China's rural cooperative medical care system is to expand to cover all rural residents by the end of 2008 and government spending on the system will be sharply increased, Vice Premier Wu Yi said at a national conference on Friday.

Fund pooled for each person in the scheme will be doubled to 100 yuan (about US$13.8) in two years, she said.

It means central and local government subsidies will be increased from 40 yuan (US$5.50) to 80 yuan (US$11) per person, according to Ding Xudong, official with the Ministry of Finance.

The scheme, seen by many as a way to help Chinese farmers who have virtually no medical insurance, now requires a participant to pay 10 yuan a year. Central, provincial, municipal and county governments supply another 40 yuan (US$5.2) per person to the fund.

When rural residents fall seriously ill, the pooled funds cover part of their medical costs. Coverage varies by illness and the actual expenses.

Initiated in 2003, the system has expanded to cover 730 million rural residents, or approximately 86 percent of rural areas by the end of 2007.

A total of 42.8 billion yuan (US$5.9 billion) was pooled by the fund last year, according to Wu, compared with only four billion yuan in 2003.

The fund paid out about 59.1 billion yuan over the past five years in reimbursements. Beneficiaries from the cooperative medical care system reached 920 million person-times.

Wu stressed at the conference that construction of medical service networks should be reinforced, pharmaceutical supply for rural areas and the management of the medicare fund should be supervised.