One is to expand government spending while striving to focus on key areas. This is an important measure for boosting domestic consumption and maintaining steady and rapid economic development. In addition to increasing its public spending by 104 billion yuan at the end of 2008 to develop low-income housing and support post-earthquake recovery and reconstruction, the central government in 2009 will allocate 908 billion yuan in public spending, an increase of 487.5 billion yuan. This includes 208.1 billion yuan to develop agricultural infrastructure and improve the wellbeing of rural residents, 49.3 billion yuan to develop low-income housing, 71.3 billion yuan to finance education, medical and health care and other social programs, 130 billion yuan for post-earthquake recovery and reconstruction, 68 billion yuan for energy conservation, emissions reduction and ecological conservation, 45.2 billion yuan to make independent innovation and technological upgrading in enterprises and develop service industries, and 231.7 billion yuan to develop infrastructure such as railways, highways, airports and ports.

Two is to carry out reform of taxes and fees and implement structural tax reductions. While carrying out reform and improving the taxation system, we will implement structural tax reductions to lighten the tax load on enterprises and the people, encourage enterprises to increase their investment and boost consumer spending power. We need to fully implement a consumption VAT, reduce the tax load on enterprises and encourage them to increase spending on independent innovation and technological upgrading. We will carry out reform of taxes and fees for refined petroleum products, make the distribution of the tax and fee load fairer and promote energy conservation and emissions reduction. We will rescind and cease collecting 100 items of administrative fees. We will continue to carry out a series of policies for tax and fee reduction or elimination that were introduced in 2008 to increase the salary threshold for the individual income tax, raise the export tax rebate rates for some products, eliminate or reduce customs tariffs for some exports, reduce the securities transaction stamp tax rate, scrap the stamp tax on stock purchases, suspend the individual income taxes on interest earnings from savings and stock account balance, and reduce taxes on home sales. This should reduce the load on enterprises and individuals by about 500 billion yuan in 2009.

Three is to increase the income of the low-income population and strongly promote consumption demand. We will adjust the distribution of national wealth and increase the proportion of individual incomes in national income distribution and the proportion of the primary distribution of income that goes directly to wages and salaries to increase the consumption capacity of residents and strengthen the effect consumption has in promoting economic growth. We need to give full play to the role of fiscal and taxation policies and increase the government assistance, focusing on increasing the income of the low- and middle-income population. We will further increase subsidies to farmers. The central budget for 2009 earmarks 123.08 billion yuan for direct subsidies to grain producers, general subsidies for purchasing agricultural supplies, subsidies for growing superior crop varieties and subsidies for the purchase of agricultural machinery and tools, an increase of 20.04 billion yuan or 19.4%. In addition, we will support a large increase in the minimum purchase price for grain in order to increase rural incomes. We will also allocate 220.833 billion yuan to increase subsistence allowances for both urban and rural families, grant them and other families in financial hardship a one-time subsidy before Spring Festival, increase basic pension payments for retirees from state-owned enterprises and increase support for entitled groups. We will carry out reform of the income distribution system in institutions. In addition, we will increase government spending to encourage and guide consumer demand. We will allocate 103.341 billion yuan to implement a policy subsidizing rural residents' purchase of home appliances and vehicles and increase reserves of important materials such as grain, petroleum, nonferrous metals and specialty steel products.