China is to begin decreasing the size of its bloated bureaucracy by 20 percent at city, county and township levels in an effort to cut costs, increase administrative efficiency and curb excessive tax levying on farmers, state press said on Sunday.

State Councillor Wang Zhongyu called for the cutbacks to begin in 663 cities, 2,109 counties and more than 25,000 township governments and said restructuring should be completed within five to 10 years.

The reform is specifically targeted at reducing the administrative power of local government, separating government functions from local enterprises and reducing redundancies in government functions between city, county and township levels.

"Institutional reform is the key to increasing farmer's incomes and reducing their financial burdens," said Chen Xiwen, an expert at the Development Research Centre of the State Council.

Reform should include the removal of around 25,000 township governments across China which would also work to invigorate county-level governments while giving farmers a bigger say in village-level management, he said.