the economy as a whole.

(1) Readjust and improve the ownership structure. It is China's basic economic system for the primary stage of socialism to retain a dominant position for public ownership and to develop diverse forms of ownership side by side. The establishment of such a system is determined by the socialist nature and the reality of China in the primary stage of socialism: First, being a socialist country, China must keep to public ownership as the foundation of its socialist economic system; second, being in the primary stage of socialism, China needs to develop diverse forms of ownership with public ownership in the dominant position; and third, any form of ownership that meets the criterion of the "three favorables" can and should be utilized to serve socialism.

Since the Third Plenary Session of the 11th Party Central Committee, our Party has earnestly reviewed its past experience and lessons with regard to the ownership issue, formulated the principle of keeping public ownership in a dominant position and developing diversified economic sectors side by side, gradually removing the fetters of the irrational ownership structure on the productive forces and bringing about a situation featuring diversified forms of public ownership with all sectors of the economy developing side by side. It remains a major task in the economic restructuring to continue readjusting and improving the ownership structure so as to further release and develop the productive forces.

We should see the full meaning of the public sector of the economy. The public sector includes not only the state- and collectively-owned sectors, but also the state- and collectively-owned elements in the sector of mixed ownership. The dominant position of public ownership should manifest itself mainly as follows: Public assets dominate in the total assets in society and the state-owned sector controls the life-blood of the national economy and plays a leading role in economic development. This is the case for the country as a whole. There may be differences in some localities and industries. Dominance of the public assets should feature in quantitative terms, but more so in terms of improved quality. The leading role of the state-owned sector should manifest itself mainly in its control power. We should make a strategic readjustment of the pattern of the state-owned sector of the economy. The state-owned sector must be in a dominant position in major industries and key areas that concern the life-blood of the national economy. But in other areas, efforts should be made to rearrange assets and readjust the structure so as to strengthen the focal points and improve the quality of the state assets as a whole. On the premise that we keep public ownership in the dominant position, that the state controls the life-blood of the national economy and that the state-owned sector has stronger control power and is more competitive, even if the state-owned sector accounts for a smaller proportion of the economy, this will not affect the socialist nature of our country.

The collectively-owned sector is an important component of the public sector of the economy. The collective economy is able to reflect the principle of common prosperity, extensively absorb funds that are scattered in society, ease employment pressure and help increase public accumulation and state tax receipts. We should support, encourage and help all forms of collective economy in their development in the urban and rural areas, which will be of great significance to the public sector of the economy in playing its dominant role.

Public ownership can and should take diversified forms. All management methods and organizational forms that mirror the laws governing socialized production may be utilized boldly. We should strive to seek various forms for materializing public ownership that can greatly promote the growth of the productive forces. The joint stock system is a form of capital organization of modern enterprises, which is favorable for separating ownership from management and raising the efficiency of the operation of enterprises and capital. It can be used both under capitalism and under socialism. We cannot say in general terms that the joint stock system is public or private, for the key lies in who holds the controlling share. If the state or a collective holds the controlling share, it obviously shows the characteristics of public ownership, which is favorable to expanding the area of control by public capital and enhancing the dominant role of public ownership. Now there have appeared a large number of diverse forms of joint stock partnerships in the urban and rural areas. They are new things arising in the process of reform. We should support them, give them guidance, constantly sum up their experience and improve them. What should be specially advocated and encouraged is the kind of collective economy that features, in the main, the association of laborers in labor and capital.

The non-public sector is an important component part of China's socialist market economy. We should continue to encourage and guide the non-public sector comprising self-employed and private businesses to facilitate its sound development. This is of great importance to satisfy the diverse needs of the people and promoting the development of the national economy.

It is necessary to improve the legal system concerning property and protect the legitimate rights and interests of, and fair competition among, all types of enterprises and at the same time exercise supervision and control over them according to law.

(2) Accelerate the reform of state-owned enterprises. State-owned enterprises constitute the pillar of the national economy. Well-executed reform of state-owned enterprises is, therefore, of vital importance to building a socialist market economy and consolidating the socialist system.

The establishment of a modern enterprise system is the orientation of the reform of state-owned enterprises. We shall convert large and medium-sized state-owned enterprises into standard corporations according to the requirements of "clearly established ownership, well defined power and responsibility, separation of enterprise from administration, and scientific management" so that they will become corporate entities and competitors adaptable to the market. We shall define more clearly the powers and responsibilities of the state and enterprises. The state will enjoy the owner's equity according to the amount of capital it has put into the enterprises and bear limited responsibilities for the debts of enterprises while enterprises will operate independently according to law, responsible for their own profits and losses. The government should not directly intervene in the operation of enterprises, and enterprises have to be restrained by the owner and should not harm the owner's equity. We shall adopt all kinds of possible means, including direct financing, to replenish the capital funds of enterprises. We shall cultivate and develop a diversity of investors in order to push the separation of administrative functions from enterprise management and change the way enterprises operate.

We should combine the reform of state-owned enterprises with their reorganization, upgrading and better management. Aiming at improving the state sector of the economy as a whole, we shall effectuate a strategic reorganization of state-owned enterprises by well managing large enterprises while adopting a flexible policy toward small ones. By using capital as the bonds and relying on the market forces, we shall establish highly competitive large enterprise groups with trans-regional, inter-trade, cross-ownership and trans-national operations. We shall also quicken the pace in relaxing the control over small state-owned enterprises and invigorating them by way of reorganization, association, merger, leasing, contract operation, joint stock partnership or sell-off. We shall promote technological progress of enterprises, encouraging and channeling the flow of funds of enterprises and society into technological upgrading so as to form a new mechanism for the development of market-oriented new products and technological renovations. Strengthening scientific management, we should try to institute in enterprises a system of leadership and a system of organization and management that conform to the law of the market economy and the national conditions, and set up a decision-making, enforcement and supervision system so as to form an effective incentive and control mechanism. We shall improve leadership of enterprises, give play to the role of Party organizations there as political nuclei and adhere to the principle of relying on the working class wholeheartedly.

