While acknowledging our successes, we must also clearly realize that many difficulties and problems remain on our way ahead. Internationally, the impact of the US sub-prime mortgage crisis on the world's major economies is worsening, the US dollar continued to fall in value and prices for primary products such as petroleum, iron ore, copper, and grain remain high in the international market and may go even higher. Furthermore, the current imbalance in the global economy is only getting worse and international competition is getting fiercer, while trade protectionism targeted at China has intensified. Domestically, deep-seated problems such as the poor economic structure, inefficient pattern of development and imperfections in systems and mechanisms have not been fundamentally resolved. In addition, China's capacity for independent innovation is still weak, the price of economic growth in terms of resource consumption and environmental impact is too high and urban and rural development, development among regions and economic and social development remain out of balance.

There are also many issues and problems currently affecting economic performance. The most conspicuous ones are as follows:

First, the danger of rapid economic growth becoming overheated growth cannot be ignored. The risk of overheated investment is great, with fixed asset investment rising by 24.8 percent in 2007, which is still too fast. Many local governments are keen to expand investment, resulting in a large number of newly started projects and projects built in violation of regulations. There is an excessive supply of money and credit. The trade surplus is still increasing.

Second, there are strong inflationary pressures. The consumer price index (CPI) continued to rise, gaining 4.8 percent for the year and exceeding the 3 percent target set early last year. Prices for major primary products continued to increase in the international market, directly putting upward pressure on domestic prices. Prices for the means of production are rising ever faster, and housing prices are continuing their rapid ascent.

Third, we are still faced with the daunting task of saving energy and reducing emissions. Heavy industries, especially energy-intensive and highly polluting ones, are growing too fast. The systems and mechanisms and policies measures for promoting energy saving and emission reduction need to be improved, enterprises do not have enough motivation to close down backward production facilities, installment of pollution control facilities is not keeping up with requirements and oversight and punishment are not effective, allowing illegal pollution to remain a common phenomenon.

Fourth, maintaining a steady pace in agricultural development and continuing to increase farmer incomes have grown more difficult. Agriculture as the foundation of the economy remains weak, the difficulty of protecting farmland is daunting and development of agriculture has become further restrained by insufficient resources, environmental impact and market conditions. Moreover, it has grown more difficult to balance supply and demand of farm products, institutional obstacles still make it hard for rural residents to find nonagricultural jobs and efforts to improve public services in rural areas have not made good progress.

Fifth, there are still many problems related to the people's wellbeing that demand our immediate attention. There is considerable pressure on employment, and development of education, culture, health and other basic public services has failed to meet the needs of the people. There are still quite a few problems related to the social safety net, income distribution, housing supply, the quality and safety of products, workplace safety and public security. The disastrous snow and ice storms that have been hitting southern China since mid-January this year have inflicted enormous damage on people's lives and property as well as on industrial and agricultural production, and post-disaster recovery is going to be a daunting task.

We must take vigorous measures and work hard to solve the above problems.