Believing that China is now at a critical transition stage in its development from traditional labor-intensive farm production to that which is more reliant on machinery, the country’s State Council announced on July 9 that it will take measures aimed at the “sound and fast” development of its farm equipment industry.

According to a report from iStock Analysts, China’s domestic agricultural machinery manufacturers are being encouraged to set up research and development centers with foreign companies through joint ventures. This is aimed at reducing China's dependence on imports of advanced technologies.

In a document issued by the State Council, or Cabinet, the government will encourage the restructuring of agricultural machinery makers to form large companies that are highly competitive.

With the release of the document, further detailed measures are likely to be rolled out by the Ministry of Industry and Information Technology.

In the document, the government commits itself to increasing policy support to the agricultural machinery sector and to continue subsidies for the purchase of agricultural machinery. It will also demand that tax benefits for the sector are implemented to the letter.

According to the Chinese Society for Agricultural Machinery, in 2009, 49.13% of China's farmland was plowed, planted and harvested by machines. This is nearly 7% higher than in 2007.

The gross output of large agricultural machinery makers totaled 230 billion yuan ($33.9 billion) in 2009.

Since 2004, China's agricultural machinery sector has maintained a growth rate of over 20%. The mechanization of China's agricultural production has reduced the annual need for around 10 million farm labors, according an estimate by the Beijing-based China Agricultural University.

China's rural population is expected to shrink from the current 900 million to 400 million over the next 30 years as farmers migrate to cities, according to a forecast by the State Council Development Research Center.