A huge migration project to relocate 350,000 residents from poverty-stricken areas in Northwest China's Ningxia Hui autonomous region still faces obstacles such as a shortage of funds, senior regional officials have said.

Wang Zhengwei, chairman of the Ningxia Hui autonomous region, said the region plans to invest 10.8 billion yuan ($1.64 billion) in relocating villagers from poor areas in central and southern Ningxia.

"We will start the project after the two sessions. So far, the preparation of land storage, water system construction and part of the money are ready," he told China Daily during an exclusive interview after a meeting of the session of the National People's Congress.

"More than 40,000 people will be moved out this year," he said.

The project will be carried out in Xihaigu area, which includes an arid belt in central Ningxia and eight counties in the region's southern mountainous area.

The population relocation plan, or so-called "ecological migration project", started in the 1980s, and has so far moved 660,000 residents from inhospitable areas to more suitable land, according to the local government.

Wang said the local environment will recover in three to five years after local farmers move out, as "plow land can be gradually turned back to forests".

When asked about the biggest difficulty in this project, Wang said "the shortage of money".

"Of the 10.8 billion yuan, 50 percent will be supplied by the central government. So we need to raise the other half," he said.

Yuan Jinlin, director of the Ningxia commission of reform and development, the region's economic planner, said the regional government will raise 20 percent of the money, county governments will pay 20 percent and relocated households will pay 10 percent.

"According to the calculation, a migrant needs 30,000 yuan to complete the relocation," he said. "Migrants will gain new housing and jobs, and their children will get better education."

According to figures released by the local government's website, 1,655 villages in 91 towns are listed in the project, which plans to move 35 percent of the 350,000 people to better places in central and southern Ningxia, and the other 65 percent to northern Ningxia.

Yinchuan, the capital of Ningxia, will accommodate 78,000 people from the project in six counties of the city, said Wang Rugui, the mayor of Yinchuan.