The State Council, China's cabinet, has announced policies to encourage migrant workers, college graduates and discharged soldiers to return to their rural hometowns and start small business.

Issued on Sunday, the policy package is the latest move to encourage entrepreneurship and innovation and create jobs, in order to drive economic growth.

The government promised to ease the business registration procedure for these small businesses and allow them to enter rural infrastructure development and public services that are normally operated by the government.

They will enjoy waivers or reductions of taxes and administrative fees, be considered for government funds for agricultural development and be offered certain allowances, according to the policies.

The government also promised to introduce these startups to private investors and to encourage state-run rural banks to provide loans.

Migrant workers, college graduates and retired soldiers have better contacts with the outside world than long-time farmers and may bring new business ideas and management experience to rural areas, the State Council believes.

They are encouraged to engage in businesses like farm produce, local specialty handicrafts and tourism as well as to use the Internet to promote their businesses.

The government also pledged to invest more in rural infrastructure, especially IT facilities, and to provide business training for those who are interested.