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Sunday, March 8, 1998 Published at 14:44 GMT

World: Asia-Pacific

China to lay off 3.5m state workers
image: [ State reform and unemployment are two of the major issues before the Assembly ]
State reform and unemployment are two of the major issues before the Assembly

China is preparing to cut the state workforce in the latest move to keep economic recession which has gripped South East Asia at bay.

The minister of Labour, Li Boyong, said redundancies in the state sector this year were likely to add about 3.5 million to the country's jobless total.

[ image: Labour minister Li Boyong wants reform despite redundancies]
Labour minister Li Boyong wants reform despite redundancies
Mr Li said the predicted job losses were due to changes in the employment structure as China felt the effects of enterprise reforms and technological progress.

Official estimates of Chinese jobless run as high as 15 million in the cities and 130 million in the countryside.

Unemployment is one of the key issues on the agenda at this year's 15-day sitting of the National People's Congress.

The announcement of state sector redundancies comes after 11.5 million workers were laid-off last year.

Now the Labour minister wants to turn around the state sector by pushing a variety of reforms, from installing more professional managers to creating a social security system for the casualties.

China is also considering forming conglomerates of existing enterprises to help Chinese industry weather foreign competition.

It was exactly such large companies that brought ruin to South Korea's economy.

But vice-minister of state economics, Chen Quigtai, said Chinese regulators would make sure large-scale enterprises kept liabilities down.

"If we can in earnest draw lessons from the Republic of Korea's case, then our effort to establish big enterprises and enterprise groups will be a smooth one," said Mr Chen.

Government reform

The government itself is not escaping the wave of reform.

The Secretary General of China's state council, or cabinet, announced plans for a sweeping overhaul on Friday.

Luo Gan said the changes were designed to trim the country's bureaucracy and make state-run industries more competitive.

Cuts were a vital part of China's move towards a market economy, he added.

[ image: Prime minister Li Peng reaffirmed 8% growth target]
Prime minister Li Peng reaffirmed 8% growth target
Earlier in the parliamentary session the Chinese Prime Minister Li Peng unveiled plans to eliminate 11 government ministries and high level bodies. He did not disclose which ministries would be affected.

The premier reaffirmed the government's target of 8% growth this year.

He said layoffs intended to return state companies to profitability would raise unemployment but he expressed confidence that the expanding economy would create new jobs.


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