BEIJING -- The following is the full text of the Report on the Implementation of the Central and Local Budgets for 2010 and on the Draft Central and Local Budgets for 2011, which was submitted for review on March 5, 2011 at the Fourth Session of the Eleventh National People's Congress and was adopted on March 14:

REPORT ON THE IMPLEMENTATION OF THE CENTRAL AND LOCAL BUDGETS FOR 2010 AND ON THE DRAFT CENTRAL AND LOCAL BUDGETS FOR 2011

Fourth Session of the Eleventh National People's Congress

March 5, 2011

Ministry of Finance

Fellow Deputies,

The Ministry of Finance has been entrusted by the State Council to submit this report on the implementation of the central and local budgets for 2010 and on the draft central and local budgets for 2011 to the Fourth Session of the Eleventh National People's Congress (NPC) for your deliberation and approval, and also for comments and suggestions from the members of the National Committee of the Chinese People's Political Consultative Conference (CPPCC).

I. Implementation of the Central and Local Budgets for 2010

In 2010, under the firm leadership of the Communist Party of China (CPC), the people of all the country's ethnic groups forged ahead in solidarity and worked tenaciously, and all localities and departments took Deng Xiaoping Theory and the important thought of Three Represents as their guide, thoroughly applied the Scientific Outlook on Development, comprehensively carried out the decisions and arrangements of the central leadership, and conscientiously implemented the relevant resolution of the Third Session of the Eleventh NPC. The national economy developed steadily and rapidly, society remained harmonious and stable, and new significant achievements were made in reform, opening up and socialist modernization. On this foundation, steady progress was made in fiscal development and reform; a basic framework of a government budget system that comprises budgets for public finances, government-managed funds and state capital operations was put in place; budgets for social security funds were compiled on a trial basis; and government budgets were successfully implemented.

1. Implementation of budgets for public finances

National revenue totaled 8.308032 trillion yuan, an increase of 21.3% over 2009 (here and below). Adding the 10 billion yuan the central budget stabilization fund contributed, utilized revenue totaled 8.318032 trillion yuan. National expenditures amounted to 8.957538 trillion yuan, up 17.4%. Adding the 224.8 billion yuan used to replenish the central budget stabilization fund and the 135.694 billion yuan of local government expenditures carried forward to 2011, national expenditures came to 9.318032 trillion yuan. Total national expenditures therefore exceeded total national revenue by 1 trillion yuan.

Breaking down, central government revenue amounted to 4.247052 trillion yuan, 111.6% of the budgeted figure and an increase of 18.3%. The central budget stabilization fund contributed 10 billion yuan, bringing the total revenue used by the central government to 4.257052 trillion yuan. Central government expenditures amounted to 4.832252 trillion yuan, 103.6% of the budgeted figure and an increase of 10.3%. This consisted of 1.597289 trillion yuan in central government spending, up 4.7%, and 3.234963 trillion yuan in tax rebates and transfer payments to local governments, an increase of 13.3%. Adding the 224.8 billion yuan used to replenish the central budget stabilization fund, central government expenditures totaled 5.057052 trillion yuan. Total expenditures exceeded total revenue, leaving a deficit of 800 billion yuan, 50 billion yuan less than the budgeted figure. The outstanding balance on government bonds in the central budget at the end of 2010 was 6.752691 trillion yuan, which was under the budgeted limit of 7.120835 trillion yuan for the year.

(Figure 1 Balance of Central Government Finances in 2010)

Revenue collected by local governments came to 4.06098 trillion yuan. Adding the 3.234963 trillion yuan in tax rebates and transfer payments from the central government, local government revenue totaled 7.295943 trillion yuan, an increase of 19.3%. Local government expenditures amounted to 7.360249 trillion yuan, up 20.6%. Adding the 135.694 billion yuan carried forward to 2011, local government expenditures totaled 7.495943 trillion yuan. Total expenditures exceeded total revenue by 200 billion yuan, and with the approval of the State Council, the Ministry of Finance offset this shortfall by issuing local government bonds on behalf of local governments.

(Figure 2 Balance of Local Government Finances in 2010) 

The following is an overview of the major issues concerning the implementation of the central budget in 2010:

1) Central government revenue and the use of surplus revenue

On the whole, central government revenue grew fast in 2010, which was a reflection of factors including economic development, price increases and a relatively low base figure for fiscal revenue in 2009. Central government revenue exceeded the budgeted figure by 441 billion yuan, mainly because revenue projections at the beginning of 2010 were based on calculations using projected figures for economic targets. Some of the targets greatly exceeded predictions in the course of implementing the budget, and consequently actual revenue exceeded the budgeted figures. The total volume of imports and exports in 2010 increased by 34.7% (including a 38.7% rise in imports), exceeding the growth target of 8% set at the beginning of the year, and revenue from import taxes exceeded the budgeted figure by 286.5 billion yuan. Automobile sales in 2010 grew by 32.4%, and revenue from sales tax and vehicle purchase tax surpassed the budgeted figure by 128.5 billion yuan. Surplus revenue from the above two sources accounted for 94.1% of total central government surplus revenue, while revenue from other sources basically matched the projected figures.

Main sources of central government revenue

Domestic VAT revenue was 1.589559 trillion yuan, 103.6% of the budgeted figure and an increase of 14.2%. Domestic sales tax revenue was 607.154 billion yuan, 115.8% of the budgeted figure and an increase of 27.5%. Revenue from VAT and sales tax on imports was 1.048746 trillion yuan, 130% of the budgeted figure and an increase of 35.7%. Revenue from customs duties was 202.745 billion yuan, 128.3% of the budgeted figure and an increase of 36.6%. VAT and sales tax rebates on exports amounted to 732.731 billion yuan (which represents a decrease in revenue by the same amount), 103.6% of the budgeted figure and an increase of 13%. Corporate income tax revenue was 779.425 billion yuan, 96.7% of the budgeted figure and an increase of 2.3%. Personal income tax revenue was 290.285 billion yuan, 114.2% of the budgeted figure and an increase of 22.6%. Stamp tax revenue on securities trading amounted to 52.782 billion yuan, 102.3% of the budgeted figure and an increase of 6.6%. Vehicle purchase tax revenue was 179.203 billion yuan, 133.9% of the budgeted figure and an increase of 54%. Non-tax revenue totaled 196.801 billion yuan, 94.8% of the budgeted figure and a decrease of 22.9%.

(Figure 3 Central Government Revenue in 2010)

Use of central government surplus revenue

On the basis of relevant laws and regulations and the relevant resolution of the Third Session of the Eleventh NPC, of the 441 billion yuan in central government surplus revenue, 65 billion yuan was used to increase tax rebates and general transfer payments to local governments, 24.2 billion yuan was used to increase transfer payments to pay for local road maintenance, 26 billion yuan was used to increase spending on education, 5.6 billion yuan was used to increase spending on science and technology, and 45.4 billion yuan was spent on road construction. Of the remaining 274.8 billion yuan in surplus revenue, 50 billion yuan was used to reduce the central government deficit, and 224.8 billion yuan was used to replenish the central budget stabilization fund for future budgetary purposes. The State Council has reported on the arrangements and use of central government surplus revenue in 2010 to the 18th meeting of the Standing Committee of the Eleventh NPC.

2) Main central government expenditures

In accordance with the decisions and arrangements of the central leadership, and following deliberation and approval by the NPC, the central government increased investment in agriculture, education, medical and health care, social security and employment, low-income housing, science and technology, and environmental protection, thereby ensuring spending on key items, including central government spending and transfer payments to local governments.

