4. Important progress was made in structural adjustment.

Our capacity for independent innovation continued to increase. The newly revised Law on Scientific and Technological Advances was promulgated and implemented in 2008. The Outline of the National Program for Long- and Medium-Term Scientific and Technological Development was implemented smoothly and its supporting policies were further improved. Funding for scientific and technological innovation was increased significantly. Expenditures on science and technology from the central budget in 2008 totaled 116.3 billion yuan, up 16.4 percent. The 16 major state science and technology projects, including development of large-scale oil and gas fields and ultra-large scale integrated circuits, all entered the implementation phase. Smooth progress was made in implementing the National Key Technology R&D Program, the March 1986 High-Tech Program, the March 1997 Program for Basic Research, and other science and technology programs. The third phase of the Knowledge Innovation Program was fully launched. Development of major state science and technology infrastructure such as the large sky area multi-object fiber spectroscopic telescope and the heavy ion research facility was completed, and they became operational. An additional 18 national engineering research centers were built in areas such as information technology, biotechnology and environmental protection; 76 more enterprise technology centers received state recognition; 90 enterprise technology centers received government support to enhance their innovation capacity. A 100 teraflops supercomputer was developed independently, and the new ARJ21-700 regional jet made a successful maiden flight.

Development of high-tech industries and equipment manufacturing was accelerated. Thirteen projects to apply biomedicine, satellite and other high technologies in production were implemented smoothly; 37 more high-tech industrial bases were certified in areas such as information technology, biotechnology, new energy sources, new materials, civil aviation and civil aerospace; three licenses were issued for third generation mobile communications. The value-added of the 54 national new and high technology development zones rose 18.6 percent in 2008. The policy framework to reinvigorate the equipment manufacturing industry was constantly improved, and R&D on a number of major equipment and key facilities was carried out successfully. The final assembly line for Airbus A320 was put into operation in Tianjin; R&D on the key equipment of the experimental demonstration line for transmitting 1,000-kilovolt AC ultrahigh-tension power was carried out successfully; mass production of megawatt wind power facilities was started. In addition, we continued to shut down backward production facilities in accordance with the law. Small thermal power plants with a total power generating capacity of 16.69 million kilowatts and 1,054 small coalmines were shut down last year, and shutdowns also progressed smoothly in the cement, steel and electrolytic aluminum industries. The growth of production in energy intensive and highly polluting industries slowed down significantly, and mergers and reorganizations of competitive enterprises in the steel, coal and building-material industries were accelerated.

Infrastructure and basic industries developed steadily. A total of nearly 100,000 kilometers of highways, including 6,433 kilometers of expressways, were opened to traffic in 2008. A total of 1,719 kilometers of newly built railway lines, 1,935 kilometers of double-track rail lines, and 1,955 kilometers of electric rail lines were put into operation. The Wuhan-Hefei Railway was completed, and construction was begun on the Beijing-Shanghai high-speed railway, Beijing-Shijiazhuang-Wuhan passenger line, trunk rail lines in the western region such as Lanzhou-Chongqing Railway and Guiyang-Guangzhou Railway, and a number of other major railway projects. Annual cargo handling capacity of berths for 10,000 ton-class or larger ships increased by 330 million tons; substantial progress was made in preparatory work on the Hong Kong-Zhuhai-Macao Bridge; eight more civilian airports were built last year, including ones in Kangding, Yulin and Changbaishan. Construction was begun on four nuclear power stations in Ningde and Fuqing, Fujian Province; Yangjiang, Guangdong Province; and Fangjiashan, Zhejiang Province. Work on a large coalmining base in Huainan and Huaibei coalmines was completed and passed acceptance inspection. The first phase of the state petroleum reserves project became operational. Coal output was 2.79 billion tons in 2008, up 4.1 percent, and installed power-generating capacity increased by 90.51 million kilowatts.

There was good development momentum in the service sector. Our policy system for supporting faster development of the service sector was constantly improved. IT-based demonstration pilot projects were implemented to provide comprehensive information services for building a new countryside, develop and provide computerized basic education resources, and provide e-commerce services for small and medium-sized enterprises. We set aside guidance funds to support development of the service sector, with the focus on developing a system of services for advanced manufacturing and a system of services for agricultural production. The value-added of tertiary industry rose 9.5 percent to 12.05 trillion yuan in 2008, the first time since 2003 that it grew faster than secondary industry.

Development became more balanced among regions. Construction was begun on ten more key projects for the large-scale development of the western region, with a total investment reaching 436.1 billion yuan. The follow-up policy to consolidate progress made in reforesting farmland was implemented, and an additional 5.23 million hectares of grazing land was returned to grassland. Rejuvenation of northeast China and other old industrial bases was accelerated. The first group of 12 cities dependent on now-depleted resources was designated, and a credit re-guarantee company was established for small and medium-sized enterprises in northeast China. We gradually implemented the policy for the central region, which calls for following the rejuvenation policy for northeast China and other old industrial bases in 26 cities of the region and the development policy for the western region in 243 counties or county-level cities and districts. Powerful momentum was maintained in developing clusters of cities in the central region, and encouraging progress was made in developing three different kinds of production bases and a system of integrated transportation hubs for the region. The eastern region continued to lead the country in changing the pattern of development, adjusting economic structure, and promoting institutional innovation. Guidelines on promoting reform, opening up and economic and social development in the Yangtze Delta area and the outline of the program for reform and development of the Pearl River Delta area were promulgated, and development and opening up in the special economic zones, the Shanghai Pudong New Area and the Tianjin Binhai New Area continued to deepen. A number of policies were formulated and implemented to support the development of old revolutionary areas, ethnic minority areas, border areas and poor areas. Cooperation between regions and cross-region one-to-one assistance continued to expand, and relocation of industries from the eastern region to the central and western regions progressed at a good pace.