We should encourage merger of enterprises, standardize bankruptcy procedures, divert laid-off workers, increase efficiency by downsizing staff and encourage reemployment projects so as to form a competitive mechanism selecting the superior and eliminating the inferior. With the deepening of enterprise reforms, technological progress and readjustment of the economic structure, it would be hard to avoid the flow of personnel and lay-offs. It will cause temporary difficulties to some of the workers. But, fundamentally speaking, it is conducive to economic development, thus conforming to the long-term interests of the working class. The Party and the government will take measures and rely on all quarters of society to show concern for laid-off workers, help them with their welfare, organize job training, and open up new avenues of employment and promote the reemployment project. All workers should change their ideas about employment and improve their own quality to meet the new requirements of reform and development.

We should press ahead with all the supportive reforms. We shall build an effective mechanism for the management, supervision and operation of state assets to preserve or increase their value and prevent the loss of state assets. We shall build a social security system, introducing old-age pensions and medical insurance systems by combining social pools with individual accounts, and improve the unemployment insurance and social relief systems so as to provide the basic social security. We shall establish public accumulation funds for urban housing and accelerate the reform of the housing system.

To deepen the reform of state-owned enterprises is an important yet arduous task of the whole Party. We should be firm in determination and bold in exploration and practice to make sure that by the end of this century most of the large and medium-sized state-owned key enterprises will have initially established a modern enterprise system and markedly improved their operation, thus breaking fresh ground in the reform and development of state-owned enterprises.

(3) Improve the structure and mode of distribution. We shall keep to the system in which distribution according to work is primary and in which a variety of modes of distribution coexist. By combining remuneration according to work and remuneration according to factors of production put in, and by giving priority to efficiency with due consideration to equity, such a system is conducive to optimizing the allocation of resources, promoting economic development and maintaining social stability. We shall protect lawful incomes according to law, allowing and encouraging some of the people to get wealthy first through honest labor and lawful operations, and allowing and encouraging the use of capital, technology and other factors of production to participate in the distribution of gains. Illegal earnings shall be banned and those who appropriate public property or seek gains by such illegal means as tax evasion or by striking deals between power and money shall be resolutely punished according to law. We shall take stock of irrational incomes and must correct the malpractice of individuals obtaining extra incomes by taking advantage of sectoral monopolies and some special privileges. We shall regulate the excessively high incomes, improve the individual income tax system, introduce such new taxes as inheritance tax, and standardize income distribution so as to make income gaps more reasonable and prevent polarization.

To concentrate financial strength on improving the state finance is an essential requirement for ensuring the development of all economic and social undertakings. It is necessary to correctly handle the relations of distribution among the state, enterprises and individuals and between the central and local authorities so as to gradually raise the proportion of fiscal revenue in the gross national product and the proportion of the central government revenue in the national revenue and, at the same time, adjust the revenue and expenditure structure to adapt to the changed ownership structure and the changed government functions and establish secure and balanced state finances.

(4) Give full play to the role of the market mechanism and improve the macroeconomic control system. We should accelerate the process of building a complete market system in the national economy. We shall continue to develop all kinds of markets, with emphasis on markets for capital, labor, technology and other production factors and the mechanism for pricing these factors. We shall reform the circulation system, improve market rules, strengthen market management, remove obstacles to market development, break through regional blockades and sectoral monopolies so as to build as soon as possible a unified and open market system with orderly competition and make better use of the basic role of the market in the allocation of resources.

The main task of macroeconomic control is to keep a balance between total demand and total supply, curtail inflation, promote the optimization of the major economic structures and achieve stable economic growth. In macroeconomic control, we should mainly employ both economic and legal means. We shall deepen the reforms of the banking, fiscal and planning systems so as to improve the means of macroeconomic control and the coordinating mechanism. We shall carry out appropriately tight financial and monetary policies, keeping an eye on the degree of the control. We shall, in accordance with the law, strengthen the supervision and control of the financial institutions and markets, including the securities market, standardize and safeguard the financial order, and effectively guard against financial risks.

(5) Strengthen agriculture as the foundation of the economy, and readjust and optimize the economic structure. In line with our economic development and taking into full account the trend of accelerated development of science and technology in the world and the speedy regrouping of the international economic structures, we should make strategic readjustments in the economic structure aimed at improving the quality and performance of the entire national economy in an all-round way and at boosting the overall national strength and international competitiveness. This is a pressing requirement of the national economic development and a long-term task. The general principles are as follows: with the market as the orientation, to make production respond to the changing demands of the domestic and foreign markets; to optimize the industrial structure by relying on scientific and technological progress; to bring about coordinated development of regional economies by giving scope to the advantages in their respective localities; and to change the mode of economic growth, putting an end to the situation featuring high input, low output, high consumption and low efficiency.

We should continue to give priority to agriculture in all our economic work. We shall keep the Party's basic rural policies stable, deepen rural reforms and see to it that agriculture and the rural economy develop and the peasants?income increases. We shall increase agricultural input through multiple channels, improve agricultural infrastructure and constantly better production conditions. We shall step up the effort to develop agriculture by relying on science and education, aiming at high yields, fine quality and high efficiency as well as good water-saving results. We shall promote an industrial management of agriculture to get production, processing and marketing integrated and supporting each other so that agriculture will develop toward commercialization, specialization and modernization. We shall develop farming, forestry, animal husbandry, sideline production and fishery in an all-round way and continue to develop town and township enterprises so as to bring into being a rational industrial structure. We shall do well in planning and building up small towns and cities. We shall keep stable, for a long time to come, the household responsibility contract system with remuneration linked to output, improve the two-tier operation system that combines unified management with independent management and gradually boost the strength of the collective economy. We shall reform the grain and cotton purchasing and marketing system and introduce a rational pricing policy. We shall set up and improve a socialized service system for agriculture, a farm produce market system and a system of state support and protection. We must respect the decision-making power of peasants in their production and operations, protect their legitimate rights and interests and really lighten their burdens so that the broad masses of the peasants will truly benefit from the various rural policies and the work of the Party.

We should transform and upgrade traditional industries, develop rising and high-tech industries and try to informationize the national economy. We shall continue to strengthen the construction of infrastructure and basic industries, intensify the readjustment and upgrading of the processing industry, invigorate pillar industries and actively cultivate new points of economic growth. We shall combine the efforts to develop new technologies, products and industries with the efforts to open up markets and integrate the development of technology-intensive with labor-intensive industries. We shall encourage and guide the tertiary industry so that it will develop at an accelerated pace.

