"It is prohibited to artificially breed terrestrial wild animals and rare and endangered aquatic wild animals under national key protection for the objective of eating", the notice says. But the trade remains legal for other purposes, including research and traditional medicine.
Both steps are part of China's ongoing efforts to stem the transmission of viruses from animals to humans.
Government-sanctioned hunting for "scientific research, population regulation, monitoring of epidemic diseases and other special circumstances" is the only exception.
Watch the CBS news video updating the wet market situation in Wuhan.
A merchant at an indoor wet market in Beijing, China, in 2012. The buyouts have so far been presented in Hunan and Jiangxi provinces.
Farmers will be compensated to allow them to transition to alternative livelihoods such as growing fruit, vegetables, tea plants, or herbs for traditional Chinese medicine. Past outbreaks, including the 2004 Severe Acute Respiratory Syndrome (SARS) pandemic, have also been attributed to the live animal markets.
Hunan province will offer farmers compensation to the tune of 120 yuan (R301) per kilogram of cobra, king rattle snake or rat snake; 75 yuan (R180) per kilogram of bamboo rat; 630 yuan (R1581) per porcupine; 600 yuan (R1506) per civet cat; and 378 yuan (R949) and 2,457 yuan (R6169) per wild goose and Chinese muntjac deer respectively.
In Jiangxi, authorities will help farmers dispose of animals and provide financial aid. As per sources, stock of wildlife breeders in Jiangxi province itself is around $1.6 billion yuan ($225 million).
As Covid-19 has spread throughout the world, China has received harsh criticism of its initial management of the outbreak and appeals have been increasing for an independent investigation into the origin of the infection.
China has been cracking down on the country's wildlife trade since the pandemic started.