Government Revenue  refers to the revenue of the government finance by means of participating in the distribution of
the social products, which is the financial resources for ensuring the government to function. The contents of government
revenue have been changed several times. Now it includes the following main items:

(1) Various tax revenues, including value added tax, business tax, consumption tax, land value added tax, tax on city
maintenance and construction, resources tax, tax on use of urban land, enterprise income tax, personal income tax, tariff,
stamp tax on security transactions, tax on purchase of motor vehicles, tax on agriculture and animal husbandry and tax on
occupancy of cultivated land, etc.

(2) Special revenues, including revenues from the fee on sewage treatment, fee on urban water resources, fee for the
compensation of mineral resources and extra-charges for education, etc.

(3) Other revenues, including revenue from interest, revenue from the repayment of capital construction loan, revenue from
capital construction projects, and donations and grants.

(4) Subsidies for the losses of the state-owned enterprises. This is an item of negative revenue, consisting of subsidies to
industrial, commercial and grain purchasing and supply enterprises.

Government Expenditure  refers to the distribution and use of the funds the government finance has raised, so as to
meet the needs of economic construction and various causes. It includes the following main items:

(1) Expenditure for capital construction: It refers to the non-gratuitous use and appropriation of funds for capital construction
in the range of capital construction, outlay of capital as well as the loans on capital construction approved by the government
for special purpose or policy purpose and the expenditure with discount paid in an overall way within the amount of the funds
appropriated to the departments for capital construction.

(2) Innovation funds of the enterprises: They refer to the funds appropriated from the government budget for the enterprises
to tap the latent power, upgrade the technology and carry out innovation, including the innovation fund of the departments,
loan of the enterprises for innovation, subsidies on the innovation of the small fertilizer plant, small cement plant, small coal
mines, small machinery plant and small steel plant, the expenditure of interest for the loan for innovation.

(3) Geological prospecting expenses: They refer to the expenses appropriated from the government budget to the geological
prospecting units for the expenditure of the prospecting work, including the expenditures of the administrative agencies for
geological prospecting and their institutional units as well as the geological prospecting expenditure.

 (4) expenditures for science and technology promotion: They refer to the expenses appropriated from the government
budget for the scientific and technological expenditure, including new products development expenditure, expenditure for
intermediate trial and subsidies on important scientific researches.

(5) Expenditure for supporting rural production: It refers to the expenditures appropriated from the government budget for
supporting the various expenditures of the rural collective units or households for production, including the subsidies to the
small water conservancy projects and well drilling, sprinkling irrigation projects run by the villages; subsidies on the rural water
and soil conserving measures; subsidies to the small power stations run by the villages; subsidies to the expenditure for
fighting against particularly severe draughts; subsidies on the rural waste land exclamation; fund for supporting the township
enterprises; fund for supporting rural cooperative production organizations, subsidies to the expenditure for popularization of
the agricultural technologies and plant protection in the rural areas; subsidies to the expenditure for the protection of
grasslands and cattle and fowls; subsidies on afforestation and forest protection in rural areas; subsidies on the rural aquatic
products industry; special fund for developing grain production.

(6) Operating expenses of the departments of farming, forestry, water conservancy and meteorology etc.: They refer to the
expenses appropriated from the government budget for the expenditures of agricultural exclamation, farms, agriculture,
animal husbandry, agricultural machinery, forestry, timber industry, water conservancy, aquatic products industry,
meteorology, technology popularization in township enterprises, popularization (demonstration) of improved varieties, plant
(cattle and fowls, forest) protection, water quality monitoring, prospecting and designing, resources investigation, cadres
training, subsidies to horticulture gardens, expenditure of specialized secondary schools, subsidies on the experiments of
sowing herbage seeds by flights, expenditures of afforestation agencies and meteorology agencies, expenses for fishery
administration and operating expenses for agricultural administration, etc.

(7) Operating expenses of the departments of industry, transport and commerce: They refer to the expenses appropriated
from the government budget to cover the expenditure on salaries and operational expenditure of the departments of
industry, transport and commerce for the expenditure of business development, including expenses for prospecting and
designing, expenditures of specialized secondary schools, expenditures of the technical training schools and expenditures for
cadres training, etc.

 (8) Operating expenses of the departments of culture, education, science and public health: They refer to the expenses
appropriated from the government budget for the expenditures on salaries and operational expenditure of the causes of
culture, publication, cultural relics, education, public health, traditional Chinese medical science, free medical services, sports,
archives, earthquake, ocean, communications, broadcasting, film and television, family planning; expenditure for training of
cadres of government, party and mass organization; expenditures for natural sciences, social sciences, associations for
science and technology and the special expenditure for the high-tech researches. They include mainly wages, extra wages,
welfare funds, pension for the retirees, stipend, expenses for official business, expenses for equipment purchases, expenses
for repairs, business expenses and subsidies to the units which are unable to support their expenditures by their own
earnings.

(9) Pension for the disabled or for the families of the bereaved and relief funds for social welfare: They refer to the funds
appropriated from the government budget for the expenditures of pension for the disabled or for the families of the
bereaved and relief funds for social welfare, including the lump-sum or regular pension paid by the departments of civil
affairs to the members of martyrs families and families of those who died for the public interest, pension to the revolutionary
disabled, subsidies for permanent disability of various kinds, subsidies to the military martyrs dependents and the
demobilized servicemen, expenditure for settling down the demobilized servicemen, operating expenses of the consoling
institutions, expenses for management and repair of the commemorative buildings for the martyrs, the expenses managed
by the departments of civil affairs for the retirees and those who have quitted their work, expenses for social relief in rural
and urban areas, operating expenses for providing relief to the areas of natural calamity and subsidies on the reconstruction
after the particularly severe natural calamities, etc.