(1) Total spending on education amounted to 254.734 billion yuan, 117.9% of the budgeted figure and an increase of 28.6%. This figure consists of 72.096 billion yuan in central government spending and 182.638 billion yuan in transfer payments to local governments. A total of 73.18 billion yuan was spent on improving the mechanism for guaranteeing the costs of rural compulsory education. All of the country' s 130 million rural students in compulsory education were exempted from paying tuition and miscellaneous fees and were supplied with free textbooks. In the central and western regions, roughly 12.28 million rural students in compulsory education from poor families received subsidies enabling them to live in school dormitories. More than 29 million urban students receiving compulsory education were exempted from paying tuition and miscellaneous fees. We implemented the plan to upgrade weak rural schools that provide compulsory education and comprehensively cleared the debts incurred from providing rural compulsory education. Students from poor families attending regular senior secondary schools were incorporated into the government student aid program, and government grants to college students were raised. Altogether 20.909 billion yuan was spent to strengthen vocational education infrastructure, exempt 4.4 million secondary vocational school students who are from poor families or studying agriculture-related majors from paying tuition, and continue to provide government grants to secondary vocational school students. We spent 60.663 billion yuan to launch a new round of Project 985, and move forward with Project 211 and the program to reform undergraduate teaching and improve its quality. We also spent 20.067 billion yuan to provide greater support for the reform and development of local institutions of higher learning. 

(2) Expenditures on science and technology came to 172.834 billion yuan, 105.8% of the budgeted figure and an increase of 14.3%. This figure consists of 166.13 billion yuan in central government spending and 6.704 billion yuan in transfer payments to local governments. We spent 30.2 billion yuan to implement major national science and technology projects, and 24.439 billion yuan to support the State Natural Sciences Fund, Program 973, projects to develop and operate key national laboratories, and other basic research. We disbursed 90.413 billion yuan to increase research on cutting-edge technologies; research for public benefit; R&D on major, generic and key technologies; and other applied research. We spent 20 billion yuan to carry out the plan for restructuring and invigorating key industries, and to stimulate technological upgrading and innovation in enterprises. We also pushed forward the development of regional scientific and technological innovation systems, and promoted the organic integration of enterprises, universities, research institutes and end-users.

(3) Expenditures on culture, sports and media were 31.6 billion yuan, 100.5% of the budgeted figure. This figure consists of 15.013 billion yuan in central government spending and 16.587 billion yuan in transfer payments to local governments. We intensified the construction of key cultural projects that benefit the people, such as those to develop multipurpose cultural centers in towns and townships, and to build libraries and show movies in rural areas. We enriched rural cultural life, and improved public cultural and sports facilities in communities. The number of public museums and memorial halls across the country open free of charge to the public reached 1,743. Protection of major cultural and historical sites, key cultural artifacts, and intangible cultural heritage continued to improve. We strengthened the broadcasting capability of the news media, deepened reform of the cultural management system, and stimulated development of the culture industry.

(4) Spending on medical and health care amounted to 148.535 billion yuan, 106.9% of the budgeted figure and an increase of 16.7%. This figure consists of 7.356 billion yuan in central government spending and 141.179 billion yuan in transfer payments to local governments. The number of people covered by the new rural cooperative medical care system reached 835 million and the number of non-working urban residents with basic medical insurance increased to 195 million, with government subsidies increasing to an average of 120 yuan per person, and the central government provided a 56 billion yuan subsidy for these purposes. We disbursed 6.3 billion yuan in subsidies to support uninsured retirees from closed or bankrupt state-owned enterprises (SOEs) as well as workers of financially distressed enterprises in taking part in basic medical insurance for urban workers. We provided 9.4 billion yuan in subsidies to further increase urban and rural medical assistance. We spent 22.5 billion yuan to strengthen the community-based medical and health care service system. We implemented the national system for basic drugs in 60% of government-run community-based medical and health care institutions and comprehensively reformed their systems and mechanisms. We spent 29.569 billion yuan in subsidies to provide nine types of basic public health services to urban and rural residents free of charge and to carry out major public health service projects. We also launched a pilot reform of public hospitals.

(5) Expenditures on social security and employment came to 378.499 billion yuan, 105.7% of the budgeted figure and an increase of 14.8%. This figure consists of 42.825 billion yuan in central government spending and 335.674 billion yuan in transfer payments to local governments. The central government spent 12 billion yuan in subsidies to extend trials of the new rural pension insurance system to 24% of the country' s counties. We launched pilot projects to fully fund enterprise employees' personal accounts for basic pension insurance, continued to increase basic pensions of enterprise retirees, with basic monthly pension benefits reaching 1,400 yuan per person on average, and provided a total of 156.1 billion yuan in subsidies to the basic pension insurance fund for enterprise employees. We spent 63.301 billion yuan to increase subsistence allowances for urban and rural recipients, and 21.562 billion yuan to raise benefits for entitled groups. We developed a system of subsistence allowances for orphans. We provided 13.769 billion yuan to ensure the basic living and working conditions for disaster victims and to appropriately raise central government subsidies to rural families for repairing or rebuilding their houses damaged or destroyed in natural disasters. We allocated 7.175 billion yuan in subsidies for policy-mandated closures or bankruptcies of SOEs. We implemented a more proactive employment policy, worked hard to carry out work-relief schemes, encouraged enterprises to hire laid-off workers, promoted the employment of university graduates, and provided special vocational training to rural migrant workers who had returned to their home villages. The central government raised subsidies to pay interest on guaranteed small loans and expand the scope of support.

(6) Spending on guaranteeing housing totaled 112.573 billion yuan, 113.4% of the budgeted figure and an increase of 15%. This figure consists of 38.648 billion yuan in central government spending and 73.925 billion yuan in transfer payments to local governments. We intensified the construction of low-income housing, work was begun to build low-income housing and renovate housing in run-down areas throughout the country, involving 5.9 million housing units, 3.7 million of which have been basically completed. We accelerated renovations of ramshackle rural houses and the construction of permanent housing for nomads. Altogether, the central government spent 76.486 billion yuan on low-income housing projects, up 38.9%. In addition, 35.216 billion yuan was spent from the housing accumulation fund for employees in administrative agencies and institutions. 

(7) Spending on agriculture, forests and water conservancy amounted to 387.966 billion yuan, 102.7% of the budgeted figure and an increase of 10.5%. This figure consists of 38.789 billion yuan in central government spending and 349.177 billion yuan in transfer payments to local governments. We spent 107.49 billion yuan in subsidies to implement a dynamic mechanism for adjusting general subsidies for agricultural supplies, further extend subsidies for superior crop varieties to more areas of the country and more varieties of crops, and expand subsidies for the purchase of agricultural machinery to 180 items in 12 categories. We spent 11.4 billion yuan to promote the application of advances in agricultural science and technology and the spread of advanced and appropriate agricultural technologies, support the development of specialized farmer cooperatives, stimulate the development of agriculture with unique local advantages, and increase agricultural safety and productivity. We spent 19.2 billion yuan on comprehensive agricultural development, including upgrading 1.608 million hectares of low- and medium-yield cropland to high-yield standards, and increasing our overall grain production capacity by 3.112 million tons. Spending on subsidies for agricultural and forest insurance premiums amounted to 6.777 billion yuan, and a total of 130 million farming households are now insured by agricultural or forest insurance policies. We made innovations in our funding mechanism for poverty alleviation through development, and provided 26 billion yuan in subsidies for 35.97 million people in poverty-stricken areas to support the development of industries with unique features or particular strengths. We spent 135.2 billion yuan on agricultural and rural infrastructure development to complete the task of the first round of a three-year program to reinforce dilapidated reservoirs, launch the second round of work to reinforce dilapidated key small reservoirs, include another 450 counties among the key counties for constructing small irrigation and water conservancy facilities, and move forward with the upgrading of rural power grids as well as key projects to build auxiliary facilities and upgrade water-saving devices in large and medium-sized irrigated areas. We spent 10.267 billion yuan to extend the trial of the government award and subsidy system for village-level public works projects, the launching of which is determined by villagers themselves, to 27 provincial-level administrative areas, which benefited 530 million rural residents. We also spent 7.581 billion yuan to expand the area of national public forests funded by the central government through the forest ecological conservation fund to 69.93 million hectares.

(8) Expenditures on land, resources and meteorology came to 37.004 billion yuan, 110% of the budgeted figure and an increase of 51.4%. This was mainly due to a considerable increase in revenue from use fees for mineral prospecting and mining rights and from mineral resource compensation fees, which are required by regulations to be used exclusively for exploiting and utilizing mineral resources. This figure consists of 17.639 billion yuan in central government spending and 19.365 billion yuan in transfer payments to local governments. This money was used to support the implementation of major geological and mining projects, and to further intensify basic geological prospecting, improve the environment in mining areas, and conserve and comprehensively utilize mineral resources.

