China will establish a minimum living standard system covering all rural residents in 2007 to drag poor villagers out of poverty, according to a circular released by the State Council on Monday.

The circular said local governments are responsible for setting up the system and adjust it timely in accordance with the change of local prices of daily necessities.

Beneficiaries will be villagers who suffer chronic living difficulties because of illness, disabilities, oldness, or bad surviving environment, said the circular.

Despite the sharp decrease of poverty-stricken villagers in the past decades, some rural residents still face food and clothes problems and need living allowances.

The government will further use the means of fiscal transfer payment, under which the centralized payment by the national treasury will be directly deposited into the rural residents' accounts via agencies, according to the circular.

Official statistics show that China had 21.48 million rural people with an annual income less than US$85 at the end of 2006.

(Xinhua News Agency August 13, 2007)