(10) Expenditure on retirees: It refers to the expenditure on retirees of government agencies and institutions that are
covered by the state budget.

(11) Expenses on subsidies to social security system: It refers to expenditure from the state budget for subsidies to social
security system, including subsidies to the social insurance fund, subsidies to promoting employment, subsidies to laid-off
workers of state-owned enterprises, supplement to national social security funds, etc.

(12) Expenditures for national defence: They refer to the security, including expenses of national defence, expenses of
scientific researches on national defence, expenses for building up peoples militia and expenditure for special projects, etc.

(13) Administrative expenses: They include expenditure for administration, subsidies to the parties and mass organizations,
diplomatic expenditure, expenditure for public security, judicial expenditure, law court expenditure, procuratorial expenditure
and subsidies to the expenses for treating the cases by the public security departments, procuratorial organs and law courts.

(14) Expenditure on policy-related subsidies: It refers to the expenditure appropriated, with the approval of the government,
from the state budget for price subsidies on such products as grain, cotton and edible oil. More specifically, it includes
subsidies to the difference between the selling prices and purchasing prices of grains, cotton and edible oil, subsidies for
curtaining prices and for sugar reserve, subsidies to the difference between the selling prices and purchasing prices of means
pf agricultural production, risk fund for grains, risk fund for non-staple food, risk fund for local production of coal, etc.

(15) Expenditure on interest of debts: It refers to expenses from the state budget on paying interest of domestic and foreign
debts.

Revenue of the central government and revenue of the local governments:  refers to the revenue of the central
government and that of the local governments as defined by the decentralized taxation system starting from 1994. In
accordance with this system, the revenue of the central government includes tariff, consumption tax and value added tax
levied by the customs, consumption tax, income tax of the enterprises subordinate to the central government, income taxes
of the local banks, foreign-funded banks and non-bank financial institutions, business tax and profits of railways, head
offices of banks, head office of insurance company , which are handed over to the government in a centralized way, tax on
city maintenance and construction, tax on purchasing motor vehicles, tonnage tax of ships, 75% of the value added tax, 94%
of the tax on stock dealing (stamp tax), interest income tax in the personal income tax, proportion of the personal income
tax (other that interest income tax) to be shared by the central government, and tax on ocean petroleum resources,. The
revenue of the local governments includes business tax, income tax of the enterprises subordinate to the local government,
proportion of the personal income tax (other that interest income tax) to be shared by the central government, tax on the
use of urban land, tax on the adjustment of the investment in fixed assets, tax on town maintenance and construction, tax
on real estates, tax on the use of vehicles and ships, stamp tax, slaughter tax, tax on agriculture and animal husbandry, tax
on special agricultural products, tax on the occupancy of cultivated land, contract tax, value-added tax on land, income from
charges on use of state-owned land, 25% of the value added tax, 6% of the tax on stock dealing (stamp tax) and tax on
resources other than the ocean petroleum resources.

Expenditure of the central government and expenditure of the local governments:  according to the different
functions of the central government and local governments in the economic and social activities, the rights of affairs
administration are classified between the central government and local governments; and the classification of the expenditure
between the central government and local governments are made on the basis of the classification of the rights of affairs
administration between them. The expenditure of the central government includes the expenditure for national defence,
expenditure for armed police forces, the administrative expenses and various operating expenses at the level of central
government, expenditure for key projects and the expenditure of the central government for adjusting the national economic
structure, coordinating the development among different regions and exercising the macro-economic regulation and control.
The expenditure of the local governments includes mainly the administrative expenses and various operating expenses at
the level of local governments, the expenditure for capital construction and technological innovation with the funds raised by
the local government, expenditure for supporting rural production, expenditure for city maintenance and construction and
expenditure for price subsidies, etc.

Extra-budgetary revenue and expenditure  Extra-budgetary fund refers to financial fund of various types not covered
by the regular government budgetary management, which is collected, allocated or arranged by government agencies,
institutions and social organizations while performing duties delegated to them or on behalf of the government in accordance
with laws, rules and regulations. It mainly covers following items: administrative and institutional fees, governmental funds
and extra charges that are stipulated by laws and regulations; administrative and institutional fees approved by the State
Council and provincial governments and their financial and planning (price management) departments; governmental funds
and extra charges established by the State Council and the Ministry of Finance; funds turned over to competent departments
by their subordinate institutions; self-raised and collected funds by township governments for their own expenditure; and
other financial funds that are not covered in budgetary management. Social security funds are treated as extra-budget fund
and managed for its exclusive use, given the circumstance that separate government budgetary system for social security is
yet to be designed. Special accounts are opened by the financial departments in banks for the management of revenue and
expenditure of extra-budgetary fund. Extra-budgetary revenue and expenditure is managed separately, namely, revenue of
institutions and departments must enter into the special accounts of the financial departments at the same administrative
level, and their extra-budgetary expenditure is arranged in line with the extra-budget plans and appropriated from these
accounts.

 Revenue from debts  refers to fund raised by the state in credit forms, including various domestic government bonds
issued by the Ministry of Finance to commercial banks and other investors, bonds in foreign currencies issued by the Ministry
of Finance at the international capital market, and other foreign debts borrowed and to be repaid centrally by the government
finance.

Expenditure on repayment of principal of debts  refers to the expenditure from government finance on the repayment
of principal of domestic and foreign debts.

Deficit of central government finance  refers to the difference between the total expenditure and the total revenue of
the central government.