We should promote rational distribution and coordinated development of regional economies. Taking advantage of its favorable conditions, the eastern part of the country should strive for a still higher level of development in the course of reform and opening up, and take the lead in achieving basic modernization where conditions permit. The central and western parts should speed up the reform, opening up and development, make use of their advantages in natural resource and develop related industries. The state will increase its support for the central and western parts by giving them priority in planning infrastructure and resources development projects, instituting step by step a standard payment transfer system, and encouraging both Chinese and overseas investors to invest in the regions. It is necessary to further develop all forms of association and cooperation between the eastern and the central and western parts. We shall pay more attention and give active support to areas inhabited by ethnic minorities in their economic development. We must try all possible ways to minimize the regional development disparities step by step. Proceeding from their actual conditions, all regions should develop their economies with distinct local characteristics, speed up the upgrading of old industrial bases, let the central cities play their role, and continue to guide the formation of trans-regional economic zones and key industrial belts. We shall accelerate the reform of investment and financing systems, improve state industrial policies, and take measures to solve such problems as launching "large and all-inclusive" and "small and all-inclusive" projects and irrational and duplicated construction projects.

(6) Implement the strategies of developing the country by relying on science and education and of achieving sustainable development. Science and technology being a primary productive force, their progress is a decisive factor in economic development. We must take full account of the great impact of the future development of science and technology, particularly high technology, on the overall national strength, social and economic structure and the life of the people and make the acceleration of their progress a vital task in economic and social development. In this way, we shall really get onto the path of developing our economy by relying on scientific and technological progress and improving the quality of laborers. In drawing up long- and medium-term science development programs, we should proceed from China's long-term development requirements, bear in mind the overall situation, highlight key areas and, trying to do certain things and refraining from doing other things, strengthen basic research and research in high technology and accelerate the pace of applying high technology to production. We should intensify the development and spread of applied technologies, promote the translation of scientific and technological achievements into practical productive forces, and concentrate on tackling major and key technological problems in economic and social development. We should import, with our priorities in mind and on a selective basis, advanced technologies from abroad with a view to enhancing our own abilities of independent creation. As a developing country, China should attach greater importance to the application of the latest technological achievements and bring about a leap in its technological development.

We should deepen the reform of the management systems of science and technology and education to promote their integration with the economy. We should give gull scope to the roles of the market and social demand in orienting and promoting scientific and technological progress and encourage and help enterprises to engage in research, development and technological upgrading so that they will undertake to engage in research and development and invest in them. Wherever conditions permit, scientific research institutes and institutions of higher learning should take the road of combining production, teaching and research by entering into association or cooperation with enterprises in various ways so as to solve the problems of segmentation and dispersal of strength in the realm of science, technology and education. Innovation, competition and cooperation should be encouraged. We shall implement the regime of protecting intellectual property rights. Competent people being the most important resource for scientific and technological progress and economic and social development, we should institute a whole set of incentive mechanisms favorable to the training and use of such people. We should actively bring in intellectual resources from overseas and encourage those studying abroad to return and work or render their service to the motherland in one way or another.

As a populous country, relatively short of natural resources, China must implement a sustainable development strategy in the modernization drive. We should stick to the basic state policies of family planning and environmental protection, correctly handling the relationship of economic development versus population, natural resources and the environment. While exploiting our natural resources and making economical use of them, we lay emphasis on the latter so as to raise the efficiency of their utilization. We should make an overall plan for the development and improvement of our land resources and rigorously enforce laws governing the management and protection of such resources as land, water, forests, minerals and seas. We shall institute a system of paid use of natural resources. We must strengthen the control of environmental pollution and improve the ecological environment by planting trees and grass, doing well in the conservation of water and soil, and preventing and controlling desertification. With regard to population, we should control its growth and improve its quality, and pay attention to the problem of an aging population.

(7) Strive to do better in opening to the outside world. Opening to the outside world is a long-term basic state policy. Confronted with globalization trends in economic, scientific and technological development, we should take an even more active stance in the world by improving the pattern of opening up in all directions, at all levels and in a wide range, developing an open economy, enhancing our international competitiveness, optimizing our economic structure and improving the quality of our national economy.

Focusing on better results, we should expand external trade in commodities and services and optimize the import and export mix. We shall stick to the strategy of achieving success on the strength of quality and a multi-outlet market, and vigorously open up markets abroad. We shall further lower the general level of tariffs and encourage the import of advanced technologies and key equipment. We shall deepen the reform of the system of trade and economic relations with foreign countries, improving the proxy system and expanding the power of enterprises to handle their own foreign trade so as to create a policy environment for competition on an equal footing. We shall take an active part in regional economic cooperation and the global system of multilateral trade.

We shall use foreign capital actively, rationally and effectively. We shall open the service trade step by step. In accordance with the law, we shall protect the rights and interests of foreign-funded enterprises, grant them the same treatment as their Chinese counterparts and improve guidance to and regulation of these enterprises. We shall encourage Chinese investors to invest abroad in areas that can bring China's comparative advantages into play so as to make better use of both Chinese and foreign markets and resources. We shall improve and enforce laws and statutes governing China's trade and economic relations with foreign countries. We must correctly handle the relationship of opening up versus independence and self-reliance, and safeguard the economic security of the country.

We should better operate the special economic zones and the Pudong New Area in Shanghai, encouraging them to continue to march in the forefront by playing their demonstrative, diffusive and leading roles in making institutional creations, upgrading industries and opening wider to the outside world.

(8) Continue to improve the standard of living of the people. Raising the standard of living of the people is the fundamental goal of the reform, opening up and economic development. We should enable the people to enjoy a fairly comfortable life on the basis of economic growth and then move on toward higher standards. We shall try to increase the real income of the people in both urban and rural areas, and broaden the range of consumption with proper guidance. While improving the people's material well-being, we shall enrich their cultural life and beautify their environment to enhance the quality of life. Special efforts will be made to improve housing, sanitation, transportation and communication conditions and expand the range of service consumption. We shall continue to build more public and social welfare facilities and improve the level of education and medical and health care. We shall adopt a policy that will ensure the basic standard of living for urban residents in difficulty. The state will adopt a variety of measures in a greater effort to fight poverty, striving to accomplish in the main the task of providing adequate food and clothing for impoverished people in rural areas by the end of the century.

