To bring about an all-round upsurge of China's socialist economy, we must continue to carry out in all our economic work the ten principles for economic construction approved by the Fifth National People's Congress at its Fourth Session, paying special attention to solving the following major questions of principle.

First, concentrating funds on key development projects and continuing to improve the people's living standards.

To attain our strategic objective for the coming 20 years, the state must concentrate needed funds on key development projects in their order of importance and urgency. For this purpose, while endeavouring to overcome undue decentralization in the use of funds, we must bring into play the initiative of all concerned to expand production and achieve better economic results, so that the national income may rise more rapidly. In recent years, state revenues have somewhat decreased and there has been a shortage of funds for urgently needed key projects. On the other hand, funds at the disposal of local authorities and enterprises have grown greatly and have been used for many projects which may seem badly needed from a local point of view; but this inevitably makes it difficult to adequately meet the national needs and to prevent and overcome the tendency towards blindness in construction. We must realize that if key national projects are not guaranteed and if such parts of the infrastructure as energy and transport are not developed, the national economy as a whole will not prosper and the individual sectors are bound to be greatly restricted in their development. Even if there should be some growth in a given locality at a given time, it would not last because of difficulties in striking a balance between supply, production and marketing. We must firmly implant the idea of co-ordinating all the activities of the nation like moves on a chessboard. While continuing to enforce the present financial system and ensure the decision-making power of enterprises, we must appropriately readjust, in the light of the actual conditions of the different localities and trades, the distribution of national and local revenues and the proportion of profits retained by enterprises, and we must encourage local authorities, departments and enterprises to make their funds available for the key projects most urgently needed by the state. While thus pooling funds, we must of course continue to take into consideration the needs of the localities and enterprises. If appropriate financial reserves are left at the disposal of local authorities and enterprises, it will help give scope to their initiative and enable them to embark on those projects which they are best fitted to undertake, especially as regards the technical transformation of existing enterprises. Our country has abundant resources of labour power, so we must pay close attention to increasing the investment of labour. In the rural areas we must put their rich manpower to good use in agricultural capital construction according to their local conditions. In mining, transport and other fields, we must also stress the role of the investment of labour.

The fundamental aim of socialist production and construction is to meet continuously the growing material and cultural needs of the people. A basic principle guiding our economic work is "first, feed the people and second, build the country." The Party and government have done a great deal to bring about a marked improvement in the people's livelihood in recent years. Yet on the whole the living standards remain fairly low. In some low-yield rural areas, or those hit by natural disasters, the peasants are still impoverished, and we must actively help them increase production and income. Urban people, too, still have many problems which call for solution - such as pay, employment, housing and public utilities. The state has decided to take effective measures to improve, steadily and group by group, the living and working conditions of middle-aged intellectuals, who play a backbone role in production, construction and all the other fields. Whether in town or country, living standards can rise only by increasing production, and not by cutting into funds indispensable to national construction, a course that would impair the fundamental and long-term interests of the people. Specifically, we can no longer increase peasant incomes mainly through raising the prices of farm produce or through lowering the fixed quotas of state purchases and enlarging the scope of negotiated prices. The increase of the average incomes of the workers and staff must necessarily be less than that of labour productivity. We must put a stop to the indiscriminate handing out of bonuses and subsidies without regard to the actual state of production and profit. As a matter of fact, a constant improvement in the living standards of the people is possible provided the workers and peasants enhance their understanding and make sustained efforts to raise labour productivity, lower consumption and eliminate waste. As for those problems concerning the people's daily life which can be solved by spending very little or even no money, leaders at all levels must take even more energetic measures to solve them. Concern for the well-being of the people is a fine tradition of our Party, which we should never neglect.