POWERFUL HEART: The financial district of Hong Kong. At a press conference on March 14, Premier Wen Jiabao said the Central Government will increase support to Hong Kong's development in the next five years (HUANG XIAOYONG)

It has exerted a big impact on the real economy. We may recall that between the end of 2008 and the first half of 2009, global trade tumbled by 26 percent, and Chinese exports also fell substantially. The Baltic Sea Crude Oil index once dropped to zero.

When I paid an inspection trip to a container port in Shenzhen, south China's Guangdong Province, the local manager told me not a single order had been received. At one point, China's GDP fell to as low as 3.8 percent in its growth. A large number of businesses had to close and a large number of migrant workers had to go back to their rural home.

It is under such tough circumstances that we adopted a stimulus package that has four key components. They include: A massive increase in government investment and structural tax cuts to restore business growth. Second, we improved the social security system in order to stabilize and improve people's livelihood. Third, we vigorously promoted science and technology advances to sustain the momentum of China's economic development. Fourth, we carried out massive structural adjustments in China's businesses, and in particular, encouraged the growth of strategic emerging industries.

All these stimulus measures were designed to not only address immediate problems, but also ensure China's long-term development.

I would like to say that a person who has not experienced difficulty would not be able to fully appreciate the gravity of the difficulty itself. It is with very hard efforts that we managed to make the Chinese economy one of the first in the world to achieve a recovery and rebound, and avoid serious setbacks in China's economic development. I think the achievements of China on this front have been widely recognized.

12th Five-Year Plan

I have always emphasized that China's revitalization is not just about the size of the economy. More importantly, it concerns the quality of our human resources, and how much progress we have made in scientific and technological development. In this respect, we must establish and improve our institutional arrangements for scientific and technological advances and the cultivation of talents. It is important that we carry out reform to combine the efforts of industry, academia and research institutions. I believe two figures are actually even more important than GDP. One is the proportion of the expenditure on education in GDP, and the other is R&D expenditure in GDP. Both concern the innovation capabilities of our country, and they both can offer the strongest and most reliable factors of China's sustained development.

With respect to transforming our mindset, it is important that we should no longer worship GDP. Of course, to promote our social progress and improve people's livelihood, it is important to grow the economy. At the same time, our economic growth must not come at the expense of natural resource and energy depletion or environmental pollution. That kind of development is not sustainable and will adversely impact on our children and grandchildren.

The evaluation system for government officials' performance is of vital importance in achieving transformation. We must ensure that in evaluating their performance, we not only take into account the economic aggregates at the local level, but also take into account whether there is coordinated economic and social development, whether social fairness and justice have been promoted, and whether the people are leading a better life. If we cannot address these above-mentioned areas, it will be difficult for us to guarantee full implementation of our plan.

Hong Kong

There is a separate chapter devoted to Hong Kong and Macao in the 12th Five-Year Plan Outline. This shows the Central Government has firm support for long-term stability in Hong Kong and Macao.

This not only meets the aspirations of the governments of the special administrative regions (SARs) of Hong Kong and Macao, and the people in these two SARs. It is also in the interest of the long-term development of Hong Kong and Macao.

Hong Kong, with strong backing of the motherland and facing the world, has a free and open economy. It has a fully developed legal system that is consistent with international legal practice. It has a large pool of managerial personnel of various kinds.

Hong Kong has withstood the test of two financial crises, so I believe Hong Kong's traditional advantage as an international financial center has not changed.

It is stated in the 12th Five-Year Plan that the Central Government will support Hong Kong in developing itself into an off-shore RMB business center and an international asset management center. Actually, many of the pilot programs we have conducted in the reform of the financial sector in recent years have been in Hong Kong SAR. For example, the RMB deposits now in Hong Kong have exceeded 300 billion yuan ($45.65 billion).

At the same time, we have also run the pilot program of settling cross-border trade with RMB in Hong Kong, in particular, trade in goods. Moreover, the cooperation between Hong Kong and the mainland, in particular, the Pearl River delta, has been enhanced. Fast progress has been made in a series of infrastructure projects linking Hong Kong with the mainland. All these have facilitated the freer flow of goods and personnel between the two sides. I believe these measures will help consolidate and develop Hong Kong's status as an international financial center.

I believe Hong Kong has the ability to cope with not only regional competition and risks, but also international competition and risks. At the same time, Hong Kong is confronted by a complex external environment. Therefore, it is important for the Hong Kong SAR to be mindful of potential perils, make the most of opportunities and meet the challenges head on.

I have said that Hong Kong needs to pay close attention to the following three things. First, Hong Kong needs to have a long-term and scientific development plan. Second, it needs to attach great importance to addressing the underlying problems in Hong Kong's economic and social development. Third, Hong Kong should work hard to improve people's well-being.

At the same time, I believe it is important for Hong Kong to pay close attention to the development of education, science and technology, so as to sustain its momentum of future development. Meanwhile, Hong Kong needs to further develop its service sector, including financial services and tourism, in the light of Hong Kong's actual conditions; and to further develop those small innovative high-tech enterprises to create more jobs.

Hong Kong has sufficient government revenues and ample foreign exchange reserves. Hong Kong needs to make the most of its favorable conditions to improve its social safety net, and in particular, take good care of the vulnerable groups, so that people in Hong Kong will lead a much better life.

Taiwan's investment

The Economic Cooperation Framework Agreement (ECFA) between the two sides of the Taiwan Straits entered into force from January 1 this year, starting with an Early Harvest program. In February, relevant parties from the two sides conducted a review of the implementation of the Early Harvest program. They shared the view that the program has got off to a good start, made smooth progress and produced initial results.

Cross-Straits trade increased 30 percent in the first month of this year. You may be aware that last year, our trade exceeded $140 billion, with Taiwan running a surplus of over $86 billion.

I would like to say that actually the mainland has become a very important destination for Taiwan investment. There are now over 80,000 Taiwan-invested enterprises on the mainland. They have made a total direct investment of over $50 billion. If we calculate the trans-investment made through a third place, the figure might exceed $90 billion. Taiwan's investment on the mainland now accounts for 9 percent of total overseas investment on the mainland.

We are pursuing scientific development and transforming the development pattern. I believe these efforts will only create a more favorable investment environment and offer more business opportunities for Taiwan enterprises. Taiwan-invested enterprises on the mainland will continue to enjoy national treatment. I don't think they will be marginalized in the process.