(9) Spending on environmental protection came to 144.31 billion yuan, 102.1% of the budgeted figure and an increase of 25.3%. This amount consists of 6.948 billion yuan in central government spending and 137.362 billion yuan in transfer payments to local governments. A total of 85.125 billion yuan was spent on conserving energy and reducing emissions. We supported 1,184 key energy conservation projects, helped 773 enterprises retrofit energy-conserving technology and assisted 1,689 enterprises in less developed areas in retiring outdated production facilities. We helped standardize 532 environmental monitoring stations and 691 environmental oversight and law enforcement agencies; carried out major emissions reductions projects to prevent and control water pollution in the key watersheds of the Huai, Hai, Liao and Songhua rivers and Tai, Chao and Dianchi lakes; and financed the construction of 87,000 kilometers of sewer lines to complement urban sewage treatment facilities. We carried forward demonstration work to improve the living environment in about 4,100 contiguous villages across 8 provincial-level administrative areas. We expanded the project to promote energy-efficient products for the benefit of the people, and put more than 30 million highly efficient and energy-conserving air-conditioners and 160 million energy-efficient lighting products into use. The trials of saving energy in the public domain and demonstrating and promoting alternative-fuel vehicles were expanded to 25 cities, and the pilot program to subsidize private purchases of such vehicles was launched in six cities. A total of 10.631 billion yuan was spent on accelerating the development of renewable energy. We implemented the Golden Sun Project to develop renewable energy, and actively carried out the large-scale domestic application of photovoltaic power. We promoted the development of biomass energy and wind power, and demonstrated the development and application of renewable energies in 26 cities and 62 counties. We used 46.806 billion yuan to consolidate progress already made in returning cultivated land to forests and grazing land to grassland, carry out key projects in the forestry industry and improve grassland ecology. 

(10) Expenditures on transportation and transport came to 259.925 billion yuan, 122.7% of the budgeted figure and an increase of 19.3%. This figure consists of 148.958 billion yuan in central government spending and 110.967 billion yuan in transfer payments to local governments. We spent 151.2 billion yuan to construct more national and provincial highways and other public transportation infrastructure and to build or upgrade 300,000 kilometers of rural roads. We used 18.711 billion yuan to provide fuel subsidies for urban public transport and other public service industries. We provided 26 billion yuan in subsidies to local governments to phase out tolls on government-financed Grade II highways, and spent 12.5 billion yuan to build railroads, expressways and airports.

(11) Expenditures on resource exploration, electricity and information totaled 82.777 billion yuan, 118.9% of the budgeted figure and a decrease of 2.8%. This figure consists of 48.838 billion yuan in central government spending and 33.939 billion yuan in transfer payments to local governments. We used 48.4 billion yuan for the construction of infrastructure for resource exploration, electricity and information. We spent 9.343 billion yuan to promote the development of small and medium-sized enterprises.

(12) Expenditures on stockpiling grain, edible oils and other materials amounted to 79.324 billion yuan, 73.6% of the budgeted figure and a decrease of 28.2%. The decrease was mainly due to fewer subsidies for things such as actual interest payments related to grain and edible oils. This figure consists of 49.512 billion yuan in central government spending and 29.812 billion yuan in transfer payments to local governments. We provided 15.1 billion yuan in direct subsidies to grain growers and 10.9 billion yuan to subsidize interest payments incurred from raising the floor prices of grain. We spent 25.79 billion yuan to strengthen the reserve systems for grain and edible oils as well as petroleum, nonferrous metals and other important commodities.

(13) Spending on the commercial services industry totaled 80.285 billion yuan, 94.2% of the budgeted figure and an increase of 29.9%. The difference between the actual and budgeted amounts was mainly due to lower actual costs for stockpiling petroleum, cotton and other commodities. This figure consists of 14.091 billion yuan in central government spending and 66.194 billion yuan in transfer payments to local governments. We spent 40.358 billion yuan in subsidies to continue to implement the policies to encourage rural residents to purchase home appliances and motor vehicles and to encourage people to trade-in old home appliances and motor vehicles for new ones. We used 3.193 billion yuan to subsidize state cotton, sugar and meat reserves. We spent 8.1 billion yuan to build a modern logistics network in the new countryside, and stimulate the logistics services industry.

(14) Spending on post-Wenchuan earthquake recovery and reconstruction totaled 79.434 billion yuan, 101.8% of the budgeted figure. This figure consists of 3.79 billion yuan in central government spending and 75.644 billion yuan in transfer payments to local governments. Post-Wenchuan earthquake recovery and reconstruction work has basically been completed in two years instead of three years as scheduled. Spending in this area between 2008 and 2010 amounted to 233.088 billion yuan, and adding the 65.582 billion yuan from the central government' s state capital operations budget and the 4.657 billion yuan carried forward to the 2011 budget, total spending came to 303.327 billion yuan. We will achieve the central government' s financial support target for post-Wenchuan earthquake recovery and reconstruction of 300 billion yuan in three years.

(15) National defense spending amounted to 518.227 billion yuan, 99.8% of the budgeted figure and an increase of 7.3%. This difference between the actual and budgeted amounts was primarily due to actual settlement allowances for discharged military personnel being less than expected. This figure consists of 517.635 billion yuan in central government spending and 592 million yuan in transfer payments to local governments. These funds were used to improve the living conditions and benefits of army officers and enlisted personnel, strengthen the informationization of the army, increase its equipment and supporting facilities appropriately, and improve its ability to respond to emergencies and disasters.

(16) Spending on public security came to 147.542 billion yuan, 106.1% of the budgeted figure and an increase of 14.6%. This figure consists of 87.52 billion yuan in central government spending and 60.022 billion yuan in transfer payments to local governments. We pressed ahead with reforming the system for ensuring funding for procuratorial, judicial, and public security departments, and constantly raised the level of funding assurances. We strengthened the disaster preparation, mitigation and emergency response system.

(17) Expenditures on general public services came to 99.27 billion yuan, 97.8% of the budgeted figure and a decrease of 8.3%. These funds were used mainly to ensure the normal operation of government agencies and assist local governments in providing grants to cadres leaving military service to find employment on their own. This figure consists of 83.724 billion yuan in central government spending and 15.546 billion yuan in transfer payments to local governments.

(18) Interest payments on government bonds totaled 151.236 billion yuan, 98.5% of the budgeted figure and an increase of 14.5%.

(Figure 4 Central Government Expenditures in 2010) 

An analysis of the above expenditures shows that in 2010 the central government spent a total of 889.854 billion yuan, an increase of 19.9%, on areas that directly affect people's lives, namely education, medical and health care, social security and employment, guaranteeing adequate housing, and culture. The expenditures on agriculture and water conservancy, transportation and transport, and environmental protection were all closely related to the people' s wellbeing, and most of the tax rebates and general transfer payments from the central government to local governments were also used to improve the people' s wellbeing. In 2010 the central government spent a total of 857.97 billion yuan, an increase of 18.3%, to benefit agriculture, rural areas, and farmers. This figure consists of 342.73 billion yuan for agricultural production; 122.59 billion yuan in direct subsidies to grain growers, general subsidies for purchasing agricultural supplies, and subsidies for purchasing superior crop varieties and agricultural machinery; 335.03 billion yuan for the development of rural education, health care and other social undertakings; and 57.62 billion yuan for expenses related to stockpiling agricultural products and associated interest payments. It should be pointed out that expenditures on the people' s wellbeing and on agriculture, rural areas, and farmers do not constitute a single budgetary item. In order to make it easier for you to deliberate these expenditures, we have combined all expenditure items related to the people' s wellbeing and agriculture, rural areas, and farmers, so there is some overlap in the statement of expenditures.

2. Implementation of budgets for government-managed funds

In 2010, revenue from government-managed funds nationwide came to 3.578194 trillion yuan, and expenditures amounted to 3.258264 trillion yuan.

