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A comprehensive plan on economic and social development is expected to lift the economy of China's Ningxia Hui Autonomous Region.

The State Council, the country's Cabinet, discussed and approved the plan during its executive meeting on Wednesday, agreeing on measures to further boost the economic and social development in this largest Muslim region of the country.

Its rich potential in agriculture and energy will be further explored, while new economic sectors such as tourism and financial services will also get an impetus, according to the meeting presided over by Premier Wen Jiabao.

The decision to further develop Ningxia was made before the region, where more than one-third of the population was Muslim, is celebrating the 50th anniversary of its establishment next month.

Wen recently made an inspection tour to Ningxia, urging local governments and people to work hard to develop the area economy and improve residents' living standards.

Although Ningxia had experienced rapid growth since China implemented policies to boost the economies of less developed areas in the country's west in 2004, the region should achieve greater social and economic progress, the plan said.

It stressed the importance of water efficiency in agricultural and industrial sectors, which is key to the sustainable development of Ningxia.

Located on the northwest Loess highland, Ningxia is a relatively dry, arid region whose economy is among the smallest in the country. Agriculture is largely irrigated by water diverted from the Yellow River, the country's second longest waterway.

According to the plan, Ningxia will build an energy and chemical industry base in its eastern region, an area with rich mineral resources such as coal, gypsum, oil and natural gas.

The Ningdong (Eastern Ningxia) energy and chemical base will receive a total investment of 50 billion yuan ($7.29 billion) by  year-end for projects of coal development, electricity production and the coal chemical industry, Chen Jianguo, secretary of the Ningxia Hui Autonomous Regional Committee of the Communist Party of China, told a press conference in Beijing on Wednesday.

Environmental protection and conservation of natural resources were also emphasized in the plan.