China 5-year plan aims for 5% jobless rate

By CNN's Alex Frew McMillan in Hong Kong

BEIJING, China -- China wants to make sure unemployment stays below 5 percent in its cities and towns through 2005 according to its latest Five-Year Plan.

The world's most populous nation also hopes to find jobs for as many as 40 million rural workers, according to the State Development Planning Commission, which developed the plan.

China's working population hit 712 million by 2000, the end of the ninth five-year plan, the commission said. This 10th installment runs from 2001 through 2005.

The State-run China Daily newspaper reported some of the details of the new plan on Tuesday.

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The commission also hopes to speed up the pace of improvement with China's social-security system, the paper said.

Mounting pressure from WTO

China will face mounting pressure on jobs as it enters the World Trade Organization, the commission noted.

That will produce a steady stream of between 5 and 6 million laborers, on top of 150 million surplus rural laborers now.

China's five-year plans became famous under Mao Zedong. The first one started in 1953, based on the Soviet plans that began in the 1920s.

Premier Zhu Rongji gave a report on this 10th installment earlier this year. Experts say they have less impact now, with state-backed companies playing a lesser role in increasingly market-driven China.

The country's official unemployment is just 3.3 percent overall. But experts throw cold water on that figure.

They note both that China has a large number of subsistence farmers who farm just to survive and that many workers are underemployed, with jobs that aren't necessary or efficient at state-backed companies.

Still, China has Asia's fastest-growing economy, and its past five-year plans have paid off.

The country, particularly its farmers, will face growing pressure as it opens up.

Rural-urban split threatens country

"A lot of the coastal areas are vibrant and dynamic," said Bijan Aghevli, head of economic research at J.P. Morgan Chase in Hong Kong.

"However there are a lot of inland areas where there is a lot of, underemployment. Those are the areas where they're vulnerable."

Some observers think the split between the haves in China's thriving cities along the coast and the have-nots in the interior, particularly the rural west, could be enough to split the country.

"That is going to be a difficult social area they're going to have to negotiate," Aghevli said. "China has been doing extremely well, there's no doubt about that. But as they go forward it's going to be more and more difficult."

The development commission has also developed a set of plans tackling 12 key economic areas, including joining the World Trade Organization.

It is now releasing details. The WTO plan calls for China to speed up reforming its regulations, overhaul its finance system and cut out protectionism.

Other plans look at issues such as population, urbanization and the environment. They are more specific than the five-year plan, China's state news agency, Xinhua, reports.

The urbanization plan, for instance, calls for 92 percent of China's urban dwellers to use natural gas by 2005.