3. Main revenue items provided for in the central budget

Domestic VAT should total 1.4563 trillion yuan, an increase of 106.558 billion yuan or 7.9%. Factors taken into consideration in reaching this total are the ratio of the growth rate of VAT to that of the value added of industry and commerce, as well as the fact that VAT reform will result in a reduction of about 100 billion yuan in revenue.

Domestic sales taxes should reach 443.4 billion yuan, an increase of 186.62 billion yuan or 72.7%. This figure rests primarily on the increase in sales tax revenue generated by the increase in the tax on refined petroleum products following reform of taxes and fees for refined petroleum products to replace the road maintenance fee, as well as on projected sales volume for commodities such as cigarettes, alcoholic beverages and vehicles.

Total import tariffs should reach 989.5 billion yuan, an increase of 73.398 billion yuan or 8%. Calculation of this figure relies mainly on the ratio of the growth rate of import tariffs tothat of regular import trade, taking into consideration a drop in the price of major commodities.

Corporate income taxes should total 760.5 billion yuan, an increase of 43.16 billion yuan, or 6%. This figure is mainly based on the following factors. Corporate profits saw a downturn in growth in 2008 and corporate income taxes are expected to drop in the first half of 2009. In addition, increases in corporate profits are expected to decline significantly in 2009, with increases in corporate income taxes witnessing a corresponding drop in the same period.

Total individual income taxes should reach 239 billion yuan, an increase of 15.582 billion yuan, or 7%. The main considerations used to compile this figure are the higher earnings threshold for the individual income tax effective as of March 1, 2008, temporary scrapping of individual income taxes on interest from savings and stock account balance instituted on October 9, as well as the projected increase in per capita disposable income of urban residents.

Total revenue from the stamp tax on securities transactions should reach 24.5 billion yuan, a drop of 70.468 billion yuan or 74.2%. The main factors behind this figure are the projected daily trade volume for securities plus the large reduction in the stamp tax rate and the scrapping of the stamp tax on stock purchases, and changes instituted in 2008 that will reduce revenue.

Export tax rebates should total 670.8 billion yuan, an increase of 84.21 billion yuan or 14.4%, which will result in a corresponding decrease in government revenue. The main factors taken into consideration were the projected growth in ordinary export trade and the series of increases in export tax rebate rates for some products instituted in the last half of 2008, which will result in a large margin of increase in total export tax rebates in 2009.

The vehicle purchase tax should reach 97 billion yuan, a decline of 1.975 billion yuan or 2%. This figure is mainly based on projected growth in vehicle sales and a reduction in the tax rate for the purchase of passenger vehicles with engine displacements at or under 1.6L to 5%.

4. Main expenditure items as provided for in the central government budget

We will further adjust the structure of expenditures, take into consideration all factors and maintain some expenditures while reducing others in accordance with the central government's policy of expanding domestic demand, sustaining growth, carrying out restructuring and improving the people's wellbeing. Expenditures will focus on agriculture, education, medical and health care, the social safety net, employment, low-income housing, science and technology, environmental protection and post-earthquake recovery and reconstruction. Main expenditure items are as follows.

