The State Council, China's cabinet, encouraged private investment in eldercare services to serve the world's largest population of elderly as part of a program announced on Friday.

China will complete a social care network for its elderly by 2020, when the age group is expected to reach 243 million, according to the program.

China's population above age 60 reached 194 million by the end of last year, and China is the only country in the world with a senior population above 100 million. The figure is expected to exceed 300 million by 2025.

By 2020, the country will have an improved service system covering daily care, medical care, psychological counseling and emergency aid, the document said.

A majority of eldercare services will gradually go to nongovernmental institutions while government institutions will mainly take care of low-income elderly people without family support or with disabilities at no or low cost, the document said.

Of the 44,000 eldercare institutions in China, about 75 percent are sponsored by the government. Nongovernmental institutions are having difficulty finding land and investment as well as lobbying preferential policies on taxes and utility fees.

The new program makes breakthroughs in land use, tax and government subsidy policies, said Dang Junwu, deputy director of the China Research Center on Aging, in an interview with Xinhua.

According to the new program, non-profit eldercare institutions sponsored by private investors will enjoy land use policies equal to their government counterparts and be exempt from all administrative fees.

Additionally, for-profit private institutions will be exempt from half the government fees.

The program also promises to arrange preferential tax policies for nongovernmental institutions and support them through government loans and service purchases.

Land supply restrictions for nongovernmental eldercare institutions will be eased gradually, said Zhan Chengfu, director of the division on social welfare and charity of the Ministry of Civil Affairs.

The program also promises to reform existing government eldercare institutions, many of which have long suffered low efficiency and poor management.

According to the program, the government will welcome private companies to take over the management of government-funded eldercare institutions, and some of these public institutions may be transformed into corporations.

"An institution funded by the government is not necessarily run by the government. Private management with public ownership might improve efficiency," Zhan said.

By the end of this year, the ministry will also work out a pilot plan in several provinces to test the conversion of public nursing homes into corporations, he said.

"The program has clarified the difference between the government and the market and will help create an environment for fair competition," Dang said. "It might inject incentives into the sector."

Despite the rapid aging of Chinese society, services to senior citizens have greatly lagged behind demand.

According to the Ministry of Civil Affairs, nursing homes across the country only have a total of 4.16 million beds.

The government expects that by 2020 the number of beds in nursing homes per 1,000 senior citizens will reach 35 to 40, up from 22 in 2012, and urban communities and at least 60 percent of villages will have eldercare services, according to the program.

Eldercare services are considered to have big economic potential. The industry will provide more than 10 million jobs by 2020, the document said.