Third, support was provided for promoting the reform of the financial system. We obtained a clear picture of the number and distribution for state-owned bank and financial assets. We formulated a policy for turning over the revenue from state-owned shares to the government, a policy for reducing the number of state-owned shares and a policy for corporate income tax, and supported the restructuring and listing of the Bank of China and the Industrial and Commercial Bank of China.

Fourth, reform of the classification of government revenue and expenditures progressed steadily. This is the most important change in the classification and statistical system for government revenue and expenditures since the founding of New China in 1949 and also represents a profound innovation in the government's budgetary management system. The new classification system fully embodies the integration of standard international practices with the particular conditions in China. Moreover, it gives a clearer picture of the revenue and expenditures of the government as well as the government's performance in carrying out its functions. This is of great significance for making the government budget more transparent, strengthening budgetary management and oversight, fighting corruption at the source, and promoting socialist democratic politics.

Fifth, we constantly deepened the reform of other budgetary management systems. We tightened control over surplus budgetary funds, made steady progress in implementing performance assessment trials, made constant improvement in trials to optimize allocation of human resources and funding, and instituted a method for managing project budgets on a rolling basis. The reform to set up a centralized treasury payment system was expanded to include all central government departments and over 6,100 of their subsidiary organs responsible for preparing their own budgets. The system now covers more than 460 billion yuan of budgetary funds. The reform also covers more than 160,000 lower-level organs that prepare their own budgets in over 1,000 counties and city districts in more than 270 prefectures and cities at the level of a prefecture in 36 provinces, autonomous regions, municipalities directly under the central government and cities specially designated in the state plan. Reform of the management system for collection of non-tax revenue was accelerated and the scope of the reform was continuously expanded. Total government procurement reached 350 billion yuan in 2006, enabling government procurement to be fairly effective in supporting and guiding energy conservation and environmental protection. Initial results were achieved in the campaign to combat bribery in government procurement. Money management through the treasury was steadily instituted, management of the outstanding balance of the national debt was instituted and efforts were accelerated to establish the Government Financial Management Information System. All these measures helped to modernize the traditional budgetary management system and promote constant improvement in the socialist market economy.

7. Public finance was handled in strict accordance with the law and progress was made in standardizing administration of public finance. The basic policy of running the country and administering public finance in accordance with the law was followed in all financial work.

First of all, we made constant improvement in legislation related to public finance. We will be examining the Law on Corporate Income Tax (Draft) during this session. The State Council promulgated or revised the Interim Tax Regulations on Tobacco Leaf, the Interim Tax Regulations on Vehicles and Boats, and the Interim Tax Regulations on Urban Land Use. The Interim Measures for Management of State-owned Assets of Administrative Organs and the Interim Measures for Management of State-owned Assets of Public Service Institutions have been formally promulgated, marking the beginning of efforts to gradually put these matters on a legal footing and standardize them. A scientific and standardized system was put into operation to distribute profits from the sale of public welfare lottery tickets. Continued progress was made in deepening the reform of the financial and administrative approval system, and all items requiring central government financial and administrative approval and application procedures for approval can now be found online.

Second, continued progress was made in improving accounting work and other basic work. Two major systems of norms, one for accounting and one for auditing work, were established to be compatible with the country's current state of economic development and international standards. In addition, we carried out a project to foster leaders in the accounting field and improved the continuing education system. We formulated a general strategic framework for reforming the government accounting system. Improvements were made in oversight and management of certified public accountants and the asset evaluation industry, allowing their business to further expand.

Third, the results of oversight of public finance were substantial. The basic elements of a public finance oversight system with real-time monitoring, comprehensive examination, feedback on improvement efforts and performance tracking were put into place. The main focus of the system was on overseeing the handling of major items of expenditures that affect the pressing interests of the masses. Irregularities were uncovered in the handling of a total of 91.1 billion yuan of government funds, and 15 billion yuan in lost funds was recovered. (More)