The Chinese government said it plans to relocate 100 million farmers, or about 12 percent of the rural population, mainly into smaller cities with a large stockpile of unsold homes, and turn the farmers' small holdings into larger farms.

But farmers who choose to move and get an urban household registration, or hukou, will have the right to decide whether to keep their farmland or sell it, the State Council, China's cabinet, said in a policy document released on Tuesday.

The State Council said it plans to move at least 13 million people registered as farmers out of rural areas permanently each year from 2016 to 2020, with at least 100 million people affected after the five years. Small plots of land left behind by city-bound villagers could be turned into larger farms that use modern methods to make the agricultural sector more competitive, policymakers said.