Comrades,

The goals and tasks we have set forth for the economic reform and development represent the fundamental interests of the people and can be accomplished only by relying on the initiative and creativeness of the people and their hard work. As long as we persist in pursuing correct policies and in properly guiding, protecting and tapping the initiative of all quarters of society, we shall definitely succeed in establishing a socialist market economy and bringing about a sustained, rapid and sound development of the national economy.

The deepening of the reform of the economic structure and the cross-century development of the socialist modernization drive require that, under the precondition of adhering to the Four Cardinal Principles, we should continue to press ahead with the reform of the political structure, further extend the scope of socialist democracy and improve the socialist legal system, governing the country according to law and making it a socialist country ruled by law.

It is our Party's persistent goal to develop socialist democracy. Without democracy there would be no socialism or socialist modernization. The essence of socialist democracy is that the people are the masters of the country. All powers of the state belong to the people. China's state system featuring people's democratic dictatorship and its system of government featuring people's congresses are the result of the struggles waged by the people and the choice of history. It is imperative that we should uphold and improve this fundamental political system, instead of copying any western models. This is of decisive importance in upholding leadership by the Party and the socialist system and realizing people's democracy.

Developing democracy must go hand in hand with the efforts to improve the legal system so that the country is ruled by law. Ruling the country by law means that the broad masses of the people, under the leadership of the Party and in accordance with the Constitution and other laws, participate in one way or another and through all possible channels in managing state affairs, economic and cultural undertakings and social affairs, and see to it that all work by the state proceeds in keeping with law, and that socialist democracy is gradually institutionalized and codified so that such institutions and laws will not change with changes in the leadership or changes in the views or focus of attention of any leader. Ruling the country by law is the basic strategy employed by the Party in leading the people in running the country. It is also the objective demand of a socialist market economy, an important hallmark of social and cultural progress, and a vital guarantee for the lasting political stability of the country. The Party has led the people in drawing up the Constitution and other laws, to which it confines its activities. In ruling the country by law, we can unify the adherence to Party leadership, the development of people's democracy and do things in strict accordance with the law, thus ensuring, institutionally and legally, that the Party's basic line and basic policies are carried out without fail, and that the Party plays the role of the core of leadership at all times, commanding the whole situation and coordinating the efforts of all quarters.

Political restructuring must help enhance the vitality of the Party and the state, demonstrate the features and advantages of the socialist system, safeguard national unification, ethnic unity and social stability, give full scope to the initiative of the people, and stimulate the development of the productive forces and social progress. The main tasks of political restructuring for the present and a period of time to come are to develop democracy, strengthen the legal system, separate government functions from enterprise management, streamline government organs, improve the democratic supervision system, and maintain stability and unity.

(1) Improve the systems of democracy. As a ruling party, the Communist Party leads and supports the people in exercising the power of running the state, holding democratic elections, making policy decisions in a democratic manner, instituting democratic management and supervision, ensuring that the people enjoy extensive rights and freedom endowed by law, and respecting and guaranteeing human rights. In developing socialist democracy, institutions are of fundamental, overall, stabilizing and lasting importance. We shall continue to further improve the system of people's congresses, ensuring that the people's congresses and their standing committees exercise the functions of the organs of state power according to law, strengthen their legislative and supervisory work, and establish closer ties between deputies and the people they represent. While making major policy decisions concerning reform and development, we must enact corresponding laws. We shall gradually establish a mechanism that will help the decision-makers to go deep among the people to see their conditions, adequately reflect their will and pool their wisdom so that decision-making will be more scientific, democratic and efficient and will reach a higher level. We shall continue and improve the system of multi-party cooperation and political consultation led by the Communist Party. Upholding the principle of "long-term coexistence, mutual supervision, treating each other with all sincerity and sharing weal or woe,"? we shall strengthen our cooperation with the democratic parties and consolidate our alliance with non-Party people. We shall continue to help the people's political consultative conferences to standardize and institutionalize their political consultation, democratic supervision, participation in and deliberation of state affairs, turning them into an important channel for the Party to unite with people from all circles. We shall consolidate and develop a broad patriotic united front. We shall implement in an all-round way the Party's policies toward ethnic minorities, uphold and improve regional autonomy for them, reinforce our work concerning ethnic groups and consolidate and enhance socialist ethnic relations of equality, solidarity and mutual assistance, promoting common prosperity and progress for all our nationalities. We shall implement in real earnest the Party's policies concerning religion and overseas Chinese affairs. The trade unions, the Communist Youth League, the women's federations and other mass organizations should play their role of democratic participation and supervision in managing state and social affairs, and serve as a bridge or bond linking the Party with the people.

We shall extend the scope of democracy at the grassroots level to make sure that people directly exercise their democratic rights, manage their own affairs according to law and create a happy life for themselves. This is a practice of socialist democracy on the most extensive scale. The grassroots organs of power and self-governing mass organizations in both urban and rural areas should establish a sound system of democratic elections, and keep the public informed of their political activities and financial affairs so as to enable the people to take a direct part in the discussion and decision-making concerning local public affairs and welfare undertakings, and exercise supervision over the cadres. We should uphold and improve the democratic management system of enterprises and institutions with workers? conferences as its basic form so that workers can participate in reform and management and protect their legitimate rights and interests. We must resolutely correct such erroneous acts as suppressing democracy and resorting to coercion and commandism.

