Jobless workers threat to system

PUBLISHED : Wednesday, 03 September, 1997, 12:00am
UPDATED : Wednesday, 03 September, 1997, 12:00am

Rising unemployment could become the Achilles heel of China's economy, economist Liu Guoguang warned yesterday.

An expanding workforce, migration of rural farmhands to cities and lay-offs from state owned enterprises would inevitably aggravate the problem, he said.

Mr Liu, a consultant to the Chinese Academy of Social Sciences (CASS), made the remarks at a seminar in Beihai, in Guangxi province.

The seminar was jointly organised by CASS, the Ministry of Foreign Trade and Economic Co-operation, the Organisation for Economic Co-operation and Development and the Guangxi Government. Other participants included Chief Economist of the State Statistical Bureau Qiu Xiaohua, CASS Vice-president Wang Luolin and economist Zhang Zhuoyuan.

According to Mr Liu, China had at least 120 million surplus labourers in rural villages who are eager to migrate to cities to find work.

Demographic changes also meant more young people would join the workforce in coming years, he said.

It is estimated that the urban unemployment rate has reached five to eight per cent and there are at least 12 to 14 million redundant city labourers.

Mr Liu said the Government must avoid making excessive investments in the economy, hoping to create jobs for the unemployed.

In the short term, the Government would have to rely on administrative fiats to keep unemployment down, said Mr Liu, adding that China also needed to re-adjust its industry mix in the long-run.

Wang Luolin was more bullish. China should be able to maintain its high-speed economic growth for the next three years, after the Government managed to achieve a 'soft-landing' last year, he said.

'Based on analysis, China's economy should be able to maintain eight to nine per cent growth.'