5. Further progress was made in reform and opening up.

Economic restructuring continued to deepen. Overall rural reform was deepened and reform of the system of collective forest rights was carried out throughout the country. The reform to institute a corporate system or a stockholding system in state-owned enterprises and the pilot project to implement a board of directors system in wholly state-funded corporations progressed steadily, and outside directors now account for more than half of the board members in all 17 of the central government enterprises participating in the project. The trial reform of the budget system for state capital operations was extended to more areas. The restructuring of assets and business operations of telecommunication companies was basically completed, ushering in a competitive market dominated by three restructured telecom giants, China Mobile, China Telecom and China Unicom. Significant progress was made in restructuring the aviation industry, with the China Aviation Industry Corporations I and II being amalgamated into the Aviation Industry Corporation of China. Coordinated measures to encourage, support and guide the development of the non-public sector of the economy were continually improved. The new Law on Corporate Income Tax was implemented well. A plan for VAT reform was formulated and implemented. Important progress was made in there forms of the Agricultural Bank of China and the China Development Bank. The capital strength, asset quality and risk resistance of the banking industry improved. The reform of the prices of resource products progressed steadily. The plans to reform the prices of refined petroleum products and related taxes and fees, which took years to formulate, were implemented smoothly. Guidelines on deepening the reform of the medical and health care system were finalized, and a plan was formulated to implement the reform from 2009 through 2011. Further progress was also made in the pilot reforms to promote comprehensive and sustainable development.

The open economy continued to grow. Foreign trade grew rapidly. Total imports and exports for the year reached US$2.5616 trillion, up 17.8 percent over 2007. The trade mix was further improved as evidenced by 17.3 percent growth in the export of mechanical and electrical products and 13.1 percent growth for new- and high-tech products. Trade in services expanded rapidly. Foreign investment was used more effectively. Management of foreign investment and loans was improved. Foreign direct investment in 2008 (excluding that in the banking, securities and insurance sectors) amounted toUS$92.4 billion, 23.6 percent higher than the previous year. Of this total, paid-in investment in the trade in services grew by 24.2 percent, and paid-in investment in the western and central regions increased by79.8 percent and 36.4 percent respectively. A total of US$23 billion of foreign loans were disbursed, a rise of 5.4 percent year on year. The state's foreign exchange reserves reached US$1.95 trillion. Enterprises picked up the pace in making investment and undertaking cooperative projects overseas. Total overseas direct investment of Chinese enterprises (non-financial portion) for the year reached US$40.65 billion, a rise of 63.6 percent over the previous year. Contracts for overseas projects and cooperation in the area of labor services maintained a rapid pace of development.