2. We will accelerate industrial optimization and upgrading and the development of emerging industries of strategic importance and promote structural adjustment and change in the development pattern.

1) We will enhance the country's capacity for independent innovation. We will continue to implement the Outline of the National Program for Long and Medium-Term Scientific and Technological Development. We will energetically carry out key national science and technology programs such as those to build a new generation broadband mobile communications network and develop important new medicines. We will increase support for and investment in R&D and further implement policies and measures for encouraging independent innovation. We will speed up the implementation of major projects for integrated circuits, flat-panel displays, new regional aircraft, and nuclear power stations. We will intensify the development of major science and technology infrastructure facilities, advance the Knowledge Innovation Program and the Technology Innovation Program, establish a number of new national engineering or technology research centers and national engineering laboratories in the areas of digital television, new energy sources, new materials and e-commerce, accelerate development of leading enterprises that can demonstrate and lead independent innovation, and help establish a number of strategic alliances for technology innovation. We will continue to support basic research and research in cutting-edge technologies, accelerate development of agricultural and other technologies that are closely related to people's well-being, and concentrate on making breakthroughs in core technologies. We will expand the trials to develop national innovative cities, and implement projects to improve the capacity for innovation of individual regions. We will improve our policies on protecting intellectual property rights.

2) We will nurture and develop emerging industries of strategic importance. We will move faster to work out the general philosophy, major policies and measures, and development plans for such industries. We will focus our efforts on developing key technologies where we are more likely to make breakthroughs and on promoting their wide application in industries, including new energy sources, energy conservation and environmental protection, new materials, biomedicine, biotechnological breeding, information technology, new energy vehicles, aviation and aerospace, and marine technology. We will draw up technology roadmaps and market promotion measures and launch a number of major projects for these technologies. We will effectively carry out the R&D income tax credit policy, improve the investment and financing mechanisms that support innovation, promptly implement the venture capital plan for emerging industries, help establish venture capital guidance funds for high-tech industries, and raise funds through a variety of channels, such as loans, bonds, stocks and venture capital. We will accelerate R&D in and application of the Internet of Things.

3) We will continue to promote the restructuring and revitalization of key industries. We will conscientiously implement the plan for restructuring and revitalizing industries and enforce detailed rules for its implementation. We will revise and apply the Guiding Catalog for Industrial Restructuring and related policies. We will carry out R&D and demonstration projects for industrial technology applications in shipbuilding, petrochemicals, nonferrous metals, environmental protection, new energy sources, energy conservation, and emissions reduction. Centering on energy conservation, consumption reduction and development of a circular economy, we will step up efforts to utilize new and high technologies to transform and upgrade traditional industries and promote greater IT application in enterprises. We will support independent development of key technologies and equipment, encourage use of key equipment that is newly developed and manufactured domestically, and promote domestic production of key equipment. We will intensify geological prospecting and improve China's ability to supply needed energy and resources domestically. We will actively adjust the energy structure and promote sustained and sound development of the energy industry. The output of raw coal, crude oil and natural gas in 2010 will reach 3.15 billion tons, 190 million tons and 92 billion cubic meters respectively, up of 3.3%, 0.5% and 8% from last year. Electricity to be generated in 2010 will reach 3.96 trillion kilowatt-hours, up 6.6%, of which hydraulic power will contribute 660 billion kilowatt-hours, up 7.2%, and nuclear power, 75 billion kilowatt-hours, up 7.1%. We will vigorously carry out wind power projects and develop supporting facilities. We will accelerate mergers and reorganizations of key industries and promote their rational distribution and intensive development.

4) We will reduce and channel excess production capacity and shut down backward production facilities at a faster pace. We will adopt a combination of legal, economic and necessary administrative means by tightening market access, setting up a mechanism for eliminating backward production facilities, and improving the market information release system, to guide sound development of industries. This year, we will shut down backward production facilities in thermal power plants with a total capacity of 10 million kilowatts, steel mills with a total capacity of 6 million tons, iron foundries with a total capacity of 25 million tons, cement plants with a total capacity of 50 million tons, paper mills with a total capacity of 530,000 tons, and plate glass plants with a total production capacity of 6 million weight cases.

5) We will speed up development of the service sector. The value-added of tertiary industry will reach 16.15 trillion yuan, an increase of 8.7%, and the service sector will constitute 34.8% of the country's employment, up 0.8 percentage points from last year. We will continue to relax controls over market access and improve and implement investment, tax, land-use and pricing policies to encourage development of the service sector. We will promptly formulate guidelines for promoting development of high-tech services. The total output of telecommunications services will grow by 18% in 2010. We will introduce policies and measures for promoting modern logistics, and support the development of key modern logistics projects. We will improve the infrastructure of major tourist attractions, promote ecological tourism, cultural tourism, and leisure and holiday tourism, and carry out the project to turn Hainan into an international tourist island. We will develop community, domestic and old-age services as well as public utilities to meet people's diversified, multilevel demands. Nationwide, the number of urban community service facilities will reach 180,000 by the end of this year, up 2.9%. We will carry out trials of comprehensive reforms in the service sector and promote development of demonstration areas for fostering the concentration of service industries. We will successfully host the Shanghai World Expo.

6) We will develop major transportation routes and key transportation hubs and improve overall transportation efficiency. We will promote development of passenger rail lines, coal transportation routes, trunk rail lines in the western region, inter-city express railways and urban rail transit facilities in an orderly manner. We will improve the national expressway network and raise the technical grades and service levels of national and provincial trunk highways. With the focus on specialized docks, modern ports, and inbound/outbound deepwater navigation channels, we will promote construction of coastal ports in an orderly manner, and develop inland water transport systems, including those along the Yangtze River. We will promote renovation and expansion of hub airports and major airports and development of regional airports. China's total length of railways and highways opened to traffic will reach 91,000 kilometers and 3.927 million kilometers in 2010, up 5.8% and 2.6% respectively. The number of airports opened to air traffic will increase by 8 to reach 174.

7) We will actively support development of small and medium-sized enterprises, especially small ones. We will accelerate the development of a public service platform and an information service network to support small and medium-sized enterprises as well as bases for creating small businesses. We will implement preferential financial and tax policies for promoting development of small enterprises; increase the amount of funds earmarked for small and medium-sized enterprises from the central government budget; encourage local governments to set up risk compensation funds for loans to small enterprises, and develop for them a multilevel system of credit guarantees.