3. Establishing a system to guarantee funding for rural compulsory education and exempt rural primary and secondary school students in the western region from all educational fees. Strengthening rural compulsory education is a strategic task that has a direct overall bearing on economic and social development and successful completion of this task is important for achieving the strategic goals of the Eleventh Five-Year Guidelines and for efforts to build a moderately prosperous society in all respects. On the basis of clear delineation of the responsibilities of each level, sharing of the burden by central and local governments, increased government spending, stronger financial guarantees and systematic, step-by-step implementation, between 2006 and 2010 we will gradually incorporate all expenditures for rural compulsory education into the public finance system and establish a mechanism to guarantee funding for rural compulsory education that divides specific tasks between central and local governments and assigns each a proportion of the burden. The main changes brought about by this reform are: exemption for rural students receiving compulsory education from paying educational fees and provision of subsidies to students from poor families for buying books and for room and board at boarding schools, stronger public funding guarantees for rural primary and secondary schools, establishment of a long-term mechanism for repairing and renovating primary and secondary school buildings and consolidation and improvement in the current mechanism for guaranteeing payment of teachers' salaries. We will also establish a system of budgets for all rural primary and secondary schools and carry out a comprehensive education reform. In order to ensure smooth implementation of reforms, the central government will assume primary responsibility for funding the reform of the mechanism for guaranteeing funding for compulsory education in the central and western regions and also provide assistance to impoverished areas in the eastern region. We will do this on a year-by-year and region-by-region basis with the objective of implementing the reform in two years and optimizing it in three. We will carry out the reform first in the 12 provinces, autonomous regions and municipalities directly under the central government in the western region and implement a mechanism for maintaining and renovating rural primary and secondary school buildings throughout the country in 2006, and we will make rural compulsory education free nationwide in 2007. New budget allocations from all levels of government from 2006 to 2010 for rural compulsory education will amount to 218.2 billion yuan, not including any adjustments in teachers' salaries. We will support vocational education, increase support for development of experimental vocational training centers, and further improve our policies for giving financial assistance to students from poor families at vocational schools. A total of 740 million yuan will be allocated from the central government budget for building experimental vocational training centers and 800 million yuan for financial aid and scholarships for students at vocational schools, 770 million yuan for both items more than for 2005. We will also provide more support to improve higher education.

4. Supporting employment, reemployment and social security work and promoting the building of a harmonious society. Intensifying our employment, reemployment and social security work is an important measure for safeguarding the people's interests, promoting equal opportunity for all, and building a harmonious socialist society. Allocations from the central government budget for social security allowances and employment and reemployment work total 185.982 billion yuan in 2006, a year-on-year increase of 23.623 billion yuan or 14.5%.

First, we will continue to do a good job in our employment and reemployment work. We will implement the new policy to support employment and reemployment efforts and find satisfactory solutions to long-standing problems related to employees laid off from SOEs.