4. We will increase support for scientific and technological innovation, energy conservation and emissions reduction.

We will promote scientific and technological innovation. A total of 14.76 billion yuan, an increase of 24%, has been allocated to increase investment in basic research and research in new and high technology. Support for scientific research by nonprofit organizations will be steadily increased. We will support the development of major science and technology infrastructure and national and key national laboratories and make greater use of the role of national bases for scientific research. We will carry out trial programs to closely integrate industry, education and research and develop a technology innovation system. We will ensure smooth progress on major scientific and technological programs. We will support the development of an industrial technology innovation system for modern agriculture. We will provide support for invigorating the domestic major equipment manufacturing industry. We will promote the development of nonprofit and strategic state industries. We will encourage venture capital investment in business startups and support technological innovation in small and medium-sized science and technology enterprises. The scope of enterprises eligible to receive special development funds will be expanded.

We will support energy conservation, emissions reduction and ecological improvement. Allocations from the central budget for energy conservation and emissions reduction total 27 billion yuan, an increase of 3.5 billion yuan. We will substitute rewards for subsidies and support the ten major state energy conservation projects, the building of sewage pipe networks in the central and western regions, and the development of a system for monitoring and supervising emissions reduction and pollution. We will set up a mechanism for closing down backward production facilities. Appropriate assistance and rewards will be provided from the central budget to economically underdeveloped regions. Investment in water pollution control will be increased in the important watersheds of the Huai, Hai, Liao and Songhua rivers, and Tai, Chao and Dianchi lakes. We will implement fiscal and taxation policies to encourage energy conservation and emissions reduction. Investment in projects and special equipment that meet specified environmental conditions, such as being energy-saving and environmentally friendly, will be eligible for corporate income tax reduction or waiver for a set period of time or will be allowed a corporate income tax deduction. We will implement a policy of mandatory government procurement of energy-saving products. VAT on the purchase of equipment that saves energy and reduces emissions will be discounted. We will improve the favorable tax and fee policy for the comprehensive use of scrap and other recyclable materials and resources. We will improve the fiscal and taxation policies for promoting the development of new and renewable energy resources. We will promote the reform of the system of paying for the use of mineral resources, establish a reserve fund system for the sustainable development of resource-based enterprises, gradually set up a sound mechanism for paying compensation for ecological damage, and run trials of a scheme for trading pollution rights in the Lake Tai watershed area. We will support the implementation of the national plan to deal with climate change. On the basis of improving the policy on reforesting farmland, we will support the development of key forestry projects and the protection of key public forests. We will improve the central government system for funding ecological conservation in forests and steadily promote reform of the system of collective forest rights and the management of state tree farms.

5. We will promote fiscal and taxation reforms.

We will deepen the reform of the fiscal management system. We will improve and standardize the system of transfer payments from the central to local governments, raise the scale and proportion of general transfer payments, and increase spending on public services. The central government has allocated 846.702 billion yuan in fiscal transfer payments to local governments, an increase of 137.417 billion yuan or 19.4%. We will improve the method of calculating standard revenue and expenditure items and strengthen support for no-development zones and restricted development zones. We will also encourage these regions to strengthen ecological and environmental protection, and promote development in development priority zones. Fiscal transfer payments to cities that once depended on resources that are now exhausted will be increased to help them gradually solve longstanding social problems. The procedure for examining and approving new transfer payments must be strictly followed to make the distribution scientific. We will continue reviewing current special transfer payments, combine items that have similar purposes and eliminate or reduce items whose term has expired, items of a one-time nature and items that do not need to be retained to meet the needs of macroeconomic regulation. The procedure for introducing policies related to special transfer payments will be standardized to keep the overall load on local budgets within an acceptable range. A total of 44 billion yuan, an increase of ten billion yuan, has been allocated for rewards and subsidies to adjust and improve the incentive and restraint mechanisms for alleviating fiscal problems of county and township governments, and to create a mechanism for guaranteeing minimum fiscal expenditures for counties and townships. We will improve the fiscal systems at and below the provincial level, accelerate the reform to put county public finance directly under the management of provincial governments and township public finance under the management of county governments, and gradually establish a mechanism to direct more revenue toward governments at lower levels in order to better equalize basic public services.