(2) Improve the legal system. The smooth progress of the undertakings of the Party and the state inevitably requires that there must be laws to go by, that the laws must be observed and strictly enforced, and that law-breakers must be prosecuted. We shall strengthen legislation, improve its quality and form a socialist legal system with Chinese characteristics by the year 2010. To safeguard the dignity of the Constitution and other laws, we must see to it that all people are equal before the law and no individuals or organizations shall have the privilege to overstep it. All government organs must perform their official duties according to law and guarantee the citizens? rights in real earnest by instituting a system of responsibility for law enforcement and a system of assessment and examination. We shall promote the reform of judicial affairs to ensure institutionally that the judicial organs are in a position to exercise adjudicative and procuratorial powers independently and fairly according to law, and establish a system for investigating and prosecuting anyone who is held responsible for unjust or misjudged cases. We shall improve the ranks of law-enforcing and judicial personnel. We shall educate the populace about the law to make them more aware of its importance. In particular, we shall enhance the leading cadres? awareness of the importance of the legal system and their ability to perform their duties according to law. We must closely integrate the improvement of the legal system with the promotion of cultural and ethical progress and make sure that they advance synchronously.

(3) Reform the structure of government institutions. Unwieldy organization, overstaffing, failure to separate the functions of the government from those of enterprises and serious bureaucracy directly hamper the deepening of the reform and economic development and impair the relationship between the Party and the masses. This problem calls for an urgent solution and must be studied from an overall point of view. Special forces should be organized to work out plans to solve it. In accordance with the requirements of a socialist market economy, we need to alter the functions of the government and separate them from those of enterprises so that enterprises will be truly given the power with regard to production, operation and management. Following the principle of simplification, uniformity and efficiency in the reform, we shall establish a highly efficient, well-coordinated and standardized administrative system, with a view to improving their service for the people. The departments in charge of comprehensive economic management should shift their functions to macroeconomic control, and specialized economic departments should be reorganized or reduced. We shall improve the work of departments supervising law enforcement and cultivate and expand social intermediary organizations. We shall deepen the reform of the administrative system, statutorily delimiting the structures, functions, sizes and working procedures of the state organs and ensuring that their sizes are kept within authorized limits and their redundant personnel are reduced. We shall also deepen the reform of the personnel system by introducing a competitive and incentive mechanism and improving the system of public servants to build up a contingent of administrators who are highly competent and professionally specialized.

(4) Improve the system of democratic supervision. Our powers are given to us by the people and all cadres are their servants who must be subjected to supervision by the people and the law. We should deepen the reform in this connection, improve the legal system of supervision, and establish and improve a mechanism ensuring that our cadres exercise their authority within the framework of law. The departments handling affairs of immediate concern to the people should carry out an open administrative system to make sure what they do is fair, just and open. We shall integrate the supervision by Party members with that by the law and the masses and give scope to the role of supervision by public opinion. We shall strengthen the supervision over the enforcement of the Constitution and other laws to safeguard the uniformity of the legal system of the state as well as the supervision over the implementation of general and specific policies of the Party and the state to see to it that they are truly carried out. We shall also strengthen the supervision over cadres at all levels and especially leading cadres to prevent them from abusing their powers. We must severely punish those in charge of law enforcement who break the law and those who accept bribes.

(5) Maintain stability and unity. With the deepening of the reform and opening up and the readjustment of economic relations, many changes have taken place in the various contradictions in the economic and social life and, in particular, some contradictions concerning the people's immediate interests are rather conspicuous. The Party committees and governments at all levels must work conscientiously, responsibly and enthusiastically to solve the people's practical problems in their life and work. With regard to contradictions among the people, we should go deep into the realities, carry out investigation and study and do ideological and political work well. As the circumstances may differ, we should properly use economic, administrative or legal means to tackle the contradictions and prevent them from becoming more acute.

Sound public security is of prime importance for the safety of people's lives and property as well as the reform, development and stability. We should improve the work of the procuratorial, judicial and public security departments. We must crack down on all kinds of crime according to the law and eradicate social evils such as pornography, gambling, and drug abuse and trafficking. In our efforts to improve all facets of public security, we need to combine punishment with prevention and lay more stress on the latter. We should intensify education and management to reinforce the responsibility system and bring about a sound environment for public security.

Building socialist democracy is a gradual historical process, so it should be advanced under the leadership of the Party, in light of China's conditions, step by step, and in an orderly way. The more developed socialism is, the more developed democracy will be. We should continue to promote a Chinese-style socialist democracy by exploring the law of its development in practice, and enable it to display greater vitality in the 21st century.

Socialist culture with Chinese characteristics, as far as its substance is concerned, is identical to the socialist ideological and ethical progress we have been promoting since we introduced the reform and opening up. Culture is relative to the economy and politics, while ideological and ethical progress is relative to material progress. Only when economic development and political and cultural advances are well coordinated and only if there are both material progress and cultural and ideological progress can there be socialism with Chinese characteristics.

Socialist modernization requires both a prosperous economy and a flourishing culture. The process of the modernization drive is largely dependent on the enhancement of the quality of the entire population and the exploitation of intellectual resources. In view of the rapid scientific and technological development, the keen competition in overall national strength, the worldwide interaction of different ideologies and cultures as well as the increasing cultural needs of our people leading a relatively comfortable life, the whole Party must fully understand that cultural advancement is essential and urgent because it plays a great role in developing the cause of socialism and rejuvenating the nation.

A socialist culture with Chinese characteristics is a major force in uniting and inspiring the people of all our nationalities, and an important indicator of our overall national strength. This culture originated from the 5,000-year-old civilization of the Chinese nation and is deeply rooted in our endeavor to build socialism with Chinese characteristics. It has distinctive features of the times, representing the basic features of our socialist economy and politics and playing a great role in promoting their development. In building socialism with Chinese characteristics, we must redouble our efforts to raise the ideological and ethical standards and scientific and educational levels of the whole nation and provide a powerful ideological driving force and strong intellectual support for economic development and all-round social progress. We must nurture citizens one generation after another who have high ideals, moral integrity, a good education and a strong sense of discipline, meeting the requirements of the socialist modernization drive. This is a long-term arduous task for our cultural advancement.

Fostering common ideals and aspirations in the whole society is the basic objective of our cultural advancement with Chinese characteristics. We should make unremitting efforts to educate cadres and the masses in Deng Xiaoping Theory. We should persistently conduct education in socialist ethics with emphasis on serving the people and on the principle of collectivism and strengthen education in democracy, the law and discipline so as to guide our people to foster a correct outlook on the world and life and correct values. We shall make great efforts to promote patriotism, collectivism, socialism and the hardworking and enterprising spirit. We shall advocate communist ideology and ethics and, combining progressiveness with extensiveness, we shall encourage all ideologies and ethics that are conducive to national unification, ethnic unity, economic development and social progress. We shall carry forward socialist humanitarianism. Young people are the future of the motherland and the hope of the nation, so we should pay great attention to their ideological and ethical progress.

