3. Adjustment of the economic structure was accelerated. We formulated policies and measures to accelerate the development of the equipment manufacturing industry and promoted independent development of major technologies and independent production of major equipment in key areas. We began to independently manufacture mega kilowatt nuclear power generators, ultra-supercritical thermal power generating units and new types of ships, and launched major projects such as those to produce high-grade digitally controlled machine tools and key manufacturing equipment. We also formulated and implemented policies and measures to carry out structural adjustments in 11 industries, including the steel, coal and cement industries. As a result, there was significant decline in the growth rate of investment in some industries with surplus production capacity and total investment for new planned projects dropped significantly. We closed down backward coal production facilities totaling 110 million tons in capacity and electrolytic aluminum production facilities totaling 1.2 million tons. A number of projects vital to China's economy were completed and put into operation and some others were started. The Qinghai-Tibet Railway was opened to traffic, all generating units at the Three Gorges Left Power Station were completed and put into operation, and construction of the Xiangjiaba Hydropower Station on the Jinsha River began. All this will play an important role in sustaining economic development.

We placed greater emphasis on saving energy and protecting the environment. We improved policies on saving energy and reducing emission of pollutants, and established a general responsibility system for meeting energy saving and pollution discharge reduction targets. We strengthened energy conservation in key industries, enterprises and projects, and conducted pilot projects to develop the circular economy. We worked hard to prevent and control water pollution in key river valleys and regions, such as the Three Gorges Reservoir area, the Songhua River, the sources and routes of the South-to-North Water Diversion Project, and the Bohai Sea. We carried out key environmental protection projects to desulphurize emissions from coal-fired power plants, treat urban sewage and dispose of waste safely. To ensure environmental safety, we launched the fourth annual nationwide campaign to punish enterprises that illegally discharge pollutants. We worked hard to protect and improve the ecosystem. Progress was made in the current stage of the campaign to restore order in and standardize the exploitation of mineral resources. Geological prospecting was intensified.

We continued to follow the overall strategy for regional development. We continued to make solid progress in the large-scale development of the western region, and the work of rejuvenating northeast China and other old industrial bases proceeded smoothly. We began implementation of the policy to boost the development of the central region. The eastern region made further achievements in leading the country in development.

4. The process of reform and opening up was accelerated. We made comprehensive plans for overall rural reform. Steady progress was made in the reform of the system of collective forest rights. Further progress was made in adjusting the distribution of the state sector of the economy, introducing the shareholding system in state-owned enterprises (SOEs), and overseeing state-owned assets. Government functions were separated from the management of postal operations, and reform of the electricity management system continued. Significant progress was made in introducing a shareholding system in state-owned commercial banks; the Bank of China and the Industrial and Commercial Bank of China were successfully listed on domestic and overseas stock exchanges, and considerable headway was made in the current stage of the reform of rural credit cooperatives. The reform of the shareholder structure in listed companies was basically completed, and the basic systems of the securities market were strengthened. Reform of the insurance industry was deepened. Reform of the foreign exchange administration system was gradually deepened. Continued improvement was made in the fiscal and tax systems. Smooth progress was made in reforming the civil servant salary system and standardizing the pattern of income distribution. A thorough campaign to improve market order was launched.

We adjusted the trade mix by improving policies concerning export tax rebates, tariffs and processing trade and by controlling the export of products whose manufacture is highly energy consuming or highly polluting. We made energetic efforts to increase imports. The structure of foreign investment use was improved, and service industries, including banking, retail sales and telecommunications, were further opened up. We deepened and expanded economic exchanges and trade with other countries. We encouraged enterprises to invest overseas and cooperate with overseas-funded enterprises. We fulfilled all the commitments we made for China's accession to the World Trade Organization (WTO) and improved economic systems, laws, regulations and policies related to doing business with other countries.

5. We worked hard to develop social programs. We increased funding for social programs. The central government spent 77.4 billion yuan on science and technology, 53.6 billion yuan on education, 13.8 billion yuan on health and 12.3 billion yuan on culture, representing year-on-year increases of 29.2%, 39.4%, 65.4% and 23.9% respectively.

We promoted innovation in science and technology. The Outline of the National Program for Long- and Medium-Term Scientific and Technological Development (2006-20), which took two years to formulate, has been issued and is being implemented, and related special programs and supplementary policies and measures have been formulated. Sixteen major projects were launched, including projects to develop giant oil and gas fields and coal seam gas, design and develop a new generation wireless broadband mobile communications network, design and produce large aircraft, develop manned spacecraft and explore the moon. We made breakthroughs in key technologies such as a high-performance computer, super high-quality hybrid paddy rice, third generation mobile communications and digital television, and increased China's capacity for independent innovation.

We put education high on the development agenda. A total of 184 billion yuan was allocated by both central and local governments to fund rural compulsory education, enabling us to pay tuition and miscellaneous fees for the 52 million rural students receiving compulsory education throughout the western region and in some areas in the central region, provide free textbooks to 37.3 million students from poor families and grant living allowances to 7.8 million students staying in dormitories. Of the 410 targeted counties, 317 reached the goals of making nine-year compulsory education generally available and basically eliminating illiteracy among young and middle-aged adults. The proportion of the target population attaining these two goals in the western region increased to 96% from the 77% of 2003. The central government spent 9 billion yuan over the past three years building facilities for 7,651 rural boarding schools. Eight billion yuan was spent to develop modern primary and middle school distance education f or rural areas. The project covers over 80% of the rural primary and middle schools in the central and western regions and enables over 100 million students to have access to high-quality education resources. New enrollment at secondary vocational schools totaled 7.41 million and total attendance reached 18.09 million. Total attendance at institutions of higher education reached 25 million and the gross enrollment ratio rose to 22%.

We worked to strengthen medical and health care services. Work to set up a disease prevention and control system with a wide range of functions that covers both urban and rural areas and a medical treatment system for public health emergencies has been basically completed. Work was begun to set up a rural health service system, and 2.7 billion yuan from the sale of treasury bonds was allocated by the central government for the development of medical and health care facilities at the county, township and village levels. Trials of a new type of rural cooperative medical care system were extended to 1,451 counties, county-level cities and city districts, covering 50.7% of the country's total number of counties, county-level cities and city districts and 410 million rural residents. With 4.27 billion yuan allocated by the central government and additional local government funding, we raised the allowances for rural participants in the cooperative medical care system significantly. Development of the community-based system of urban medical services was accelerated. Subsidized medical care was improved for urban and rural residents. The central government allocated 5.1 billion yuan to support local government efforts to improve public health care services. Substantial progress was made in preventing and controlling major diseases such as AIDS.

We energetically developed culture and sports. The press and publishing, radio, television, film, literature and art, philosophy and the social sciences flourished. Culture-related facilities, especially in rural areas, were improved. The project to expand radio and television coverage in rural areas was extended from incorporated villages to unincorporated villages. Continued progress was made in the project to build multi-use cultural centers in communities, towns and townships and the national shared database project for cultural information and resources. Reform of the cultural management system was deepened. Development of the culture industry was accelerated, and cultural exchanges with other countries were increased. Sports activities for the general public were extensively developed, and the level of competitive sports continued to improve. Efforts to promote socialist cultural and ethical progress were strengthened.