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5. Striving to increase employment and improve social security work. We increased policy support and spending to expand employment and reemployment. The central government last year allocated 20.9 billion yuan to provide basic living allowances and reemployment subsidies to employees laid off from state-owned enterprises, 2.9 billion more than the year before. We did a good job providing employment for urban residents newly entering the workforce, college graduates and demobilized soldiers. A special fund was also set up in central government budget to support job training for farm laborers looking for urban employment and to assist demobilized soldiers from urban areas in finding jobs for themselves.

The social security system underwent steady improvement, and its coverage was expanded. The work of incorporating basic living allowances for workers laid off from state-owned enterprises into the unemployment benefit system was completed in 17 provinces, autonomous regions and municipalities directly under the central government. All urban residents entitled to basic living allowances are now basically receiving them. Allowances for key entitled groups were increased significantly, and 7.46 billion yuan was allocated from the central government budget for allowances for entitled groups, a 90 percent increase from the previous year. The basic framework of a social assistance system has been established in 28 provinces, autonomous regions and municipalities directly under the central government and in 2,300 counties and cities. Disaster relief and anti-poverty work was intensified. Total expenditures from the central government budget for fighting natural disasters and providing disaster relief came to 8.9 billion yuan last year, and more than 90 million people were helped. The central and local governments allocated 16.2 billion yuan for poverty alleviation, and the number of rural residents living in poverty decreased by 2.45 million.

6. Strengthening democracy and the legal system. Democracy continued to make advances at the local level, and elections for village committees were held in 21 provinces, autonomous regions and municipalities directly under the central government. The running of governments, factories and villages was made more transparent. Government decision making was made more scientific and democratic, and a system of public notices and public hearings on matters affecting the interests of the people was instituted. Much effort was put into passing government legislation. The State Council sponsored seven bills, including the revised versions of the Labor Contract Law, the Law Guaranteeing the Rights and Interests of Women, and the Individual Income Tax Law (draft), and 22 administrative regulations were drawn up and promulgated by the State Council, including the Emergency Measures for Handling Major Animal Epidemics and the Special Regulations for Preventing Coalmine Accidents. The State Council formulated and implemented the Master State Plan for Rapid Response to Public Emergencies and plans for managing specific emergencies, thus improving our ability to respond to emergencies. Oversight was strengthened through auditing and supervision. We carried out thorough preparatory work for implementing the Civil Servant Law of the People's Republic of China. The new Regulations on Petitions in the Form of Letters and Visits were implemented, improving people's access to government departments that handle such petitions and ensuring order in submitting and handling them. Steady progress was made in the reform of the judicial system. A campaign to correct irregularities and promote impartiality in law enforcement was launched to safeguard citizens' lawful rights and interests. We continued to improve all facets of public security and severely punished illegal and criminal activities in accordance with the law. The number of criminal cases dropped, and social stability was maintained.

Work related to ethnic groups, religions, overseas Chinese, and Taiwan was further improved. We continued to make progress in the modernization of national defense and the army. Significant progress was made in diplomacy.

We owe these successes to the correct overall leadership of the Central Committee with Comrade Hu Jintao as General Secretary and to the concerted efforts and hard work of government employees and the general public. On behalf of the State Council, I would now like to express our sincere thanks to the people of all ethnic groups, to the democratic parties, to all people's organizations, and to people from all walks of life. I would like to sincerely thank our compatriots from the Hong Kong and Macao special administrative regions and Taiwan, as well as overseas Chinese. I would also like to sincerely thank our friends around the world who care about and support China's modernization drive.

While acknowledging our successes, we must also clearly realize that there are still many difficulties and problems in China's economic and social activities. Many long-standing and deep-seated problems have yet to be fundamentally solved, and a number of new problems have arisen that require our attention. First, it has become difficult to further increase grain production and rural incomes. There is downward pressure on grain prices and upward pressure on the prices of agricultural supplies, making it difficult for farmers to increase their earnings and discouraging them from growing grain. Moreover, the total area of useable farmland continues to decrease, and the overall agricultural production capacity is weak. This poses a threat to the nation's food security. Second, fixed asset investment is still expanding too fast. Investment in some industries is increasing too quickly, and too many new projects have been launched. Investment is too concentrated in some areas, and there is significant pressure for a rebound in investment. Third, the adverse consequences of overheated investment in some industries are becoming apparent. The problem of excess production capacity is getting worse, causing the prices of goods to drop and inventories to increase. Corporate profits are down and losses are increasing, creating greater potential financial risks. Fourth, many problems affecting the vital interests of the people have yet to be satisfactorily solved. There is strong public concern over the difficulty and high cost of getting medical treatment and receiving an education. The people's interests are adversely affected by violations of regulations and policies in a number of areas, including land expropriation, housing demolition and resident relocation, relocation of people from reservoir areas, and corporate restructuring, as well as by environmental protection. Fifth, there are serious problems in production safety. Major coalmine and traffic accidents occur frequently, causing serious loss of life and property.

We are also aware that there are still quite a few defects and shortcomings in the work of governments at all levels. The process of transforming government functions is behind schedule, some tasks have not been adequately carried out, and efficiency is low. The problem of formalism and going through the motions is still fairly serious. Some government employees engage in fraud, some are extravagant and wasteful, and some are even corrupt.

We must heighten

（责任编辑：中大编辑）

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