The progress of education and science is the foundation of our cultural advancement. Training hundreds of millions of qualified laborers and tens of millions of professional personnel to meet the needs of the modernization drive and exploiting the advantage of our vast human resources has a direct bearing on the cause of socialism in the 21st century. We must see to it that education is given a strategic priority. We should respect teachers and their teaching, and strengthen the ranks of teachers. Bringing the initiative of all quarters of society into full play, we shall spare no efforts to make the nine-year compulsory education universal, eliminate illiteracy among young and middle-aged people, expand vocational and adult education of different types and steadily develop higher education. We shall optimize the educational structure, speed up the reform of the management system of higher education, and judiciously allocate resources for education so as to enhance the quality of instruction and raise the overall efficiency of schools. We should implement the Party's educational policy with an emphasis on improving the quality of students and train builders of and successors to the cause of socialism, who are developed morally, intellectual and physically in an all-round way. Great efforts should be made to raise the scientific and technological level, popularize science and technology, guide people to take a scientific approach and master scientific methods, and encourage them to be creative and inventive. We should eliminate ignorance and combat feudal and superstitious activities. We shall develop philosophy and other social sciences, which are of great importance to retaining the guiding position of Marxism in the ideological sphere of our country, to studying the laws governing the development of socialism with Chinese characteristics, and to improving our ability to understand the world and change it.

The development of the cultural undertakings, including literature and art, the press and publishing, radio, film and television, is an important aspect of cultural advancement. In the press and publicity work we must adhere to the principle of keeping the Party spirit, persist in seeking truth from facts and maintain a correct orientation for public opinion. We should tighten control over the press and publishing, optimizing their structures and improving their quality. We should deepen reform of the system for managing cultural undertakings, and implement and improve related economic policies. We must adhere to the principles of serving the people and the cause of socialism and of "letting a hundred flowers blossom and a hundred schools of thought contend," giving full scope to the theme of our times while advocating diversity so as to create more excellent works which integrate ideological content with artistry.

A healthy cultural environment is an important condition for promoting the cultural and ideological progress of society and advancing the reform, opening up and the modernization drive. We should conduct mass activities to promote ideological and ethical progress in depth and in a protracted way, and make efforts to advocate social, occupational and family ethics. We should, on the one hand, try to boost our cultural undertakings, and on the other, tighten control over the markets for cultural products so as to facilitate their sound development. We should build more cultural establishments. More attention should be paid to the protection of scientific and cultural heritage and revolutionary relics. We should promote the reform and development of public health and sports. We should advocate healthy and civilized lifestyles and constantly improve the cultural life of the masses.

China cannot develop its culture in isolation of the common achievements of human civilization. Following the principle of keeping our own culture as the base and making use of that of others, we should conduct various exchanges with other countries, drawing on their strong points while introducing our own achievements to the world. We must resolutely resist the corrosion of decadent ideas and cultures.

As part of the working class, intellectuals are playing an important role in the drive for modernization. We should implement the Party's policy toward intellectuals and give full play to their initiative and creativity. Intellectuals should study hard and better themselves so that they will be propagators of advanced thoughts, pioneers in the development of science and technology, educators training people to be citizens with high ideals, moral integrity, a good education and a strong sense of discipline, and producers of excellent intellectual works, contributing hand in hand with workers and peasants to the rejuvenation of the Chinese nation.

Chinese culture has a glorious history. In the great practice of the socialist modernization drive, we are sure to create a more magnificent socialist culture with Chinese characteristics and make due contribution to human civilization.

Comrades,

Having talked about the economic, political and cultural tasks, I should now like to make a special point on national defense and army building. To strengthen national defense and army building is the basic guarantee for our national security and modernization drive. Deng Xiaoping's concept of army building in the new period is the continuation and development of Mao Zedong's thinking on military affairs and the scientific guide to building our army and our national defense. In line with the general requirements of being qualified politically and competent militarily and having a fine style of work, strict discipline and adequate logistical support, we should press ahead with the army building and reform so as to make the People's Liberation Army a more revolutionary, modernized and standardized army. In our army's 70 years of brilliant history, it has stood all kinds of tests and become stronger and stronger, for which the fundamental guarantee is the strong Party leadership. Under the new historical conditions, the army must consistently uphold the absolute leadership by the Party, be in agreement with the Party Central Committee ideologically and politically, obey orders of the Party Central Committee in all actions and never forget its nature and purposes as the people's army. It should adhere to the strategy of active defense, improve its quality and take the road of fewer but better troops with Chinese characteristics. The army should be strict with itself, strengthen ideological and political work, carry forward its fine traditions and take the lead in the whole society in promoting cultural and ethical progress. In order to adapt itself to the profound changes in the military arena in the world, the army should intensify its education and training, and upgrade its defense capabilities under modern technology and especially high-tech conditions. In addition to the army reduction by one million men in the 1980s, we shall reduce the armed forces by another 500,000 in the next three years. We should strengthen the army by relying on science and technology, put more efforts in the research in defense-related science and technology, establish and improve an operation mechanism so that the defense industries are adapted to the socialist market economy, and gradually upgrade weapons and other equipment. The army should subordinate itself to and serve the overall interests of national economic development, strengthening itself through thrift and hard work and actively supporting and participating in the economic development of the country. Party organizations and governments at all levels and the masses should be concerned about and support the development of national defense and army building. We shall intensify defense education, increasing the people's awareness of the importance of national defense. The army should continue to support the government and cherish the people, and the government and the people should continue to support the army and give preferential treatment to families of armymen and martyrs so as to consolidate the unity between the army and the government and between the army and the people. We should also strengthen the work with regard to the militia and the reserves, and improve the mobilization system for national defense. We should continue to strengthen the Chinese People's Armed Police and the public and state security departments.

Complete reunification of the motherland is the common aspiration of all Chinese at home and abroad. Taking the great cause of the peaceful reunification of the motherland as their historical task, the Chinese Communists have made unremitting efforts to that end. Deng Xiaoping's scientific concept of "one country, two systems" has vigorously pushed forward the process of the peaceful reunification of the motherland.

