BEIJING, Nov 21 (Reuters) - Pollution in China's vast countryside is threatening health, water and farmland, the government said on Wednesday, vowing to stop toxic industries shifting pollution to rural areas.

The top environmental official also told a newspaper that big polluters would be barred from stock listings.

China's cities have been the focus of official efforts to clean factory smoke and car exhaust from often smoggy skies.

But as richer areas have set stricter controls, polluting factories have sprung up in the poorer countryside, where hundreds of millions live.

"The environmental situation in our countryside is extremely grim," said the directive issued by the office of the State Council, the cabinet, on the government Web site (www.gov.cn).

"Some rural environmental problems have become a major factor threatening the physical health and property of farmers, and they are constraining the sustainable economic and social development of the countryside."

A government report said last month that birth defects in Chinese infants had soared nearly 40 percent since 2001, and officials linked the rise to environmental degradation.

Cleaning up the countryside will not be easy.

Factories can be big polluters -- but also big revenue contributers to stretched local governments and bribe-taking officials. And as rural residents become richer, they are also consuming more.

China has promised to cut the two key pollution measures by 10 percent between 2006 and 2010, but last year the country failed to meet the annual target.

The directive issued by the State Environmental Protection Administration (SEPA) and other agencies set broad goals for cleaner toilets and drinking water and reining in polluting factories.

"Strictly control industrial pollution in rural areas," it ordered, calling for tougher enforcement of emissions limits. "Adopt effective measures to prevent urban pollution transferring to the countryside."

The government also demanded stricter controls on poultry and livestock raising, as well as fish farms.

SEPA's chief, Zhou Shengxian, said that from next year companies "guilty of environmental violations or failing to meet discharge requirements will not be allowed to list their shares", the China Daily reported.

The threatened squeeze on stock listings -- which may be hard to enforce in China's disjointed regulatory system -- comes after vows to choke off polluters by withholding bank loans and export approvals. (Reporting by Chris Buckley, editing by Nick Macfie)

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