Soldiers' military performance will be evaluated according to rules jointly published by the Ministry of Civil Affairs and the People's Liberation Army's (PLA) Headquarters of the General Staff.
The rules aim to ensure those with longer service and greater contributions enjoy priority in post-service job assignments, an official statement said.
Retired soldiers will be evaluated on their military performance, service in remote areas, professional skills, and other experience.
The new rules came after President Xi Jinping announced in September that the 2.3-million-strong PLA - the world's largest army - will be pruned further by laying off 300,000 troops by 2017.
Reports said China plans to scrap two of the existing seven commands andthreecorps to streamline its forces which are increasingly getting modernised with latest weapon systems.