Revenue from central government-managed funds reached 317.557 billion yuan, 124.3% of the budgeted figure. This figure includes 5.916 billion yuan from the Three Gorges Project construction fund, 61.692 billion yuan from the railroad construction fund, 11.444 billion yuan from port development fees, 13.641 billion yuan from civilian airport administration and development fees, 24.773 billion yuan from lottery ticket proceeds, 18.344 billion yuan from the fund for providing ongoing aid to residents relocated to make way for the construction of large and medium-sized reservoirs, and 9.144 billion yuan from the central government fund for repaying rural power grid loans. Adding the 63.134 billion yuan carried forward from 2009, utilized revenue totaled 380.691 billion yuan in 2010.

Expenditures from central government-managed funds totaled 301.675 billion yuan, 94% of the budgeted figure. This total consists of two parts. The first is 228.405 billion yuan of central government spending, including 6.989 billion yuan on the construction of the Three Gorges Project; 58.2 billion yuan on railroad construction; 8.715 billion yuan on port development; 4.676 billion yuan on civilian airport administration and development; 13.91 billion yuan from lottery ticket proceeds, which was spent on social welfare programs, sports, education and other public service programs; 45 million yuan from the fund for providing ongoing aid to residents relocated to make way for the construction of large and medium-sized reservoirs; and 10.287 billion yuan from the central government fund for repaying rural power grid loans. The second part is 73.27 billion yuan in transfer payments to local governments, an increase of 13.34 billion yuan or 22.3%. A total of 79.016 billion yuan was carried forward to 2011 from central government-managed funds.

Revenue collected by local governments from funds under their control reached 3.260637 trillion yuan, 201.9% of the budgeted figure. This figure includes 2.910994 trillion yuan from the sale of state-owned land-use rights, 213.2% of the budgeted figure, which was mainly attributable to increased land supply, increase of overall land prices and better revenue management; 61.087 billion yuan from urban infrastructure construction fees; 24.364 billion yuan from lottery ticket proceeds; and 24.282 billion yuan from local education surcharges. Adding the 73.27 billion yuan in transfer payments from central government-managed funds, total revenue from local government-managed funds came to 3.333907 trillion yuan.

Expenditures from local government-managed funds totaled 3.029859 trillion yuan, 175% of the budgeted figure. This includes 2.697579 trillion yuan of spending from proceeds of the sale of state-owned land-use rights, consisting of 1.33956 trillion yuan paid out as compensation for land expropriation, housing demolition and resident relocation; 224.827 billion yuan for strengthening rural infrastructure and providing subsidies to farmers; 46.362 billion yuan for providing low-rent housing; 333.663 billion yuan from proceeds of the sale of land-use rights of SOEs that went bankrupt or were converted into stockholding companies, which was used to assist their laid-off employees in resettling; and 753.167 billion yuan for urban development spent in accordance with relevant provisions of the Law on Urban Real Estate Administration. A total of 28.819 billion yuan from lottery ticket proceeds was spent on social welfare, sports, education and other public service programs; 47.968 billion yuan was spent on urban infrastructure construction; and 17.741 billion yuan was added to local education expenditures. The surplus revenue from local government-managed funds was carried forward to 2011.

3. Implementation of the budget for the central government's state capital operations

In 2010, revenue from state capital operations of central government enterprises totaled 55.87 billion yuan, 132.7% of the budgeted figure. The surplus was mainly because proceeds from the sale of state shares in enterprises were included in the budget for state capital operations. Adding the 1.89 billion yuan carried forward from 2009, utilized revenue totaled 57.76 billion yuan. Expenditures from the central government' s state capital operations came to 56.343 billion yuan, consisting of 14.854 billion yuan for supplementing the national social security fund, 932 million yuan for post-Wenchuan earthquake recovery and reconstruction, 17.95 billion yuan for restructuring the state sector of the economy and industrial restructuring, 12.196 billion yuan in subsidies for reforming central government enterprises and making them profitable, 3.2 billion yuan for fostering major scientific and technological innovations, 3 billion yuan for major energy conservation and emissions reductions projects, 2.241 billion yuan for overseas investment, 470 million yuan for social security, 1 billion yuan transferred to the public finance budget to be spent on the people' s wellbeing, and 500 million yuan for the industrial development of the Xinjiang Production and Construction Corps.

4. Implementation of a proactive fiscal policy

We conscientiously implemented a proactive fiscal policy, spurred the national economy to continue to develop in the direction anticipated by the exercise of macro-control, and further consolidated the positive momentum of the economy.

We increased urban and rural incomes and boosted consumer demand. We increased subsidies to farmers, strengthened agricultural infrastructure and overall agricultural production capacity, and raised rural incomes. We raised subsidies for urban and rural recipients of subsistence allowances, enterprise retirees and entitled groups, and increased people' s consumption capacity. We continued to implement the policies to encourage consumption, such as those that encourage rural residents to purchase home appliances and motor vehicles and people to trade in old home appliances and motor vehicles for new ones.

We allocated and used government public investment and optimized its structure. On the basis of overall plans for using appropriations from the public finance budget, revenue from government-managed funds, and income from state capital operations, the central government spent 1.071 trillion yuan on public investment, which mainly went to developing agricultural infrastructure and projects meant to improve the wellbeing of rural residents; education, health and other social undertakings; low-income housing; energy conservation, emissions reductions and ecological improvement; and innovation and restructuring. We again issued 200 billion yuan worth of government bonds on behalf of local governments, and gave top priority in using these funds to carrying forward and completing public welfare projects.

We implemented a policy of structural tax reduction, and guided enterprise investment and consumer spending. We consolidated progress in VAT reform and the reform of taxes and fees on refined petroleum products. We implemented a preferential income tax policy for some small enterprises with low profits. We reduced the purchase tax on passenger vehicles with engine displacement of 1.6 liters or less to 7.5%. We continued to implement all tax and fee reduction and exemption policies, and tightened management over the examination and approval of administrative fees and projects financed through government-managed funds.

5. Progress in fiscal and taxation reforms

We optimized the structure of transfer payments, increased the size and proportion of general transfer payments, and combined and streamlined special transfer payments. We improved the method of distributing transfer payments to ethnic minority areas and the system of transfer payments to functional ecological zones, and gradually increased transfer payments to cities once dependent on now-depleted mineral resources. We established a sound mechanism for ensuring basic funding for county-level governments, and enhanced the capacity of primary-level governments to provide public services. We carried out the reform to place county finances directly under the management of provincial-level governments in 970 counties in 27 provincial-level administrative areas, and to put township finances under the management of county governments in 28,600 towns and townships. We improved public finance budgets, comprehensively compiled budgets for central and local government-managed funds, continued to expand trials of the budget system for state capital operations, and started compiling budgets for social security funds on a trial basis. We deepened the reform of budget management systems, such as departmental budgeting, centralized treasury collection and payment, and government procurement. We conducted trials of the reform of resource taxes first in Xinjiang and then in other parts of the western region. We extended urban construction and maintenance taxes and education surcharges to foreign enterprises and nationals on the same basis as their domestic counterparts. We energetically pressed forward with the reform of the income distribution system, fully implemented the policy of linking the pay to performance for teachers in compulsory education, and accelerated implementation of the policy to institute a performance-based salary system in public health institutions and community-based medical and health care institutions.