1) A total of 344.659 billion yuan has been allocated for expenditures related to agriculture, rural areas and farmers, forest projects and water conservancy projects, an increase of 74.439 billion yuan or 27.5%. We will stabilize and develop grain production to increase rural incomes. An allocation of 75.6 billion yuan has been earmarked for general allowances for agricultural supplies, an increase of 5.6%. The total allowances for the purchase of agricultural machinery and tools have increased by a large margin. The allocation for 2009 is 13 billion yuan, a 2.25-fold increase, to expand the types of allowances from 9 to 12 and to cover all agricultural and animal husbandry counties throughout the country. We will increase funding for allowances for planting superior seed varieties. A total allocation of 15.48 billion yuan, an increase of 25.4%, will be used to grant such allowances to more farmers who plant superior varieties of crops such as wheat and corn as such allowances are now to be granted to all farmers planting superior paddy rice strains. We will support efforts to add 50 million tons of grain growing capacity across the country step by step and in accordance with plan. We will institute a new poverty line and implement a new policy for providing support to the low-income rural population with a total appropriation there for of 19.73 billion yuan, an increase of 17.9%. We will promote agricultural restructuring. We have allocated 6.5 billion yuan for development of modern agricultural production, an increase of 20.4%, and we will support different areas in growing those crops that are best suited to their local conditions, have distinctive local characteristics and increase agricultural safety and efficiency. We will improve low-cost lending and assistance to promote the industrialization of agriculture. Overall agricultural development funds will total 14.7 billion yuan, an increase of 15.7%, and we will accelerate efforts to improve average and poor-yield farmland to increase overall agricultural production capacity, concentrating on the main grain-producing areas. We will formulate a suitable increase in the ratio for the cultivation allowance based on efforts to stabilize the current policy of allowances for paying agricultural insurance policy premiums and gradually expand the number of varieties eligible for the allowance. These steps will be financed by an allocation of 7.98 billion yuan, an increase of 31.9%. A total of 129.51 billion yuan has been allocated to develop agricultural infrastructure, provide strong support for the efforts to accelerate the reinforcement of dilapidated large and medium-sized and key small reservoirs, improve irrigated areas and build small water conservancy facilities. We will increase spending on projects for supplying safe drinking water and methane to rural areas by providing safe drinking water to another 60 million people and methane to an additional 5 million families.

2) The total allocation for education is 198.062 billion yuan, an increase of 38.208 billion yuan or 23.9%. Funds totaling 66.25 billion yuan have been allocated to increase support for expenses incurred in operating compulsory education in rural areas, an increase of 16.1%. On the basis of the policy of exempting rural students from paying tuition and miscellaneous fees, supplying them with free textbooks, and providing poor on-campus students with living expenses, the public spending per primary and secondary school student will reach the levels specified by the central government, i.e. 300 yuan for a primary school student, and 500 yuan for a junior secondary school student. We will carry out a project to improve the safety of the buildings in rural primary and secondary schools providing compulsory education. An allocation of 5.77 billion yuan has been earmarked to exempt urban students in compulsory education from tuition and other education-related expenses, an increase of 44.9%. We will assist migrant workers in urban areas in ensuring their children receive school education. The central government has allocated 12 billion yuan to implement the performance-based salary system for teachers in compulsory education. A total of 13.7 billion yuan has been allocated to develop county-level vocational education centers and demonstration secondary vocational schools, accelerate renovation of the buildings in rural junior secondary schools in the central and western regions, and improve the auxiliary facilities in ruralschools with student dormitories. Subsidies totaling 4.5 billion yuan, an increase of 115.3%, will be used to continue supporting development of state-level demonstration vocational colleges and practical workshops for vocational education and to gradually make secondary vocational education free in rural areas. Twenty-four billion yuan has been allocated for assistance to students from poverty-stricken families and for state education assistance loansand subsidies. Expenditures in higher education will total 50.255 billion yuan to continue developing high-quality universities and key disciplines.

3) Spending on medical and health care will total 118.056 billion yuan, an increase of 32.611 billion yuan or 38.2%. We will deepen reform of the pharmaceutical and health care system. Beginning in 2009, we will carry out five major tasks in the next three years to establish systems for guaranteeing basic medical services. We will improve the new rural cooperative medical care system, complete the establishment of a basic medical insurance system for non-working urban areas, and raise the level of both central and local government assistance to 80 yuan per capita. The central government has allocated 30.4 billion yuan for this purpose. The central government will help resolve the problem of retirees from local state-owned enterprises closed or forced into bankruptcy pursuant to policy in participating in basic medical insurance for urban workers, and further help resolve the problem of retirees from state-owned enterprises that are or used to be under the central government and have been closed or forced into bankruptcy pursuant to policy and from local state-owned enterprises forced into bankruptcy pursuant to policy in participating in such insurance. Subsidies totaling 6.45 billion yuan have been allocated to provide better medical assistance services for urban and rural residents. The basic framework will be set up for a national system for basic drugs so that patients have access to safe and affordable drugs. Subsidies totaling 16.53billion yuan have been allocated to improve the community-based medical and health service system, focusing on support for the establishment of 29,000 town and township hospitals and the improvement, expansion or construction of 5,000 central town and township hospitals, and to support urban community health clinics and town and township hospitals in purchasing medical equipment. An allocation of 24.6 billion yuan in subsidies will be used to improve prevention and control of major communicable diseases and other public health work. Local governments will receive support in providing certain basic public health services for urban and rural residents free of charge. The trial reform of publicly established hospitals will be extended.

