3) Energetically supporting work related to employment, reemployment and social security to promote harmonious social development.

    We conscientiously carried out the fiscal and tax preferential policies formulated by the central authorities to promote employment and reemployment and continued to support implementation of the program for college student volunteers to serve in the western region. The central government increased funding for reemployment subsidies by 2.225 billion yuan, up 54.6 percent year-on-year. Local authorities also made corresponding allocations for employment subsidies, effectively contributing to employment and reemployment efforts. We continued to successfully maintain the "two guarantees" [guarantee of a basic living allowance for workers laid off from state-owned enterprises and guarantee that the pensions of retirees are paid on time and in full, tr.] and work to ensure that the urban poor receive subsistence allowances. The central government spent 14.4 billion yuan on basic living allowances for laid-off workers to ensure they were paid on time and in full and took concrete measures to incorporate the allowances into the unemployment insurance system.The central government paid 52.4 billion yuan in transfer paymentsfor old-age insurance, guaranteeing that basic pensions for workers retiring from state-owned enterprises were paid on time and in full. In addition, allocations from the central budget wereused to support pilot programs to improve urban social security systems in Jilin and Heilongjiang provinces.

    The central government earmarked 296 million yuan to subsidize local governments in steadily implementing a new system for rural cooperative medical and health care services on a trial basis. In addition, 300 million yuan was taken from lottery funds for publicwelfare to develop the rural medical assistance system. A financial guarantee mechanism was set up with 1.5 billion yuan in special transfer payments from the central budget plus corresponding funding from local budgets to improve the living standards of economically disadvantaged demobilized servicemen working as cadres in some enterprises. The central government appropriated 1.701 billion yuan in subsidies to prevent and control major floods and droughts and respond to major flooding, plus 4 billion yuan as relief for people in areas stricken by catastrophic natural disasters. Local governments also allotted funds for these purposes. All this not only helped to promptly resolve the difficulties of disaster victims in their work and lives, but also put in place a contingency funding mechanism for responding to natural disasters to make relief supplies and equipment readily available.

    4) Increasing investment in education, science, culture and health to promote the development of all social undertakings. Educational expenditures for the whole country in 2004 increased by 42.189 billion yuan, or 14.4 percent. Of this amount, expenditures for education from the central budget grew by 4.323 billion yuan, or 15 percent. Vigorous efforts were made to improveconditions for elementary education in rural areas. Continued support was given to major programs such as the project to renovate or rebuild dangerous primary and secondary school buildings across the country, the plan to make nine-year compulsory education basically universal and basically eliminate illiteracy among young and middle-aged adults in the western region, and projects to support modern distance education in ruralprimary and secondary schools and make adjustments in the geographic distribution of these schools. The basic shape of a state investment system for assisting poor students through publicfinance has been put in place. The system provides poor students in rural primary and secondary schools with free textbooks, pays for miscellaneous education-related fees, and gives poor students staying on campus a living allowance. It also grants state studentloans to college students and provides a living allowance to students from destitute families. The system provided more than 24million poor students receiving compulsory education in rural areas in the central and western regions with free textbooks and was widely praised by students, their parents and the general public. We increased investment in institutions engaged in basic research, hi-tech research, research for public benefit and non-profit research and continued to support development of a nationalplatform to supply the basic conditions for science and technologyand the knowledge innovation pilot program of the Chinese Academy of Sciences. Expenditures for science and technology for the wholecountry in 2004 increased by 9.85 billion yuan, or 13.7 percent. Of this amount, expenditures from the central budget grew by 5.234billion yuan, or 11.9 percent. Support was continued for the national programs to share cultural information and send books to the countryside to promote cultural undertakings at lower levels. Four billion yuan was earmarked for public health to support the systems for disease prevention and control, medical treatment, monitoring enforcement of health laws and rural health services, as well as efforts to prevent, control and treat serious diseases such as AIDS, tuberculosis, snail fever and endemic diseases. Nearly 200 million yuan in subsidies was spent on trials of a system for rewarding and supporting some rural families that observe the state's family planning policy, thereby encouraging rural people to follow the policy. A total of 848 million yuan, 275 million yuan of which was from the central budget, was used asa strong guarantee to prevent and control the highly pathogenic avian flu, and a number of supporting fiscal and tax policies wereadopted to effectively lessen the impact of the disease on poultryproducers and related enterprises.