6. Implementation of the NPC budget resolution

In accordance with the relevant resolution of the Third Session of the Eleventh NPC, as well as the guidelines of its Financial and Economic Affairs Commission, we strengthened and improved macro-control through the management of public finance, worked hard to ensure funding for key areas, improved the compilation of budgets, strictly implemented budgets, carried forward the reform of the fiscal and taxation systems, and strengthened government debt management. We made fiscal management more scientific and meticulous. We made important progress in revising the Budget Law and the Law on Certified Public Accountants as well as enacting the Law on Vehicle and Vessel Tax. We made budgets more detailed, reduced the number of budgets compiled by the central government for local governments, and made sure funds were available for more budgetary items at the beginning of the year. We actively evaluated budgets of major projects, and made budgetary expenditure items more accurate and scientific. We notified local governments in advance of the amount of budgeted transfer payments from the central government, with the result that local government budgets were significantly more complete. We made budget implementation more balanced and efficient. The percentage of budget expenditures for the whole year that were made in December nationwide dropped from 26.3% in 2009 to 20.1% in 2010. We formulated specific measures and improved policies for strengthening the management of corporations run by local government financing platforms, and saw to it the debts of these corporations were cleared up and verified. We constantly improved the mechanisms for budget compilation, implementation, final settlement and oversight to be coordinated with and stimulate each other. Our efforts to bring unauthorized departmental coffers under control constantly deepened. We organized a review and inspection of the funds for aiding agriculture and benefiting farmers, and promoted innovation in and improvement of management mechanisms. We comprehensively increased the openness of budgets, with the number of central government budget tables made public increasing from 4 in 2009 to 12 in 2010, and detailed expenditure tables now have several section-level headings. A total of 74 central budgetary departments have opened their budgets to the public. Further achievements were made in making local budgets more open. We strengthened basic fiscal management work such as developing a system of standards for expenditures. We constantly standardized township and town fiscal management and gradually strengthened oversight. We successfully finished the work of responding to the NPC Standing Committee' s inquiries on the central government final budget for 2009. We reported to the Standing Committee on budget implementation in the middle of the year, and implemented measures to improve implementation on the basis of the Standing Committee' s response to our report. The State Council has reported relevant developments to the Standing Committee of the Eleventh NPC.

The year 2010 was the last year of the Eleventh Five-Year Plan period. A review of the past five years shows that the development and reform of public finance have taken on new appearances.

The scale of revenue and expenditures expanded constantly, and the structure of expenditures further improved. During the Eleventh Five-Year Plan period, public finance revenue totaled 30.3 trillion yuan, with an average annual increase of 21.3%, and public finance expenditures totaled 31.9 trillion yuan, with an average annual increase of 21.4%. The government substantially increased funding for improving the people' s wellbeing, made compulsory education free to all urban and rural students throughout the country, significantly improved basic medical insurance for urban and rural residents, put in place the basic framework for a social security system covering both urban and rural areas, and greatly accelerated the development of the system of public cultural services. During the Eleventh Five-Year Plan period, public finance spending on education totaled 4.45 trillion yuan, an increase of 160% over the Tenth Five-Year Plan period; expenditures on medical and health care totaled 1.49 trillion yuan, an increase of 260%; spending on social security and employment totaled 3.33 trillion yuan, an increase of 130%; spending on culture totaled 560 billion yuan, an increase of 140%; and central government spending on agriculture, rural areas, and farmers came to nearly 3 trillion yuan.

Fiscal and taxation policies constantly improved, and macro-control through management of public finance was further strengthened. In light of developments and changes in the international and domestic economic situations, we first followed a prudent fiscal policy and then a proactive fiscal policy, coordinated our fiscal policy with monetary and industrial policies, and improved the macro-control system under conditions of the socialist market economy. As a result, we effectively dealt with the impact of the global financial crisis and laid a foundation for our long-term sustainable development.

Fiscal and taxation reforms were constantly deepened, and the public finance system further improved. The system of transfer payments was progressively improved, a rudimentary mechanism to ensure funding for county-level governments was established, and the general framework for a government budget system was basically formed. The agricultural tax was rescinded nationwide; VAT reform was fully implemented; tax policies were comprehensively unified for domestic and overseas-funded enterprises; the sales tax system continued to improve; the reform of taxes and fees on refined petroleum products progressed smoothly; trials of the reform of resource taxes were initiated; and the reform of the local taxation system made steady progress. 

Fiscal management was constantly strengthened, and the level of management was raised further. We intensively exercised management over public finance in accordance with the law, constantly improved the system for classifying government revenue and expenditure items, strengthened management over the compilation and implementation of budgets, accelerated efforts to make budgets more open, constantly improved the fiscal oversight mechanism, further improved the fiscal accounting system, and ensured that public finance performed its functions.

The above-stated achievements are attributable to the overall planning and correct leadership of the CPC Central Committee and the State Council; the close cooperation and diligent work of all localities and departments; and the joint efforts of all our ethnic groups. At the same time, we are also fully aware that some prominent problems concerning fiscal operations and management still exist, the main ones being: Some county and township governments remain in rather difficult financial circumstances, and assurances of adequate basic funding for them have to be strengthened. The system for ensuring that financial resources are correlated with responsibilities still has yet to improve, and the task of making basic public services uniform between regions and between urban and rural areas is quite arduous. The fiscal and taxation policies for promoting the transformation of the pattern of economic development need further improvement, and public finance must play a larger role in adjusting income distribution. Local governments face debt risks that cannot be overlooked. Management of revenue and expenditures from the sale of land-use rights urgently needs to be strengthened. Fiscal management remains weak, and the pace at which expenditures are made throughout a fiscal year is not sufficiently uniform. The performance of government funds needs to be raised. We will give these problems our full attention and continue to adopt effective measures to solve them.

II. Draft Central and Local Budgets for 2011

1. Our country's present fiscal situation

The situation our country's development faces in 2011 is extremely complex. The world economy will continue to recover slowly, and the foundation for recovery is not solid. The positive trend of our country's economy has not changed, but we face numerous conflicts and problems. Fiscally, there is still a significant imbalance between our revenue and expenditures.

In terms of revenue, sustained steady and rapid economic development has laid a foundation for increasing revenue. At the same time, revenue will decrease somewhat because the revenue base figure for 2010 was relatively high; it will be difficult to maintain rapid growth in imports and exports; the automobile market is gradually cooling off; and we are implementing the reform of personal income tax, adjusting the scope of VAT and business taxes, and continuing to implement the preferential income tax policy for some small enterprises with low profit. Revenue will rise less in 2011 than in 2010.

In terms of expenditures, in order to complete ongoing government-funded projects and strengthen agricultural and water conservancy infrastructure, we must maintain a certain level of investment. In order to accelerate economic restructuring and the transformation of the pattern of development; move forward with reform in the key areas of education, medicine and health, and social security; effectively ensure and improve the people's wellbeing; respond to inflation pressure; and increase subsidies to people with low incomes, we must further increase government spending. All of this will put considerable pressure on expenditures.

2. General requirements for compiling budgets and public finance work

On the basis of the central leadership's decisions and arrangements and in light of the present economic and fiscal situations, we have adopted the following guiding thought for compiling the 2011 budgets and doing public finance work: We need to comprehensively implement the guiding principles of the Seventeenth National Party Congress and the Fifth Plenary Session of the Seventeenth CPC Central Committee; take Deng Xiaoping Theory and the important thought of Three Represents as our guide; thoroughly implement the Scientific Outlook on Development; unwaveringly take scientific development as the theme and accelerating the transformation of the pattern of economic development as the main thread; continue to implement a proactive fiscal policy; deepen reform of the fiscal and tax systems; make adjustments in the distribution of national income; optimize the structure of expenditures; increase support for agriculture, rural areas, and farmers, education, medical and health care, social security and employment, low-income housing projects, energy conservation and environmental protection as well as less developed areas; effectively ensure and improve the wellbeing of the people; and promote economic growth and restructuring, and balanced regional and overall urban and rural development. We will adhere to the policy of managing financial matters in accordance with the law, taking all factors into consideration when making overall plans, and increasing revenue and reducing expenditures; strengthen the scientific management of public finances; strictly limit regular expenditures; increase returns on the use of government funds; and promote steady and rapid economic growth and social harmony and stability. 

On the basis of this guiding thought, we will continue to implement a proactive fiscal policy in 2011, which will primarily be manifested in the following ways.

First, raising the incomes of urban and rural residents, and expanding consumer demand. We will spur the adjustment of national income distribution, increase government subsidies, raise the basic income of low-income urban and rural residents, and increase consumption capacity. We will improve all policies that strengthen agriculture and benefit farmers; strive to expand employment; support the creation of a sound mechanism for regularly raising the salaries of enterprise employees; raise the level of pension benefits for enterprise retirees and subsistence subsidies for low-income urban and rural residents; and implement the policy of linking pay to performance for teachers in compulsory education and for employees of public health institutions and community-based medical and health care institutions. We will improve policies that help expand consumption, such as the policies of providing subsidies for rural residents to purchase home appliances and subsidies for trading in old home appliances for new ones.

