Beijing  - The Chinese government announced a three-year action plan on health care reform on Tuesday, pledging improved facilities, universal access to basic insurance and the introduction of an essential drug system.

Admitting that health care services in rural areas lag behind those in the country's cities, the government has pledged to build 2000 new county-level hospitals which adhere to national standards, and to provide each village with a local clinic.

Extra training will also be offered in village and township clinics in an attempt to address staff shortages in rural areas and health insurance subsidies for farmers and unemployed urban residents will increased by 50 per cent, according to the government.

The 2009-11 action plan, worth 850 billion yuan (124 billion dollars), is part of a new set of health reform guidelines jointly released on Monday by the Central Committee of the Communist Party of China and the State Council, China's cabinet.

According to the "Guidelines on Deepening the Reform of the Health-care System", the reforms are aimed at "solving pressing problems that have caused strong complaints from the public".

Until the 1980's, healthcare costs in China were largely covered by the state. When this system was dismantled and replaced by a market-oriented approach, medical fees rose and many under-funded public hospitals began to rely on sales of medicines.

Under the reforms, the government says it will bar hospitals from making profits by prescribing expensive medicines, and an essential medicines scheme will be created to regulate prices. (dpa)