As a hallmark of the great success of the concept of "one country, two systems,?Hong Kong's return to the motherland constitutes a crucial step taken by the Chinese people in the great cause of the reunification of the motherland. Since Hong Kong's return, the policies of "one country, two systems," " Hong Kong people administering Hong Kong" and a high degree of autonomy have been conscientiously implemented, and Hong Kong has maintained its prosperity and stability. Facts will prove that the government of the Hong Kong Special Administrative Region (HKSAR) and our compatriots in Hong Kong will certainly be able to administer Hong Kong well in accordance with the Basic Law of the HKSAR.

Macao will return to the embrace of the motherland in 1999, another great event for the Chinese nation. All preparations for Macao's return are being made in an energetic and orderly fashion. Macao's smooth transition and smooth transfer of government can certainly be secured and its long-term development and stability maintained.

The concept of "one country, two systems" is an important component of Deng Xiaoping Theory. The basic idea is that on the premise of national reunification, the main part of China will stick to the socialist system while Taiwan, Hong Kong and Macao will retain the current capitalist system and way of life for a long time to come. This concept is the basic policy for promoting the great cause of the peaceful reunification of the motherland, because it not only embodies the principled position of achieving national reunification and safeguarding state sovereignty, but also takes into full consideration the past and the present of Taiwan, Hong Kong and Macao and embodies a high degree of flexibility. The adoption of the policy of "one country, two systems" is in the interest of the reunification of the motherland and the rejuvenation of the Chinese nation and conducive to world peace and development.

Thanks to the introduction of the basic principles of "peaceful reunification" and "one country, two systems" as well as other policies, significant headway has been made in the relations between the two sides of the Taiwan Straits. The smooth return of Hong Kong and the maintenance of its long-term prosperity and stability will undoubtedly create favorable conditions for the settlement of the Taiwan issue. However, the growth of the splitting tendency on the Taiwan Island and the interference of certain foreign anti-China forces have stood in the way of peaceful reunification as big obstacles, which of course have met with determined opposition from the Chinese people including our compatriots in Taiwan.

We shall adhere to the basic principles of "peaceful reunification" and "one country, two systems" and the eight-point proposal on developing relations between the two sides and promoting the peaceful reunification of the motherland. We shall stick to the principle of "one China" and oppose splitting, the "independence of Taiwan," the attempt to create "two Chinas" or "one China, one Taiwan" and any interference by foreign forces. We shall not allow any forces whatsoever to change Taiwan's status as part of China in any way. We shall work for peaceful reunification, but we shall not undertake to renounce the use of force. This is not directed against our compatriots in Taiwan, but against the schemes of foreign forces to interfere with China's reunification and to bring about the "independence of Taiwan." We shall spare no efforts in expanding economic exchanges and cooperation between the two sides, speed up the establishment of direct links of postal, air and shipping services and trade between the two sides and continue to promote mutual visits of people and exchanges in various fields such as science, technology and culture. We place our hopes on our compatriots in Taiwan who are endowed with the glorious tradition of patriotism. Except for a handful of people who stubbornly cling to the position of "independence of Taiwan," all parties and personages of all circles in Taiwan are welcome to exchange views with us on relations between the two sides and on peaceful reunification.

Now we should like to renew our solemn appeal: As the first step, the two sides of the Straits can hold negotiations and reach an agreement on "officially ending the state of hostility between the two sides in accordance with the principle that there is only one China." On this basis, the two sides can jointly undertake to safeguard China's sovereignty and territorial integrity and map out plans for the future development of their relations. We hope that the Taiwan authorities will earnestly respond to our suggestions and proposals and enter into political negotiations with us at an early date. On the premise that there is only one China, we are prepared to talk about any matter. All opinions and proposals can be put forward as long as they are in the interest of the reunification. The issue of the reunification of the motherland should be solved by us Chinese on both sides of the Taiwan Straits.

Taiwan's future hinges on the reunification of the motherland, and splitting is no way out. With full determination, we are capable of finding a final solution to the Taiwan issue. No matter how many difficulties and obstacles are in store for us, the complete reunification of the motherland and the all-round rejuvenation of the Chinese nation will certainly come true, for all the Chinese on both sides and living elsewhere will proceed from the fundamental interests of the Chinese nation and go forward hand in hand.

At present, the international situation as a whole is becoming more relaxed. Peace and development are the main themes of the present era. The trend toward multi-polarity has further developed globally or regionally in the political, economic and other fields. World forces are experiencing a new split and realignment. Relations between the big powers are undergoing major and profound adjustments. Regional and intercontinental organizations of cooperation are active as never before. The overall strength of the great number of developing countries is growing. The development of the trend toward multi-polarity contributes to world peace, stability and prosperity. The call of the people of all countries for treating each other on an equal footing and living together in amity is becoming louder and louder. It has become the mainstream of the times to desire peace, seek cooperation and promote development. The factors for safeguarding world peace are gaining strength. For a fairly long period of time to come, it will be possible to avert a new world war and secure a favorable, peaceful international environment and maintain good relations with the surrounding countries.

However, the cold war mentality still exists, and hegemonism and power politics continue to be the main source of threat to world peace and stability. Expanding military blocs and strengthening military alliances will not be conducive to safeguarding peace and security. The unjust and irrational old international economic order is still infringing upon the interests of developing countries, and the gap in wealth is widening. It is still serious that human rights and other issues are used to interfere in the internal affairs of other countries. Local conflicts due to ethnic, religious and territorial factors crop up from time to time. The world is not yet tranquil.

It is necessary to adhere to the ideas of Deng Xiaoping about diplomatic work and firmly pursue an independent foreign policy of peace. In international affairs, we should determine our position and policies by proceeding from the fundamental interests of the people of China and other countries and judging each case on its own merits. We shall not yield to any outside pressure or enter into alliance with any big power or group of countries, nor shall we establish any military bloc, join in the arms race or seek military expansion.