Second, striving to optimize the investment structure, and strengthening weak links in economic and social development. Funds allocated for capital construction investment in the central government budget will be used mainly to support the construction of low-income housing projects and the development of agricultural infrastructure, particularly water conservancy, and education and health infrastructure; energy conservation, emissions reductions, ecological conservation and environmental protection; and economic and social development in Xinjiang, Tibet and Tibetan ethnic areas in Sichuan, Yunnan, Gansu and Qinghai provinces; innovation; and the development of strategic emerging industries. We will give priority to ensuring funding for key ongoing projects, and begin construction on the major projects in the Twelfth Five-Year Plan in an orderly manner. At the same time, we will further encourage and guide healthy development of nongovernmental investment.

Third, adjusting and improving tax policies, stimulating enterprise development and guiding consumer spending. We will continue to reform and improve the tax system, straighten up and standardize administrative charges and government-managed funds, make better use of the role of taxation in adjusting the economy and distributing income, and spur accelerated transformation of the pattern of economic development. We will launch pilot projects for reforming VAT, improve the system of sales taxes, implement reform of the personal income tax system in stages and press ahead with reform of resource taxes. We will continue to implement the preferential income tax policy for some small enterprises with low profits and support the development of small and medium-sized enterprises. We will implement preferential tax policies that are beneficial for conserving energy, reducing emissions, protecting the environment and creating new jobs.

Fourth, further optimizing the structure of government expenditures, and ensuring and improving the wellbeing of the people. We will increase expenditures in the key areas of agriculture, rural areas, and farmers; less developed areas; social programs; restructuring; and scientific and technological innovation. We will promote the improvement of the people' s wellbeing and the development of all social undertakings, and ensure the masses receive more visible and tangible benefits. We will vigorously support the post-disaster rebuilding of Yushu and Zhugqu. We will reduce regular expenditures and genuinely lower administrative costs.

Fifth, vigorously supporting economic restructuring and balanced regional development, and spurring transformation of the pattern of economic development. We will increase support for scientific and technological innovation and give impetus to the industrial application of scientific and technological results. We will promote the development of strategic emerging industries, support the development of small and medium-sized enterprises and service industries, and actively move forward with industrial restructuring and with mergers, reorganizations and technological upgrading of enterprises. We will encourage and expand imports of key components and parts as well as advanced equipment, and introduce advanced technology. We will vigorously support energy conservation and emissions reductions, accelerate the creation of a mechanism to compensate for damage caused to the ecological environment, and comprehensively establish a mechanism for subsidizing and rewarding preservation of grassland ecological environments. We will increase general transfer payments from the central government to local governments; give more support to old revolutionary areas, ethnic areas, border areas and impoverished areas; and implement fiscal and tax policies to promote balanced regional development. 

On the foundation of promoting steady and rapid economic development in 2011, we will concentrate our financial resources on a number of major issues to ensure and improve the wellbeing of the people: 1) We will comprehensively implement the requirements set forth in the National Medium- and Long-Term Plan for Education Reform and Development, increase education spending, and increase returns on the use of education funds. 2) We will energetically support reform of the pharmaceutical and healthcare systems and raise the level of medical services and medical insurance. 3) We will increase investment in low-income housing projects, and move forward with the construction of public rental housing and low-cost rental housing and the renovation of dangerous rural housing and all types of run-down areas. 4) We will support the accelerated establishment of a social security system that covers both urban and rural residents, further expand the scope of pilot projects in a new type of pension insurance for rural residents, and bring zero-income residents of cities and towns where pilot projects are underway into the insurance system. 5) We will strengthen agricultural and rural infrastructure; energetically carry out irrigation and water conservancy projects, harness small and medium-sized rivers, reinforce dangerous small reservoirs and prevent disasters from mountain torrents; and effectively improve working and living conditions in the countryside. 6) We will support energy conservation, emissions reductions and scientific and technological innovation; and spur economic restructuring and transformation of the pattern of economic development.

3. Public finance budgets for 2011

On the basis of the targets for economic development in 2011, economic and social policies, and the general requirements for compiling budgets decided upon at the Central Economic Work Conference, we have set the following major targets for 2011 public finance budgets: total revenue in the central budget should reach 4.586 trillion yuan, an increase of 8% over the actual figure for 2010 (here and below), and 150 billion yuan will be added from the central budget stabilization fund, bringing total revenue for 2011 to 4.736 trillion yuan. Expenditures in the central budget should total 5.436 trillion yuan, an increase of 12.5%. This consists of 1.705 trillion yuan incurred at the central level, an increase of 6.7%, and 3.731 trillion yuan paid out as tax rebates and transfer payments to local governments, an increase of 15.3%. Expenditures exceed revenue in the central budget, resulting in a deficit of 700 billion yuan, 150 billion yuan less than the actual figure for 2010. The limit for the outstanding balance of government bonds in the central budget stands at 7.770835 trillion yuan.

(Figure 5 Budgetary Balance of the Central Government for 2011)

Based on preliminary provisions for the local budgets as complied by the central government, revenue collected by local governments will amount to 4.386 trillion yuan, up 8%. Adding the 3.731 trillion yuan in tax rebates and transfer payments from the central government, local government revenue will total 8.117 trillion yuan. Local government spending will amount to 8.317 trillion yuan. Expenditures will exceed revenue by 200 billion yuan, and to compensate for this, the State Council has agreed for the Ministry of Finance to issue 200 billion yuan of local government bonds on behalf of local governments, and these will be incorporated into provincial-level government budgets. Arrangements for revenue and expenditures of local governments should be based on the budgets approved by the people' s congresses at their respective levels.

Combining central and local budgets, national revenue will be 8.972 trillion yuan, an increase of 8%. Including the 150 billion yuan from the central budget stabilization fund, total available national revenue is projected to be 9.122 trillion yuan. Total national expenditures are budgeted at 10.022 trillion yuan, up 11.9%. Total expenditures will exceed total revenue by 900 billion yuan. The national budget deficit will be around 2% of GDP in 2011, down from 2.5% in 2010. These arrangements take into account the need to consolidate and develop the results in responding to the impact of the global financial crisis and to maintain steady and rapid economic development, and reflect the requirement to promote the sustainable development of public finance.

Overview of the central budget stabilization fund

The outstanding balance of the fund stood at 236.813 billion yuan at the end of 2010. After 150 billion yuan is transferred to the 2011 budget, 86.813 billion yuan will remain.

1) Main revenue items provided for in the central budget

Revenue from domestic VAT will amount to 1.757 trillion yuan, an increase of 10.5%. Revenue from domestic sales tax will amount to 650 billion yuan, an increase of 7.1%. Revenue from VAT and sales tax on imports will amount to 1.122 trillion yuan, up 7%. Revenue from customs duties will amount to 217 billion yuan, up 7%. Revenue from corporate income tax will amount to 838 billion yuan, up 7.5%. Revenue from personal income tax will amount to 312 billion yuan, an increase of 7.5%. Revenue from stamp tax on securities trading will amount to 55 billion yuan, up 4.2%. Export tax rebates will amount to 800.5 billion yuan, an increase of 9.2%, which will result in a decrease in revenue by the same amount. Revenue from vehicle purchase tax will amount to 192.7 billion yuan, an increase of 7.5%. Non-tax revenue will amount to 208 billion yuan, up 5.7%.

(Figure 6 Central Government Revenue in 2011) 

2) Main expenditure items provided for in the central budget

The plans for expenditures call for further optimizing the spending structure and giving top priority to ensuring funding for work related to agriculture, rural areas, and farmers; improving the people' s wellbeing; developing social undertakings; advancing economic restructuring; and deepening reform. The main expenditure items, consisting of central government spending and transfer payments to local governments, are arranged as follows.

