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The Chinese government is determined to modernize the agricultural industry and will invest more money in the country's vast rural areas.

Addressing the annual central rural work conference which closed in Beijing Saturday, Chinese Vice Premier Hui Liangyu said that the agricultural industry and the rural areas had continued to develop in 2006 despite a series of natural disasters and increasingly fierce trade competition.

Sources at the meeting said that agricultural reform should be pursued, policies in favor of farmers strengthened and public services in rural areas improved.

"However, there are still a whole raft of very complex and challenging issues concerning farmers, rural areas and the agricultural industry as a whole," Hui said.

Greater efforts will be made to improve land productivity, the efficiency with which resources are utilized and technological capacity in the industry.

To ensure basic medical services for farmers, the new cooperative medical care system will be expanded to cover 80 percent of China's rural areas next year, according to the meeting.

At present, 40 percent of rural areas, or 200 million farmers, are covered by the cooperative medical care system to which farmers, local government and central government all contribute.

148 million elementary and primary students in rural areas will be exempted from tuition fees starting from 2007 and a new compulsory educational financing system will be established.

In 2006, 50 million elementary and primary students in western China's rural areas were exempted from all educational charges except textbook fees.

The government will also press ahead with a national social security system in both urban and rural areas.