We oppose hegemonism and safeguard world peace. All countries should settle their disputes and conflicts through peaceful consultations instead of resorting to force or the threat of it. No country should interfere in the internal affairs of another country under any pretext, still less bully the weak, invade or subvert other countries. We do not impose our social system and ideology upon others, nor will we allow other countries to force theirs upon us.

We shall work to bring about a just and rational new international political and economic order. This order should be based on the Five Principles of Peaceful Coexistence, conform to the purposes and principles of the United Nations Charter and reflect the trend of the times to seek peace and development.

It is necessary to respect the diversity of the world. The world today is rich and varied. All countries are entitled to choose the social systems, development strategies and lifestyles that suit their own conditions. The affairs of a country should be decided upon by its own people, and global issues should be dealt with through consultations by all countries.

The good-neighborly policy should be upheld. This has been our consistent stand and will never change. Keeping in mind the overall objective to maintain peace and stability, we should settle the disputes between China and the surrounding countries through friendly consultations and negotiations. Should this fail to serve the purpose, we should put them aside for the time being, seeking common ground while reserving differences.

We should further strengthen our solidarity and cooperation with the Third World countries. The developing countries share the same fundamental goal of safeguarding their independence and developing the economy. China will, as always, join the vast number of developing countries in mutual support and close cooperation in all areas to safeguard our lawful rights and interests.

We should further improve and develop our relations with developed countries on the basis of the Five Principles of Peaceful Coexistence. All countries should respect each other and live together in amity regardless of differences in their social systems and ideologies. They should seek the point where their common interests converge, expand mutually beneficial cooperation and work together to take up the challenge facing mankind for survival and development. They should persist in dialogue, not confrontation, in properly handling their differences by proceeding from their long-term interests and the overall task of promoting world peace and development. We are opposed to imposing or threatening to impose sanctions without good reason.

Pursuant to the principle of equality and mutual benefit, we should conduct extensive trade, economic and technological cooperation and scientific and cultural exchanges with all countries and regions to promote common development.

We should take an active part in multilateral diplomatic activities and give full play to China's role in the United Nations and other international organizations.

On the basis of the principles of independence, complete equality, mutual respect and non-interference in each other's internal affairs, we shall develop new types of inter-party relations of exchange and cooperation with all political parties of various countries which are ready to have contacts with our Party with a view to promoting state relations.

China is a staunch force for safeguarding world peace and regional stability. In carrying out the socialist modernization program, we need a long-term peaceful international environment, and above all, we need to maintain good relations with the surrounding countries. China's development will not pose a threat to any other country. China will never seek hegemony even when it becomes developed in future. The Chinese people, for a long time subjected to aggression, oppression and humiliation by foreign powers, will never inflict these sufferings upon others.

The future of the world is bright, though the road is tortuous. The Chinese people are ready to join hands with the people of other countries in making unremitting efforts to promote the lofty cause of peace and development and work for a brighter future for mankind.

To hold high the great banner of Deng Xiaoping Theory, fulfill the tasks defined at this congress and advance our cause in an all-round way to the 21st century, it is essential to uphold, strengthen and improve the leadership of the Party and do well in Party building.

The Communist Party of China is the core of the leadership of the people of all nationalities in China. The leading role of the Party is determined by its nature of being the vanguard of the working class and secured after going through ordeals in long years of struggle. Never in China has there been any political organization like our Party that has absorbed so many advanced elements, that is so well organized and broadly based and that has made so many sacrifices for the Chinese nation. The Party maintains close ties with the people, and, in its forward march, is good at reviewing its experience and taking its errors seriously, thereby formulating and upholding correct theories and lines. History has entrusted a colossal responsibility to our Party, and the people place high hopes on it. Having led the people in writing a glorious chapter in the annals of the 20th century, it can certainly write another one in the 21st century.

Party leadership and Party building have always been connected with the historical tasks of the Party and with the theories and lines it has formulated for accomplishing the tasks. Guided by Marxism-Leninism and keeping the political line of the Party in mind, the first generation of collective leadership with Mao Zedong at the core successfully launched the great project of Party building -- it established a vanguard of the working class which led the people in winning victory in the new-democratic revolution and establishing the socialist system. The second generation of collective leadership with Deng Xiaoping at the core, creatively applying Marxism-Leninism and Mao Zedong thought to present-day China, launched another great project of Party building centering on what kind of party it should be and how to build it under the conditions of reform, opening up and the modernization drive. Facing the new century, the Central Committee is leading the entire Party in advancing this great project. The project is designed to make the Party a Marxist political party that is armed with Deng Xiaoping Theory, that serves the people wholeheartedly, that is completely consolidated ideologically, politically and organizationally, that can withstand all trials and tribulations, that is always at the forefront of the times and that leads the people of the country in building socialism with Chinese characteristics. In light of the general objectives of this great new project, the entire Party should strengthen its building in ideology, organization, style of work and all other aspects, always try to improve its leading and governing ability, and guard against corruption and degeneration so as to show a new look and greater militancy in leading the people in accomplishing the new historical tasks.

To strengthen Party building ideologically, it is essential to unswervingly arm the entire Party with Deng Xiaoping Theory and give full play to the ideological and political strength of the Party. Deng Xiaoping Theory has provided a powerful ideological weapon that will enable our Party to understand the world and to change it. The entire Party should attach great importance to study, be adept at studying and usher in a new upsurge in studying Marxism-Leninism, Mao Zedong Thought and particularly Deng Xiaoping Theory. Leading cadres at all levels, and especially the several hundred members of the Party Central Committee and the several thousand cadres at the provincial and ministerial levels bear an especially important responsibility for holding high the great banner of Deng Xiaoping Theory. They should take the lead in studying that theory and comprehensively and accurately master its scientific system. They should grasp both the basic ideas and the essence of the theory in an overall perspective and systematically analyze and understand the relevant aspects of the theory in light of the respective fields of their work. We should continue to educate the cadres at and above the county level in Party spirit and conduct, focusing mainly on the need to study, to be politically minded and to be honest and upright. We shall make it a common practice within the entire Party to study conscientiously, hold democratic discussions, try to explore new ways and be realistic and pragmatic. We should continue to integrate theory with practice, study for the sake of application, acquire a better understanding of the theory of Marxism, learn to better solve practical problems and transform our subjective world while transforming the objective world.