(1) The appropriation for education spending is 296.357 billion yuan, an increase of 16.3%. This figure consists of 78.645 billion yuan of central government spending and 217.712 billion yuan in transfer payments to local governments. Three billion yuan in subsidies has been appropriated primarily to support the development of rural preschool education in the central and western regions and ethnic minority areas. We have appropriated 92.124 billion yuan to improve the mechanism to guarantee funding for rural compulsory education, raise the benchmark of public funding per student in rural primary and secondary schools, continue to implement the policy of exempting urban students in compulsory education from paying tuition and miscellaneous fees, and ensure that children of rural migrant workers have equal access to compulsory education in cities. We have appropriated 16.514 billion yuan to continue to carry out the plan to improve weak rural schools providing compulsory education. We have appropriated 13.4 billion yuan to strengthen the basic conditions for vocational education and implement the policy of exempting students in secondary vocational schools whose families have financial difficulties and students in such schools who are studying agriculture-related majors from paying tuition. We have appropriated 27.1 billion yuan in subsidies to improve the policy framework for providing financial aid to students from families with financial difficulties attending regular senior secondary schools, regular undergraduate institutions, and higher and secondary vocational schools. We have appropriated 71.725 billion yuan to implement Project 985 and Project 211, accelerate the building of top-class universities and academic disciplines, and develop innovation platforms in strong disciplines. We have appropriated 20 billion yuan to support efforts to raise per student appropriations for local universities and advance their development and reform. We will promote the development of special education and education in ethnic minority areas.

(2) The appropriation for science and technology spending is 194.413 billion yuan, an increase of 12.5%. This figure consists of 190.159 billion yuan of central government spending and 4.254 billion yuan in transfer payments to local governments. We have appropriated 43.5 billion yuan, up 44%, to speed up the implementation of major national science and technology projects. We have appropriated 25.719 billion yuan for basic research funds to increase investment in the State Natural Sciences Fund and improve the capabilities of key national laboratories and basic research institutes. We have appropriated 99.063 billion yuan for applied research funds primarily to support research on cutting-edge technologies, research for the public interest and research on major, generic and key technologies. We will expand pilot programs for independent R&D on major scientific equipment. We will give more guidance and support to strengthen regional innovation capabilities and give impetus to the transformation of scientific and technological results into actual productive forces.

(3) The appropriation for spending on culture, sports, and media is 37.443 billion yuan, up 18.5%. This figure consists of 18.84 billion yuan of central government spending and 18.603 billion yuan in transfer payments to local governments. Priority will be given to supporting cultural development projects that affect the vital interests of people in rural areas and at the primary level. We will guarantee free admission to non-profit cultural facilities such as museums and memorial halls. We will strengthen protection of key national artifacts and major cultural and historical sites. We will actively promote cultural restructuring and the development of cultural programs and the culture industry. We will strengthen the international broadcasting capability of the news media.

(4) The appropriation for medical and health care spending is 172.758 billion yuan, an increase of 16.3%. This figure consists of 6.356 billion yuan of central government spending and 166.402 billion yuan in transfer payments to local governments. Together with the 127.321 billion yuan appropriation in 2009 and the 148.535 billion yuan appropriation in 2010, this completes the three-year plan for new spending from the central budget to support the deepening of pharmaceutical and health care reform. The central government has appropriated 76 billion yuan, up 35.7%, to raise the participation of eligible individuals in basic medical insurance for urban workers, basic medical insurance for urban residents and the new rural cooperative medical insurance to over 90%, and to raise the subsidy for the new rural cooperative medical insurance and basic medical insurance for urban residents from 120 yuan to 200 yuan per person. We will support the full implementation of the national system of basic drugs at government-run community-based medical and health care institutions and carry out comprehensive reform of community-based medical and health care institutions. We have appropriated 34.6 billion yuan to raise per capita spending on basic public health services for urban and rural residents from 15 yuan to 25 yuan, and continue to support the implementation of major public health service projects. We will carry out trial reforms of public hospitals. We have appropriated 8 billion yuan to increase medical assistance in both urban and rural areas. 

(5) The appropriation for social security and employment spending is 441.434 billion yuan, an increase of 16.6%. This figure consists of 48.479 billion yuan of central government spending and 392.955 billion yuan in transfer payments to local governments. We have appropriated 13.1 billion yuan in subsidies to support the expansion of trials of the new rural pension insurance from around 24% of counties to 40% and extend pension insurance coverage to zero-income urban residents. We have appropriated 10.4 billion yuan to provide living allowances in one lump sum to more than 86 million urban and rural recipients of subsistence allowances and childless and infirm rural residents receiving guarantees of food, clothing, medical care, housing and burial expenses. We have appropriated 179.6 billion yuan in subsidies to basic pension insurance funds of enterprises, up 15.1%, to increase the per person monthly pension of enterprise retirees by about 140 yuan, improve the overall planning system for basic pension insurance funds of enterprise employees at the provincial level, and properly solve the problem of basic pension insurance for retirees of collectively owned enterprises that do not participate in the pension insurance scheme. The central government has appropriated 74.9 billion yuan, up 18.3%, to raise urban and rural subsistence allowances. We have appropriated 25.77 billion yuan in subsidies, up 19.5%, to raise benefits for entitled groups. We have appropriated 3.6 billion yuan to raise subsistence allowances for orphans by an appropriate amount. We have appropriated 10.65 billion yuan to help people affected by natural disasters to restore their lives. We have appropriated 6 billion yuan in subsidies to continue to deal well with the aftermath of policy-based closures and bankruptcies of SOEs. We will expand the policy of giving encouragement and support to people who start their own businesses, and we will do a good job in employment assistance and providing training in vocational and start-up skills.

(6) The appropriation for guaranteeing adequate housing is 129.266 billion yuan, up 14.8%. This figure consists of 29.163 billion yuan of central government spending and 100.103 billion yuan in transfer payments to local governments. By means of increasing government investment at all levels and actively guiding the participation of nongovernmental capital, we will accelerate the construction of public rental housing and low-rent housing; carry out renovations of run-down areas in cities, industrial and mining areas, forest regions, land reclamation zones and coalmines, and dilapidated rural homes; and build permanent housing for nomads. The central government has appropriated 103 billion yuan for low-income housing projects, up 34.7%. We have appropriated 26.266 billion yuan for the housing accumulation fund for employees in administrative agencies and institutions.

(7) The appropriation for spending on agriculture, forestry, and water conservancy is 458.883 billion yuan, an increase of 18.3%. This figure consists of 42.419 billion yuan of central government spending and 416.464 billion yuan in transfer payments to local governments. We have appropriated 157.54 billion yuan to strengthen agricultural and rural infrastructure with a focus on water conservancy; vigorously support harnessing small and medium-sized rivers, reinforcing dangerously defective small reservoirs, and preventing and controlling geological disasters such as mountain torrents; increase the number of designated counties where small irrigation and water conservancy facilities will be built and expand the scope of key national water and soil conservation projects; and advance the upgrading of water-saving equipment in large and medium-sized irrigated areas and of rural power grids. We have appropriated 86 billion yuan in general subsidies for purchasing agricultural supplies, up 20.1%. We have appropriated 22 billion yuan to improve the system of subsidies for purchasing superior crop varieties and to increase such subsidies. We have appropriated 17.5 billion yuan to scale up the subsidies for purchasing agricultural machinery. We have appropriated 9 billion yuan to promote the development of modern agriculture and agricultural sectors with particular strengths or unique features. We have appropriated 23 billion yuan, up 19.8%, for overall agricultural development to quickly increase the national grain output by 50 million tons, improve average- and poor-yield farmland, develop high-yield farmland, promote industrialized agricultural operations, and raise overall agricultural production capacity, with the focus on main grain-producing areas. We have appropriated 13.66 billion yuan to put in place a subsidy and award mechanism for the protection of grassland ecology. We have appropriated 30.6 billion yuan, up 17.7%, to support poverty-alleviation work in contiguous poverty-stricken areas with special features and develop industries with unique features or particular strengths in poverty-stricken areas. We have appropriated 9.406 billion yuan to improve the policy of subsidies to help pay agricultural insurance policy premiums. We have appropriated 16 billion yuan, up 55.8%, to comprehensively implement government awards and subsidies for village-level public works projects, the launching of which is determined by villagers themselves. We will comprehensively sort out and pay off debts incurred from providing compulsory education in rural areas and continue to carry out trials of sorting out and paying off other public welfare debts in rural areas. 

