China introduces new measures to fight unemployment

Government becoming more open about the problem

March 24, 1998
Web posted at: 1:31 p.m. EST (1831 GMT)

BEIJING (CNN) -- The Chinese government on Tuesday invited international journalists to visit a job training center and announced a plan to have unemployed young people develop uncultivated land near Beijing. These were among the latest signs that China has become more open about discussing the nation's growing unemployment problem.

For years, China boasted of full employment. But many workers in state-run enterprises who had lifetime jobs with little to do are now being laid off to make those businesses profitable.

In one job-creation program, Beijing hopes to turn laid-off workers into farmers by encouraging unemployed people to develop uncultivated land.

"Going to the countryside to open up new land is going to become a new path of employment for laid-off and unemployed people in Beijing," the state-run Xinhua News Agency said Tuesday.

Beijing has more than 200,000 laid-off workers and registered unemployed. And the director of the Beijing Municipal Labor Bureau, You Lantian, said Tuesday that state-owned enterprises in the capital would lay off 157,000 people this year.

Already, the number of unemployed workers seen selling trinkets on the streets or running small street stalls is increasing sharply as factories lay off staff or shut down.

Under the new policies drawn up recently by the Beijing city government, unemployed people will be able to get their welfare money paid to them in a lump sum if they rent out land, Xinhua said.

Factoid: At the annual session of China's parliament earlier this month, former Labor Minister Li Boyong said 11.5 million state workers had been laid off by the end of 1997 and 3.5 million more would be this year. China's official urban unemployment rate hit 3.1 percent, but the huge army of surplus rural laborers does not appear in the official unemployment statistics.

Uncultivated land around Beijing can be rented for up to 50 years, the news agency said.

China-watchers say the new policy is reminiscent of the "Down to the Countryside" movement of the 1970s, when millions of Chinese young people were sent to rural areas to open up new land and learn about farmers' lives. The big difference is that the movement of youths to farms in the 1970s was not voluntary.

In another anti-unemployment measure, Beijing firms were offered cash rewards of up to 3,000 yuan ($360) for signing a two-year contract to employ unemployed men above age 40 or women above 35.

If a company hired more than 60 percent of its workers from the ranks of the jobless, the government could grant it a three-year tax holiday and a further two years of reduced taxes, in addition to easier bank loans, You said.

China's official urban unemployment rate hit 3.1 percent at the end of 1997. That is expected to rise to 3.5 percent by the end of this year.

But many economists believe the true figure could be several times higher.

China also has a huge army of surplus rural laborers who do not appear in the unemployment statistics.

Outgoing Premier Li Peng told parliament that job creation was a "pressing task."

Central Bank cuts interest rates

In a related move Tuesday, China's central bank announced a cut in interest rates that is intended to stimulate the economy.

The People's Bank of China said it would cut commercial bank lending rates effective Wednesday. The central bank will cut interest rates for bank loans by an average of 0.6 of a percentage point and for savings deposits by 0.16 of a percentage point -- slightly more, and slightly sooner, than some had expected.

The move was designed to help lower the debt burden of struggling state-owned enterprises, many of which are facing the prospect of bankruptcy due to heavy debt loads.

The central bank last cut interest rates in October 1997 to stimulate consumer spending and reduce the country's growing stockpiles.

However, domestic demand has continued to lag, and officials have begun to fear that the government's target of 8 percent annual growth will not be met.

The Associated Press and Reuters contributed to this report.

Newsmaker profiles:

• Li Peng - Chinese Premier
• Jiang Zemin - Chinese President

Related story:

• China leader pledges government cuts as parliament convenes - March 5, 1998
• Jiang urges China move closer to capitalism - September 12, 1997
• A CNN interview with President Jiang Zemin - May 9, 1997
• After Deng, China still faces tough problems - February 21, 1997

Related sites:

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• China.Com
• China News Services
• ChinaScape - Chinese Web Index
• The complete reference to China/Chinese Related Web Sites
• Welcome-To-China.com
• Chinese Embassy in Washington D.C.
• Inside China Today

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