Third, we supported efforts to develop and make structural improvements in medical and health care systems. Total expenditures for medical care and public health across the country reached 102.699 billion yuan, up 20.2%. The central government earmarked 4.2 billion yuan to develop a system for responding to public health emergencies, a disease information network and a system for overseeing enforcement of public health laws. A total of 542 million yuan was earmarked for subsidies to support pilot programs to establish a new type of rural cooperative medical care system; the new system expanded from 11.6% in 2004 to 23.5% of the counties, cities and city districts across the country in 2005. In addition, vigorous efforts were made to develop the medical assistance systems in urban and rural areas. A total of 335 million yuan was allocated to reward rural families that observe the family planning policy, an increase of 68% over the amount for 2004. A particularly important move was to set up a 2 billion yuan fund in the central government budget to prevent and control outbreaks of avian flu and adopt temporary tax reduction and exemption policies to guarantee funding for the effort to prevent and control highly pathogenic avian flu and facilitate recovery of the poultry industry.

Fourth, funds were set aside to ensure funding for strengthening government authority. A special fund totaling 4.81 billion yuan was set up in the central government budget in 2005 for this purpose, effectively improving conditions for case-processing work in lower-level procuratorial, judicial and public security departments. Furthermore, efforts to improve management resulted in constant improvement in performance of funds used. Another 400 million yuan was earmarked especially to simplify customs clearance procedures, resulting in initial progress toward the goal of higher speed, lighter burden, improved efficiency and stricter oversight. The central government also earmarked 924 million yuan to continue trial reforms of the prison system taking place in some provinces, autonomous regions, and municipalities directly under the central government. Vigorous support was given to the central government, localities and departments drawing up contingency plans for public emergencies.

4. Increasing transfer payments and making the distribution of basic public services more even. We implemented preferential fiscal and tax policies for developing the western region and revitalizing northeast China and other old industrial bases and constantly looked for new ways to support this effort while increasing funding.

First, we improved the mechanism for alleviating the financial difficulties of counties and townships. In 2005, the central government began allocating a yearly 15 billion yuan to implement a policy measure centered on "three rewards and one subsidy" in line with the basic philosophy of "clearly defined responsibilities, comprehensive approach, incentives plus restraints and guidance on a case-by-case basis." This encouraged local governments at all levels to allocate more funds to the lower levels, develop county economies, streamline organizations and reduce their staffs, and improve public finance at and below the provincial level. Provinces and autonomous regions allocated an additional 10.8 billion yuan for rewards and subsidies on top of the original scale of fiscal transfer payments to their counties and townships, stopping the financial slide of these counties and townships and allowing them make a turn around.

Second, transfer payments were increased substantially. In addition to the 414.371 billion yuan in tax rebates and structural subsidies in the 2005 budget, the central government paid out 732.997 billion yuan in transfer payments and subsidies of various kinds, an increase of 21.6% over the previous year. Funding for fiscal transfer payments amounted to 381.272 billion yuan, a year-on-year increase of 46.4%. More than 90% of the transfer payments went to central and western regions. This not only improved the level of basic public services where they are insufficient, but also helped alleviate the financial difficulties of counties and townships, thus promoting more balanced development among regions.

5. Deepening fiscal, tax and other reforms to improve the socialist market economy.