(8) The appropriation for spending on land, resources, and meteorology is 45.489 billion yuan, an increase of 22.9%. This rather large increase is due to the large anticipated increase in revenue from use fees for mineral prospecting and mining rights and from mineral resource compensation fees, which are required by relevant regulations to be used exclusively for exploiting and utilizing mineral resources. This figure consists of 16.748 billion yuan of central government spending and 28.741 billion yuan in transfer payments to local governments. We will intensify exploration for mineral resources, restoration of the geological environment around mines, and conservation and comprehensive use of mineral resources, and support oversight and protection of the use of territorial waters.

(9) The appropriation for spending on energy conservation and environmental protection is 159.185 billion yuan, an increase of 10.3%. This figure consists of 7.437 billion yuan of central government spending and 151.748 billion yuan in transfer payments to local governments. We have appropriated 94.5 billion yuan for energy conservation and emissions reductions to strengthen the development of key energy-conserving projects; promote cleaner production, the retrofitting of energy-conserving technology and the development of energy-conserving industries; continue to support the work of retiring backward production facilities; make buildings more energy-efficient; further intensify the implementation of the project of promoting energy-saving products to benefit the people; expand the scope of subsidies for purchasing energy-saving and alternative-fuel vehicles; strengthen heavy metal pollution treatment and comprehensive ecological treatment in key areas and rivers; and comprehensively improve the rural environment. We have appropriated 12.2 billion yuan to support the implementation of the Golden Sun Project, use biomass energy more comprehensively, carry out demonstrations on the use of renewable energy in buildings, and encourage enterprises to develop circular production and to re-manufacture and re-use materials. We have appropriated 14.084 billion yuan, up 120%, to give impetus to the implementation of the second phase of the natural forest resources protection project. We have appropriated 32.7 billion yuan to support the implementation of major ecological restoration projects and consolidation of achievements made in returning farmland to forests. We will encourage imports of important energy resources, natural resources and raw materials and strictly control exports of resource products and products whose production is energy-intensive and highly polluting. We will promote the dissemination of research on low-carbon technology in key areas, and support the implementation of the National Climate Change Program.

(10) The appropriation for spending on transportation and transport is 286.691 billion yuan, up 10.3%. This figure consists of 40.024 billion yuan of central government spending and 246.667 billion yuan in transfer payments to local governments. We have appropriated 196.64 billion yuan to build rural roads, national and provincial trunk highways, and other public transportation infrastructure. We have appropriated 29.647 billion yuan to continue to provide fuel subsidies for urban and rural public transport and some other public service industries. We have appropriated 26 billion yuan for subsidies to local governments to phase out tolls on government-financed Grade II highways.

(11) The appropriation for spending on resource exploration, electricity, and information is 74.486 billion yuan, down 10%. This reduction is largely because of less spending on capital construction. This figure consists of 41.088 billion yuan of central government spending and 33.398 billion yuan in transfer payments to local governments. We have appropriated 38.1 billion yuan for the construction of infrastructure for resource exploration, electricity, and information. We have appropriated 3.5 billion yuan in special funds to support R&D and demonstration in strategic emerging industries. We have appropriated 10.344 billion yuan exclusively to promote the development of all kinds of small and medium-sized enterprises.

(12) The appropriation for spending on stockpiling grain, edible oils, and other commodities is 113.05 billion yuan, up 23.9%. This figure consists of 79.628 billion yuan of central government spending and 33.422 billion yuan in transfer payments to local governments. We have appropriated 29.3 billion yuan to eliminate local contributions to grain risk funds in major grain-producing areas and increase central government subsidies. We have appropriated 70.387 billion yuan to support steadily raising the floor prices of wheat and rice and increase reserves of grain, edible oils, petroleum, nonferrous metals, and other important commodities. 

(13) The appropriation for spending on the commercial services industry is 70.614 billion yuan, an increase of 3.3%. This figure consists of 2.466 billion yuan of central government spending and 68.148 billion yuan in transfer payments to local governments. We have appropriated 42.6 billion yuan in subsidies to improve the policies to encourage the sale of home appliances in rural areas and the trading in of old home appliances for new ones. We have appropriated 9.4 billion yuan to continue to build a modern logistics network in the new countryside and promote the development of the logistics services industry. ( (14) The appropriation for national defense spending is 583.591 billion yuan, an increase of 12.6%. This figure consists of 582.956 billion yuan of central government spending and 635 million yuan in transfer payments to local governments. These funds will be used mainly to modernize the army and improve the living conditions of officers and enlisted personnel.

(15) The appropriation for public security spending is 161.732 billion yuan, an increase of 9.6%. This figure consists of 102.453 billion yuan of central government spending and 59.279 billion yuan in transfer payments to local governments. We will continue to reform the funding system for procuratorial, judicial, and public security departments and improve the equipment of primary-level procuratorial, judicial, and public security departments and their ability to handle cases.

(16) The appropriation for general public service spending is 111.884 billion yuan, up 4.3%. We will strictly control regular expenditures. Spending on official overseas visits, purchases and the use of vehicles, and official entertainment shall not exceed the reduced allowance for 2009. The above figure consists of 87.685 billion yuan of central government spending and 24.199 billion yuan in transfer payments to local governments.

(17) The appropriation for payment of interest on government bonds is 183.984 billion yuan, an increase of 21.7%.

Consolidating the above expenditures shows that in 2011, the central government will spend a total of 1.050992 trillion yuan, an increase of 18.1%, in areas that directly affect people' s lives, namely education, medical and health care, social security and employment, guaranteeing adequate housing, and culture. Expenditures on agriculture and water conservancy, transportation and transport, and environmental protection are all closely related to the people' s wellbeing, and most of the tax rebates and general transfer payments from the central government to local governments will also be used to ensure and improve the people' s wellbeing. Expenditures on the people' s wellbeing will account for around two thirds of central government expenditures. The central government has appropriated a total of 988.45 billion yuan, up 15.2%, to benefit agriculture, rural areas, and farmers. This figure consists of 393.87 billion yuan for agricultural production; 140.6 billion yuan in direct subsidies to grain growers, general subsidies for purchasing agricultural supplies, and subsidies for purchasing superior crop varieties and agricultural machinery; 396.36 billion yuan to support the development of rural education, health care, and other social undertakings; and 57.62 billion yuan for expenses incurred through stockpiling agricultural products and associated interest payments. We have appropriated a total of 382.6 billion yuan for central government investment in capital construction.

3) Central government spending on tax rebates and transfer payments to local governments

We will further improve the structure of transfer payments. Central government expenditures on tax rebates and transfer payments to local governments in 2011 will amount to 3.731 trillion yuan, an increase of 15.3%. This figure consists of 506.799 billion yuan in tax rebates, an increase of 1.4%; 1.733677 trillion yuan in general transfer payments, up 18.5%; and 1.490524 trillion yuan in special transfer payments, an increase of 17.1%. General transfer payments for making access to basic public services more equal will amount to 660.911 billion yuan, up 21.2%. This figure includes 77.5 billion yuan in awards and subsidies to county-level governments to ensure their basic funding and improve their ability to provide basic public services, and 30 billion yuan to strengthen public finance guarantees for functional ecological zones such as the Sanjiangyuan functional ecological zone around the sources of the Yangtze, Yellow, and Lancang rivers. A total of 37 billion yuan in transfer payments has been appropriated to support leapfrog development in Tibet, Xinjiang, and other ethnic minority areas. A total of 13.5 billion yuan in transfer payments has been appropriated to continue helping cities formerly dependent on now-depleted mineral resources. A total of 58.1 billion yuan in transfer payments has been appropriated for the reform of taxes and fees on refined petroleum products.

(Figure 7 Central Government Expenditures in 2011)