Rural working and living conditions were improved. The central government spent 19.46 billion yuan to continue funding the construction of six categories of small rural projects [water-efficient irrigation, potable water supplies, road building, methane production facilities, hydroelectric plants, and pasture enclosure, Tr.] and another 4.2 billion yuan to build small water conservancy facilities and renovate small, dilapidated reservoirs. A total of 11.57 billion yuan was spent to promote overall development of agriculture, resulting in 1.57 million hectares of low- and medium-yield farmland being upgraded and high-grade arable land being cultivated, and in three billion kilograms of grain production capacity being added last year. Part of this sum also went to 1,457 projects to make agricultural operations more industrial. An additional 17.2 billion yuan paid out to the central government in compensation for land converted to development purposes was used to develop and protect primary farmland, improve land and cultivate arable land. One billion yuan was appropriated to promote the development of farmers' specialized cooperatives and the dissemination of agricultural science and technology. In addition, 1.29 billion yuan was spent to improve the distribution of goods and develop the market system in the countryside.

Support was given to fight natural disasters, provide disaster relief and reduce poverty through development. In response to serious natural disasters in 2007, the central government promptly appropriated 13.3 billion yuan for disaster relief, supplemented by generous appropriations from local governments. To intensify poverty reduction through development, the central government spent 14.4 billion yuan mainly in poor areas in the central and western regions. We also made innovations in working mechanisms, which made our poverty reduction efforts even more effective.

We promoted the development of rural social programs. We gave strong support to rural compulsory education, a new type of rural cooperative medical care and other rural social programs. We continued to implement the system for rewarding and supporting some rural families that observed the state's family planning policy and carried out the "fewer children equals faster prosperity" project in the western region. Trials for a special assistance system for family planning were launched in selected areas.

Altogether, 431.8 billion yuan from the central budget was spent on agriculture, rural areas and farmers, an increase of 80.1 billion yuan or 23%. It should be pointed out here that expenditures supporting agriculture, rural areas and farmers do not constitute a single budgetary item. In order to make it easier for you to examine and deliberate expenditures in this area, we have combined all expenditure items related to agriculture, rural areas and farmers so there will be some overlap with expenditures for education, medical and health care, etc.

4. We made further progress in ensuring the people's wellbeing and improving their lives.

We promoted the development of education. Spending of the central government on education totaled 107.635 billion yuan, an increase of 76%. A total of 36.48 billion yuan from the central budget, along with 32.3 billion yuan from local budgets, was spent to fully carry out the reform to introduce a system for guaranteeing funding for rural compulsory education, exempt all the students receiving compulsory education in rural areas across the country from paying tuition and miscellaneous education fees, provide them with free textbooks, give living allowances to students from poor families who stay in school dormitories, raise budgetary funding for operating expenses of primary and secondary schools and increase subsidies for renovating their buildings. All this benefited 150 million students receiving compulsory education in rural areas and 7.8 million students from poor families living on campus. We supported the trials to provide free education to education students at normal universities directly under the Ministry of Education. A new policy system for providing financial assistance to students from poor families was adopted to cover more students and raise the amount of aid they receive. We also gave financial support to students from poor families at regular undergraduate institutions, and vocational colleges and secondary vocational schools in the form of grants.

We stimulated the development of medical and health care. Central government expenditures for medical and health care reached 66.431 billion yuan, a rise of 296.8%. The new type of rural cooperative medical care was extended to reach 730 million rural residents in 86% of the country's counties, and the central government provided 11.4 billion yuan in subsidies for this program. We began trials to implement a basic medical insurance system for urban residents in selected cities, with annual subsidies of at least 40 yuan per person from the central government. A total of 3.4 billion yuan was spent to further carry out the work of providing medical care for needy urban and rural residents. Spending on public health increased, with 9.68 billion yuan used primarily to support prevention and control of major diseases and development of community-based health services.