4) Expenditures for the social safety net and employment will total 335.069 billion yuan, an increase of 60.71 billion yuan or 22.1%. Improving the social safety net is an important basis for improving the people's wellbeing as well as an important measure for responding to the difficulties currently facing the country and expanding consumer demand. Spending on the social safety net will total 293.049 billion yuan, an increase of 43.898 billion yuan or 17.6%. A total of 54.08 billion yuan, an increase of 48.9%, has been allocated to raise the per capita monthly cost of living allowance by 15 yuan for urban residents and 10 yuan for rural residents. Ten billion yuan has been set aside so the government can award a one-time subsidy before Spring Festival to the more than 75.7 million urban and rural residents who receive subsistence allowances, as well as childless and infirm rural residents who receive subsidies for food, clothing, medical care, housing and burial expenses throughout the country. A total of 139.241 billion yuan has been allocated to raise the level of basic pension benefits for retirees from state-owned enterprises by about 10% of the average monthly per capita benefits of 2008, with a focus on special groups, and the central and western regions and northeast China and other old industrial areas will receive assistance from the central government as required. A total of 17.512 billion yuan has been allocated to raise allowances for some entitled groups as needed and to provide allowances and living subsidies for entitled groups. We will continue to support the policy-mandated closure and bankruptcy of state-owned enterprises, promote the pilot project for reforming collectively owned factories in northeast China, the central region and some central government enterprises, and support improvements in working and living conditions for people relocated to build reservoirs.

A total of 42.02 billion yuan of employment assistance has been earmarked to support our vigorous employment policy, an increase of 16.812 billion yuan or 66.7%. We will give full play to the role government spending and major public projects play in creating jobs for migrant workers and substitute work for relief through government financing of public works projects in agriculture, forestry and water conservancy. Employment assistance will increase, focusing on finding employment for persons who have real difficulty finding it, zero-employment families and workers in disaster-hit regions, and policy support will be provided for migrant workers returning to the countryside to set up businesses. A favorable government policy will be instituted to encourage college graduates to work in urban and rural community-level organizations, the central and western regions and small and medium-sized enterprises. Support will be provided to make more training available to improve the vocational abilities of laid-off and unemployed persons and migrant workers, a special training program will be instituted, and enterprises will be encouraged to provide on-the-job training. We will support small and medium-sized enterprises and service industries in providing more employment opportunities, and encourage people to start up their own businesses or find jobs on their own through a fiscal policy of reducing or exempting taxes and fees, and providing guaranteed, small-sum, low-interest loans, social security allowances, allowances for public service work and subsidies for vocational training.

5) Expenditures to build low-income housing will total 49.301 billion yuan, an increase of 31.111 billion yuan or 171%. Greater financial support will go to building low-rent housing and upgrading shantytowns, and the amount of subsidies will be appropriately raised for the central and western regions. The problem of finding housing for the 2.6 million low-income urban families and relocating, repairing or upgrading housing for the 800,000 families living in shantytowns in forest areas, wasteland areas and adjacent to coalmines will be addressed mainly by providing housing, coupled with rent subsidies. Efforts to upgrade dangerously dilapidated rural housing will be intensified and projects to build permanent housing for pastoral nomads in ethnic minority areas implemented.