The system, similar to medical insurance, requires contributions both from individual farmers and governments so that a funding pool is built up to cover farmers' treatment costs for serious illnesses at a set ratio.

The State Council gave its approval to the plan last October.

Each province would have to choose at least two or three counties to run pilot schemes this year, Health Minister Zhang Wenkang said on Wednesday.

Public health authorities in China now consider the plan, due to be effective nationwide by 2010, as a starting point for a demanding scheme to provide basic and fair health care to the rural residents, who make up more than 70 percent of the country's nearly 1.3 billion population.

Chinese farmers were more likely to suffer a financial crisis caused by illness than urban dwellers because the farmers paid almost all their medical bills themselves, said Chen Xiwen, deputy director of the State Council's center for development research.

He said while urbanites paid 60 percent of medical expenses, farmers paid 90 percent, and the average farmer income was only one-third of their urban counterparts.

An old cooperative medical system that operated under the planned economy had greatly improved the health of Chinese farmers in past decades. But it became ineffective when the market economy swept the countryside.

Zhang said the central government would make an annual contribution of 10 yuan (US$1.20) to each participant in the cooperatives in the central and western regions. Local governments are expected to contribute equally to the funding pool.

(Xinhua News Agency January 25, 2003)