We will further improve the system of transfer payments, increase their size, implement preferential fiscal and taxation policies to promote balanced development among regions, and make basic public services more uniform from region to region. Fiscal transfers from the central government to local governments will be divided into three categories: tax rebates, general transfer payments and special transfer payments. The central government will deduct the amount of revenue to be turned over by local governments from its tax rebates to local governments and eliminate the budgetary item consisting of revenue turned over by local governments in order to simplify fiscal settlement between the central government and local governments. Expenditures of the central government for tax rebates and transfer payments to local governments in 2009 will reach 2.8889 trillion yuan, an increase of 688.332 billion yuan or 31.3%. This figure includes 493.419 billion yuan in tax rebates after deducting the amount of revenue to be turned over by local governments, an increase of 159.193 billion yuan. The reason for this increase is a rise in revenue collected by the central government from the sales tax on refined petroleum products following reform of taxes and fees for such products, which the central government will transfer to local governments for use in maintaining highways and channels. General transfer payments will total 1.137493 trillion yuan, an increase of 267.844 billion yuan or 30.8%, equivalent to 47.5% of total transfer payments. This figure includes 210.107 billion yuan in expenditures for education, public security and general public services and on the social safety net and employment, items that are generally stable in amount and that have been included in special transfer payments in previous years. Special transfer payments will total 1.257988 trillion yuan, an increase of 261.295billion yuan or 26.2%, equivalent to 52.5% of total transfer payments. The reason for this big increase is that most of the central government's increased spending and its expenditures for stimulating consumption will go to subsidizing local governments in the form of special transfer payments. General transfer payments will be used for the following purposes. Fifty-five billion yuan, an increase of 25.5%, has been allocated to support gradual establishment of a county-level mechanism to ensure adequate financial resources to help financially-strapped counties and townships. In combination with the plan for major ecological conservation projects such as the one designed to protect the sources of the Yangtze, Yellow and Lancang rivers, we will increase the proportion of transfer payments to governments in no-development zones and restricted development zones to ensure their adequate financial resources for providing public services. An allocation of 50.5 billion yuan has been made to increase transfer payments to ethnic minority areas, major grain-producing areas and border areas. A total of 5 billion yuan in subsidies, an increase of 100%, has been allocated to help cities formerly dependent on now-depleted mineral resources solve longstanding social problems. Eight billion yuan has been set aside to subsidize administrations of industry and commerce, which stopped collecting administration fees from sole proprietors and fair trade markets last year.

In addition, revenue from funds controlled by the central government should reach 288.092 billion yuan, including amounts to be rolled over into the funds this year from last year. This figure includes: 16 billion yuan from the fund for developing the Three Gorges Project, 58.2 billion yuan from the fund for developing railways, 10.37 billion yuan from civilian airport administration and development fees, 8.73 billion yuan from port development fees, 13.6 billion yuan from the fund for providing continuing aid to residents relocated to make way for the construction of large and medium-sized reservoirs, 15.8 billion yuan from the sale of lottery tickets, and 68.283 billion yuan from operation of foreign exchange funds controlled by the central government. The target for expenditures from funds controlled by the central government has been set at 288.092 billion yuan, which includes central government spending and subsidies to local governments. This figure includes: 19.815 billion yuan from the fund for developing the Three Gorges Project, 58.201 billion yuan from the fund for developing railways, 14.802 billion yuan from civilian airport administration and development fees, 10.335 billion yuan from port development fees, 19.779 billion yuan to provide continuing aid to residents relocated to make way for the construction of large and medium-sized reservoirs, 22.913 billion yuan from the sale of lottery tickets to finance social welfare programs, sports, education and other public service programs, and 68.287 billion yuan to pay operating expenses for foreign exchange funds controlled by the central government.

III. Managing Public Finance in Accordance with the Law and Making Management More Scientific to Ensure Successful Implementation of the 2009 Budgets

We will manage public finance in a law-abiding, scientific and democratic manner and strive to make the management of public finance more scientific and detailed to ensure that public funds are used effectively, focusing on the following tasks: