We supported social safety net, employment and other work. The central government spent 230.316 billion yuan on the social safety net and employment effort, an increase of 13.7%. To put in place a system of cost of living allowances for rural residents throughout the country, the central government paid out three billion yuan in subsidies to areas with financial difficulties and local governments also increased their spending. It spent 16 billion yuan to support improvements in the system of cost of living allowances for urban residents. It allocated 6.5 billion yuan in subsidies to raise the basic pension benefits for retired enterprise employees. It also granted 1.7 billion yuan in subsidies to increase the allowances for entitled groups and allowed more people to become eligible for these allowances, benefiting over six million people. Subsidies were granted to urban recipients of cost of living allowances as well as junior college and secondary technical school students from poor families who were materially affected by the rises in the prices of pork and other foods. A total of 15 billion yuan was granted in subsidies to industries and groups such as fisheries and taxi drivers that were greatly affected by the increases in the prices of refined oil products. A total of 5.11 billion yuan was allocated to relieve enterprises of their obligation to operate social programs. Twenty billion yuan was spent to subsidize the policy-based closures or bankruptcies of 92 state-owned enterprises (SOEs) and to find new employment for 357,000 of their laid-off employees. Another ten billion yuan in subsidies was allocated to pay long-overdue salaries and wages owed to SOE employees. The central government spent 13.7 billion yuan to provide further aid to residents displaced by large and medium-sized reservoirs. The central government paid out 23.8 billion yuan in subsidies to increase support for employment and reemployment efforts, and it further improved the preferential taxation policy for employment of the jobless, people with physical or mental disabilities, and other special groups.

We supported environmental protection and ecological conservation. The central government allocated 38.37 billion yuan to support implementation of key forestry ecological projects such as protecting virgin forests, reforesting farmland, and controlling the sources of dust storms affecting Beijing and Tianjin and to further improve the policy for funding ecological conservation of forests. This figure includes an additional allocation of 1.12 billion yuan to continue to provide rural households that reforested their land with subsidies after their grain and cost of living allowances expired. The central government also paid 1.58 billion yuan to support the reform of the system of collective forest rights.

We instituted a low-rent housing system. For this purpose, the central government allocated 5.1 billion yuan. This was supplemented by increases in spending by local governments. The central government also formulated accompanying financial measures and methods and clarified tax and fee policies to support the efforts of all localities to set up a sound low-rent housing system in urban areas. We also deepened the reform of the housing system and improved the system for managing matching-fund programs for housing.

We promoted development of cultural programs and the culture industry. We vigorously advanced the reform of the cultural management system and sped up development of the system of public cultural services in rural areas. The primary focus of support was on implementing projects to make the reception of central radio and television programming available to more areas through broadcasting facilities rather than cable, to set up a national shared databank of cultural information and resources, and to show movies in the countryside. All of these projects helped enrich the cultural life of rural residents. We also supported growth of the cartoon and animation sector in China.

We strengthened public services and public security. The central government appropriated 3.3 billion yuan to support efforts to tighten oversight of the quality and safety of exports, to crack down on the production and marketing of counterfeit goods and conduct random inspections and special campaigns to ensure the quality of products, and to improve the safety standard system and the inspection and testing system for food. It spent three billion yuan to fully fund the expenditures of courts following the reform of court costs. It also allocated 7.49 billion yuan in subsidies to help procuratorial, judicial and public security organs in poor areas improve their equipment and supplies while also ensuring funding for the costs of handling cases.

5. Fiscal and taxation reforms progressed steadily.

The system of transfer payments was further improved. The central government's fiscal transfer payments to local governments, mainly in the central and western regions, came to 709.29 billion yuan in 2007, an increase of 193.32 billion yuan. This figure includes 250.5 billion yuan in general transfer payments, which were used to promote a more balanced financial distribution among different regions. We improved the methods for calculating fiscal transfer payments and introduced a transfer payment system to assist cities that had depended on resources that are now exhausted. We adjusted and improved the "three rewards and one subsidy" policy and increased the rewards to local governments for balancing financial distributions among counties and ensuring key expenditures. The central government allocated 34 billion yuan for rewards and subsidies, an increase of 10.5 billion yuan. This helped to further ease the financial difficulties of both counties and townships. The proportion of county-level expenditures to total local expenditures throughout the country increased by three percentage points compared to the figure before the policy was adopted. We reviewed special transfer payments and cut their number from 213 to 174. The State Council has reported on standardizing transfer payments to the Standing Committee of the Tenth NPC.

Important headway was made in taxation reform. The corporate income tax systems for domestic and overseas-funded enterprises were reformed, and the new Law on Corporate Income Tax and the regulations on implementing it went into effect on January 1, 2008. Collection of taxes on urban land use and vehicle and boat operation is going smoothly after the revision of related regulations, and the relevant taxation policies were also further improved. On the basis of the VAT reform trials in northeast China, the reform was extended to eight industries in 26 old industrial cities in the central region. Progress in resource tax reform entered a new stage.