In science and technology, we improved the national innovation system and strengthened basic research and infrastructure development. Important progress was made in major R&D projects, including those to design and develop advanced integrated circuit chips, third-generation mobile communications, high-performance composite materials, and high-grade, digitally controlled machine tools. Under the leadership of the State Council, we formulated the Outline of the National Long- and Medium-Term Program for Scientific and Technological Development based on two years of in-depth research and extensive deliberation during which the views of all concerned parties were solicited.

In education, we focused on strengthening compulsory education, especially in rural areas. Over 7 billion yuan was allocated by the central and local governments to pay tuition and miscellaneous fees, provide free textbooks, and subsidize room and board for 17 million students from poor families in 592 designated poverty-stricken counties. Free textbooks were also provided to over 17 million students from poor families in the central and western regions. As a result, many students who had dropped out of school were able to continue their studies. We continued to implement the plan to make nine-year compulsory education basically universal and to basically eliminate illiteracy among young and middle-aged adults in the western region. We built, renovated or expanded over 2,400 boarding schools in rural areas and provided distance learning equipment for 160,000 rural primary and secondary schools and learning centers over the past two years. Vocational education was further improved, and higher education continued to develop.

In health, we put great effort into improving the public health system and rural health care work. Over the past three years, the central and local governments spent 10.5 billion yuan to basically complete establishment of a disease prevention and control system that operates at the provincial, city and county levels. A total of 16.4 billion yuan was spent on setting up a medical treatment system for public health emergencies, and work is proceeding smoothly. The central government spent 3 billion yuan from the sale of treasury bonds to support the establishment of health clinics in towns and townships in the central and western regions, thus improving public health and medical treatment conditions there. Trials of a new type of rural cooperative medical care system were extended to 671 counties with a total of 177 million rural residents. We intensified efforts to prevent and treat major diseases such as AIDS and gave high priority to the prevention and control of highly pathogenic avian influenza, keeping it from spreading and infecting people. Progress was made in population work and family planning.

In culture, we launched a trial reform of the cultural system, upgraded culture-related facilities for public use, implemented the project to share cultural information, and increased cultural exchanges with other countries. Further successes were achieved in the country's athletic endeavors. Greater efforts were made to promote socialist cultural and ideological progress.

5. Striving to increase employment and improve social security work. We increased policy support and spending to expand employment and reemployment. The central government last year allocated 20.9 billion yuan to provide basic living allowances and reemployment subsidies to employees laid off from state-owned enterprises, 2.9 billion more than the year before. We did a good job providing employment for urban residents newly entering the workforce, college graduates and demobilized soldiers. A special fund was also set up in central government budget to support job training for farm laborers looking for urban employment and to assist demobilized soldiers from urban areas in finding jobs for themselves.

The social security system underwent steady improvement, and its coverage was expanded. The work of incorporating basic living allowances for workers laid off from state-owned enterprises into the unemployment benefit system was completed in 17 provinces, autonomous regions and municipalities directly under the central government. All urban residents entitled to basic living allowances are now basically receiving them. Allowances for key entitled groups were increased significantly, and 7.46 billion yuan was allocated from the central government budget for allowances for entitled groups, a 90 percent increase from the previous year. The basic framework of a social assistance system has been established in 28 provinces, autonomous regions and municipalities directly under the central government and in 2,300 counties and cities. Disaster relief and anti-poverty work was intensified. Total expenditures from the central government budget for fighting natural disasters and providing disaster relief came to 8.9 billion yuan last year, and more than 90 million people were helped. The central and local governments allocated 16.2 billion yuan for poverty alleviation, and the number of rural residents living in poverty decreased by 2.45 million.

6. Strengthening democracy and the legal system. Democracy continued to make advances at the local level, and elections for village committees were held in 21 provinces, autonomous regions and municipalities directly under the central government. The running of governments, factories and villages was made more transparent. Government decision making was made more scientific and democratic, and a system of public notices and public hearings on matters affecting the interests of the people was instituted. Much effort was put into passing government legislation. The State Council sponsored seven bills, including the revised versions of the Labor Contract Law, the Law Guaranteeing the Rights and Interests of Women, and the Individual Income Tax Law (draft), and 22 administrative regulations were drawn up and promulgated by the State Council, including the Emergency Measures for Handling Major Animal Epidemics and the Special Regulations for Preventing Coalmine Accidents. The State Council formulated and implemented the Master State Plan for Rapid Response to Public Emergencies and plans for managing specific emergencies, thus improving our ability to respond to emergencies. Oversight was strengthened through auditing and supervision. We carried out thorough preparatory work for implementing the Civil Servant Law of the People's Republic of China. The new Regulations on Petitions in the Form of Letters and Visits were implemented, improving people's access to government departments that handle such petitions and ensuring order in submitting and handling them. Steady progress was made in the reform of the judicial system. A campaign to correct irregularities and promote impartiality in law enforcement was launched to safeguard citizens' lawful rights and interests. We continued to improve all facets of public security and severely punished illegal and criminal activities in accordance with the law. The number of criminal cases dropped, and social stability was maintained.

Work related to ethnic groups, religions, overseas Chinese, and Taiwan was further improved. We continued to make progress in the modernization of national defense and the army. Significant progress was made in diplomacy.

We owe these successes to the correct overall leadership of the Central Committee with Comrade Hu Jintao as General Secretary and to the concerted efforts and hard work of government employees and the general public. On behalf of the State Council, I would now like to express our sincere thanks to the people of all ethnic groups, to the democratic parties, to all people's organizations, and to people from all walks of life. I would like to sincerely thank our compatriots from the Hong Kong and Macao special administrative regions and Taiwan, as well as overseas Chinese. I would also like to sincerely thank our friends around the world who care about and support China's modernization drive.

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