3. We will accelerate independent innovation and industrial upgrading and further strengthen the competitive advantages of the economy.

1) We will implement plans to restructure and reinvigorate key industries. Following the principles of addressing both the symptoms and root causes of problems and taking into account both long-term and short-term needs, we will adopt a combination of well-coordinated measures, including intensifying technological transformation of enterprises, promoting mergers and reorganizations, shutting down backward production facilities, developing major products, innovating major technologies, and apportioning key development projects, to protect and develop key industries, such as the steel, automobile, shipbuilding, petrochemical, textile, non-ferrous metals, equipment manufacturing, electronic information and light industries, as well as leading enterprises and name brands and their market shares.

2) We will improve the country's capacity for independent innovation. Industrial policies concerning biotechnology, software and integrated circuits will be formulated. More investment from the budget for state capital operations and from the central government budget will be given to enterprises to carry out R&D on technologies for biomedicine, third generation mobile communications, and energy-efficient, environmentally friendly automobiles, and to apply these technologies in production. We will quickly organize the implementation of major state science and technology projects to make breakthroughs in the key, generic technologies that have wide application and can foster the development of other technologies. We will accelerate development of the national science and technology infrastructure program, develop large astronomical telescopes and oceanographic research vessels and make further progress in the third phase of the Knowledge Innovation Program. We will continue to develop a group of engineering research centers, national engineering laboratories and enterprise technology centers. We will allocate a fund of 20 billion yuan to promote technological transformation of enterprises. We will set up a number of service platforms for technological innovation and accelerate extensive application of domestically developed technologies and products. We will strengthen the protection of intellectual property rights. We will strive to raise government spending on R&D up to 1.58 percent of GDP in 2009.

3) We will accelerate development of high-tech industries and equipment manufacturing. We will carry out projects to promote industrial application of high technologies such as information, biotechnology, new materials, new energy sources, civil aviation and civil aerospace, focusing on major high-tech industrial projects such as the next-generation Internet and digital television. We will increase efforts to develop national high-tech industrial bases and industry chains. We will explore ways to set up venture capital guidance funds for high-tech industries. We will help the advanced equipment manufacturing industry become bigger and stronger. We will carry out projects to support domestic development and production of major technical equipment, and implement policies for giving preferential treatment for the purchase and use of key equipment that is newly developed and manufactured domestically. We will strengthen the country's capacity for independent design and mass production of regional airplanes and promote domestic development and manufacturing of large equipment such as large-capacity nuclear power generators, wind power facilities and high-speed trains.

4) We will promote reform and development of the service sector. We will give more support to modern services while standardizing and upgrading traditional services. We will promote the integration of service industries, such as modern logistics, information technology, finance and consultancy, with modern manufacturing industries so that they can help each other develop. We will encourage the development of consumer services that can create more jobs and are urgently needed in the market.

5) We will vigorously promote reorganization of enterprises. We will encourage leading and superior enterprises to acquire those that are backward or financial strapped, encourage well-established enterprises to consolidate, and encourage affiliated enterprises and upstream and downstream enterprises to integrate in order to form a group of strong, competitive large enterprises and conglomerates.

6) We will take more effective measures to support development of small and medium-sized enterprises. We will provide them with finance guarantees and interest subsidies, and increase the amount of government funds earmarked for them, with the central government funding for supporting their development to be raised from 3.9 billion yuan to 9.6 billion yuan. We will also improve the system under which various sectors of society provide services for them, and offer them better market access.

7) We will work hard to resolve transportation bottlenecks and continue to upgrade energy structure. We will strengthen the capacity for transporting coal from the west to eastern ports and for transporting coal out of Xinjiang, improve passenger rail lines, and build more railways connecting to northeast China and more railways that directly connect coalmining bases in Shanxi and Shaanxi provinces and western Inner Mongolia with railways in central China. We will accelerate development of the national network of expressways and construction of airports in the central and western regions. In addition, we will promote development of large coalmining bases and carry out projects to send electricity and gas from the west to the east, and upgrade urban power grids.