The government urges more township enterprises to engage in businesses that will absorb more employees, such as the service industry and the farm produce processing industry, said Liu Zengsheng, director of the Bureau of Township Enterprises under the ministry.

China has witnessed growing surplus labor in rural areas as it is modernizing the agricultural sector and also suffering from the depressed growth of farmers' income.

In the government's Tenth Five-year Plan, the country aims to have farmers' annual income rise by 5 percent on average and 40 million rural population employed in the next five years.

"Township enterprises, regarded as grassroots businesses in the countryside, offer the major solution for this problem," said Chen Naixing, an expert with the Chinese Academy of Social Sciences.

Township enterprises in China have employed 128 million people, equal to almost half of the idle labor force in rural areas and 33.7 percent of farmers' annual net income on average came from township enterprises last year.

"China has too many people working for traditional agriculture industries," he said, "The modernization of agriculture is doomed to produce increasing idle labor force."

Agricultural population in China has engaged 70 percent of the total population, compared with 10 percent in developed countries.

The government encourages town ship enterprises to let farmers hold their shares or lease some collectively owned township companies, said Liu Zengsheng.

(Xinhua 04/27/2001)