Minister of Finance Jin Renqing, the decision-maker of China's finance expenditure, recently stated the ministry's new year resolution.

"The majority of the newly added government investment in 2007 will be used in rural construction," said Jin. "We will make sure that the scale and proportion of investment used in rural construction will increase compared with those in 2006."

In 2006, the major capital expenditure of the Ministry of Finance involved the following items: expenditures for capital construction; additional appropriation for enterprises' circulating capital; innovation funds, and science and technology promotion funds; geological prospecting expenses; operating expenses of industry, transportation and commerce; expenditures for supporting agricultural production and agriculture operating expenses; operating expenses for culture, education, science and health care; pension and relief funds for social welfare; expenditures for national defense; expenditures for government administration; and expenditures for price subsidies.

But this year, the expenditure items will change. According to the new budget statement, some items listed in 2006 have disappeared, like expenditures for capital construction and expenditures for government administration. Instead, they are replaced by expenditures for general public services and transportation. Meanwhile, some new items are added like expenditures for urban and rural community affairs, environmental protection and social insurance.

Favoring rural areas

"In 2007, the whole country will carry out reform on the guarantee mechanism for expenditures on universalizing compulsory education in rural areas," said Jin.

According to the Ministry of Finance arrangement, free compulsory education will be universalized in central and eastern China's rural areas this year. As a result, tuition and incidental fees will be exempted for the entire 148 million middle and primary school students in all rural areas, and the funds needed will be brought under the umbrella of the state budget.

Jin said beginning in the spring semester of 2006, free compulsory education has already been fully carried out in the western part of the country. Boarding school students also receive subsidies for living expenses from the government. A total of 48.8 million students have benefited from the project, which saves 140 yuan for each primary school student and 180 yuan for every middle school student per year.

The Central Government plans to spend 24 billion yuan on the rural free compulsory education project this year, compared to 19.1 billion yuan last year.

In terms of the new-type rural cooperative medical system, Zhang Tong, spokesman for the Ministry of Finance, noted that it has achieved some effects and will be extended to 80 percent of the towns and cities nationwide this year. To achieve this goal, 14 billion yuan is required.