4. Steady progress was made in building a resource-conserving and environmentally friendly society.
Efforts to conserve energy and other resources continued to produce more results. We announced a master work plan for saving energy and reducing pollutant emissions and a plan and methods for compiling statistics on and monitoring and assessing progress. In addition, an accountability system for energy conservation and pollution reduction targets has been put in place. Good progress was made in the ten major state projects for energy conservation. Funds from the central government were used to support nearly 700 energy-saving projects that will potentially save 22.5 million tons of standard coal. The campaign to save energy in 1,000 energy-intensive enterprises was carried out in full, resulting in a total saving of more than 20 million tons of standard coal. The second group of pilot projects for a circular economy was launched. New fiscal, tax, financial, pricing and other policies to support energy conservation and pollution reduction efforts were introduced at a faster pace. The new policies raised resource taxes on a number of mineral products, introduced the List of Equipment and Products Entitled to Corporate Income Tax Credit for Energy- and Water Efficiency and Comprehensive Utilization of Resources and set up a system of mandatory government procurement for energy-efficient products. The policy of charging differential electricity rates was tightened and pilot projects to generate and distribute electricity more efficiently were launched. The revised Law on Energy Conservation was promulgated, and a number of energy efficiency standards and quotas for energy consumption in production were set. Efforts were intensified to track compliance with energy conservation and pollution reduction laws and to increase publicity and guidance concerning compliance with these laws.
Further progress was made in the protection and improvement of the ecological environment. We continued to work on key ecological projects such as those to protect virgin forests, bring the sources of sandstorms affecting Beijing and Tianjin under control, build networks of key forest shelterbelts, and protect and improve the Sanjiangyuan Nature Reserve. Since 2003, an additional 31.91 million hectares of the country has been covered with trees, including the forests returned from former farmland, and a total of 34.6 million hectares of grazing land has been returned to grassland. A system of indicators was formulated to assess compliance with clean production standards in 24 industries, including the thermal power, phosphate fertilizer, and lead and zinc industries, and extensive inspections were carried out to ensure clean production in these industries. We continued our efforts to prevent and control pollution in key river valleys and regions, including the Huai, Hai, Liao and Songhua rivers, Tai, Chao and Dianchi lakes, the Three Gorges Reservoir area, the Danjiangkou Reservoir area and its upper reaches, and the Bohai Sea. The percentage of treated urban sewage reached 59% and percentage of urban household waste safely handled reached 56%, 3 and 2 percentage points higher respectively than the levels of the year before. Breakthrough was made in desulfurizing projects for coal-fired power plants, with desulfurization devices installed in more thermal power plants with a total capacity of 110 million kilowatts, bringing the proportion of China's total thermal power plant capacity with such equipment up to 50%. We issued the National Climate Change Program, China's first policy document to comprehensively respond to climate change and the first of its kind produced by a developing country. The program received a positive response from the international community.
Figure 6. Urban Sewage Treatment and Safe Handling of Urban Household Waste
5. Reform and opening up was vigorously advanced.
We strengthened overall guidance, improved overall planning and coordination, and stepped up overall support and supervision and inspection for reforms, and deepened reforms in key areas. Trials of overall rural reform were expanded, and positive results were achieved in the reform of the system of collective forest rights. Reform of farms run by overseas Chinese was accelerated, and trials of subsidized insurance premiums for major agricultural and livestock products were launched. The reform of state-owned enterprises (SOEs) was further deepened and a trial budget system for the management of state capital was launched. An additional 12central government enterprises were listed on domestic or overseas stock markets. Substantial progress was made in the trial to institute a board of directors system in SOEs. The income tax rates for domestic and foreign enterprises were unified to make a single income tax rate for both and the trial VAT reform was expanded. A system of requiring compensation for the acquisition of mineral prospecting and mining rights was implemented in eight major coal-producing provinces. Trials to set up new types of rural financial institutions were extended to 31 provinces. Concrete steps were taken in preparation for the reform of the Agricultural Bank of China and the China Development Bank. Key state-owned insurance companies such as the China Life Insurance Company and the China Pacific Insurance (Group) Company Limited have completed their reorganization and transformation to become shareholding corporations and were listed on the stock exchange. The China Investment Corporation was established. The Renminbi exchange rate was made more flexible. The Renminbi appreciated by 13.3% against the US dollar between July 2005, when reform of the mechanism for setting the Renminbi exchange rate was introduced, and the end of 2007. Further progress was made in deepening the reform of the science and technology management system and the pilot project to nurture the second group of innovation-based enterprises was launched. Vigorous efforts were made to reform the investment system. Steady progress was made in price reform for refined petroleum and natural gas, and reform of the price of heating in cities was accelerated. More items were removed from the list requiring administrative approval. Steady progress was made in implementing the package of pilot reforms to promote comprehensive and sustainable development. Measures to encourage, support and guide the development of the nonpublic sector of the economy were further improved.
China's economy continued to become more open. The country's export and import volume reached US$2.1738 trillion in 2007, up 23.5% from the year before. The mix of exports and imports continued to improve. The export volume of electrical machinery and new and high technology products rose by 27.6% and 23.6% respectively, and initial results were achieved in efforts to control excessive growth in the export of resource products and products whose production is energy intensive or highly polluting. A new Suggested List of Industries for Foreign Investment was released. Foreign direct investment for the year, excluding financial investment, totaled US$74.8 billion, a year-on-year increase of 13.6%. The structure of foreign investment continued to improve. Foreign investment increased by over 60% in the western region and over 70% in northeast China. Banking, commerce and telecommunications were all opened wider to foreign investment. Foreign investment in tertiary industry rose by 47% year on year, and its share in total foreign investment increased by 10 percentage points. The country's foreign exchange reserves reached US$1.5282 trillion. Chinese enterprises did more investing overseas and increased cooperation with foreign companies, resulting in Chinese direct investment in other countries, excluding financial investment, reaching US$18.7 billion in 2007, an increase of 6.2% over the previous year.
Figure 7. Change in the Structure of Foreign Direct Investment