3. Further progress was made in economic restructuring.

China's capacity for independent innovation was improved. The revised Law on Scientific and Technological Advances was promulgated. Smooth progress was made in all 16 of the major state science and technology projects, the third phase of the Knowledge Innovation Program was launched, and implementation of the March 1986 High-tech Program, the March 1997 Program for Basic Research and other state science and technology programs was accelerated. Basic research, research in cutting-edge technologies and research in technologies for public benefit applications were strengthened. Policies on software, integrated circuits, digital television, biotechnology, satellite applications, civil aviation and other industries were formulated. An additional 27 national key laboratories were set up, construction was begun on four major state science and technology infrastructure facilities, six national engineering laboratories and nine national engineering research centers, and the capacity for innovation was enhanced in 124 state-level enterprise technology centers thanks to government support. Smooth progress was made in major programs to develop industrial technologies in areas such as clean production, coalmine safety, energy conservation and emission reduction, and comprehensive utilization of resources, and in 11 state programs to apply high technologies to industry, including new flat-panel displays and biopharmaceuticals. China's first lunar exploration project was a great success, the first airliner for regional use with Chinese intellectual property rights rolled off the production line, and the development of an experimental network for a 3G mobile telecommunications system using the TD-SCDMA standard for which China owns intellectual property rights moved on to the next stage. Total added value of the high-tech industry accounted for 7.8 percent of China's GDP, up 0.1 percentage points year on year.

Significant results were obtained in industrial restructuring. The proportion of quality products and high value-added products in China's industrial production was raised. Total output value of new products grew by 31.2 percent. Production of sheet and strip steel as a share of total steel production increased by 1.5 percentage points. Production of the new dry-process cement as a share of total cement output grew by 5 percentage points. Good results were made in efforts to design and manufacture all equipment and installations for new types of ships, large-capacity nuclear power generators, large wind farms, and ultrahigh-tension power transmission and transformer facilities. Administrative approval to operate enterprises in industries that are energy intensive or highly polluting was further restricted. Structural adjustment of industries with excess production capacity was accelerated. Fresh achievements were made in streamlining mining resource development. More mergers and reorganizations were carried out in enterprises in the steel, non-ferrous metals, coal, building materials, automobile and textile industries. Efforts to relocate and restructure the Shougang Group made headway. A number of backward production facilities that did not meet safety and environmental standards or were damaging resources were shut down in accordance with the law. In 2007, small thermal power plants with a total capacity of 14.38 million kilowatts, 2,322 small coalmines, backward iron foundries with a total capacity of 46.59 million tons, backward steel mills with a total capacity of 37.47 million tons and backward cement plants with a combined capacity of 52 million tons were put out of business.

Energy, transportation and other basic industries and infrastructure enjoyed significant growth. Coal output in 2007 reached 2.54 billion tons, 6.9 percent more than in 2006. Total power-generating capacity was increased by more than 100 million kilowatts, and the total amount of electricity generated was up 14.4 percent. Output of refined petroleum rose by 7.5 percent, 3.1 percentage points higher than the increase of the previous year. There was continued improvement in the transportation infrastructure. A total of 143,595 kilometers of highways was added, including 8,059 kilometers of expressways, and construction of the five vertical and seven horizontal national trunk highways totaling 35,000 kilometers was basically completed. Newly built railway lines opened to traffic totaled 678 kilometers, double-track railways 480 kilometers and electrified railways 938 kilometers. Annual cargo handling capacity of berths for 10,000 ton-class or larger ships increased by 439.16 million tons. In addition, five more civilian airports were built and expansion of Beijing Capital International Airport was completed. These improvements in the transportation infrastructure helped ensure adequate capacity for the transport of key materials.

The service industry enjoyed faster development. The guidelines for accelerating development of the service sector were carried out to give play to the guiding role of government grants in promoting overall growth of the service industry. Total added value of the service sector for the year reached 9.6328 trillion yuan. The industrial structure is now dominated by the service sector in a number of large and medium-sized cities in China, with total added value of the service sector accounting for 50 percent or more of local GDP in some cities such as Beijing, Shanghai and Guangzhou. Furthermore, there has been improvement in the structure of the service industry itself, with accelerated growth of modern services. The number of Internet users in China now exceeds 200 million, making the country second in the world. Online shopping for goods and services accounted for 13 percent of total retail sales in the country.