The Government should not allow fears of unemployment to slow reforms of state-owned enterprises, Beijing economist Dai Yuanchen said yesterday. 'As I predicted several years ago, job creation will be the biggest problem facing China in the coming few decades,' he said. Many local officials have complained that although the Government has succeeded in lowering inflation to below four per cent this year, its austerity measures have led to rising unemployment and poor business for many state firms. Labour Minister Li Boyong said China's registered urban unemployment figure was 5.52 million at the end of last year but a survey put it at almost nine million. Figures did not include the millions of surplus rural labourers who moved to the cities in search of work. Mr Dai said that as China pushed forward with reforms of state-owned enterprises, the Government would have to deal with rural unemployment and the millions of high school graduates each year. Private companies would soon become the biggest employers in China, he said, adding that they would also absorb laid-off workers from state-owned enterprises. Mr Dai said the rise of the private sector would not threaten the state economy. Job retraining and a better-administered social insurance system remained the best weapons to deal with unemployment. But he warned that there was not a universal formula for all provinces and poor or inefficient handling by local officials could lead to protests or riots by disgruntled workers. The professor predicted that a new form of labour union would appear as more state workers joined private companies. At present, official unions only cater to workers of state-owned enterprises and collectives formed by the workers. The professor has said job losses would be offset by an increase in employment opportunities created by rapid development in non-public sectors.