Page last updated at 10:45 GMT, Thursday, 20 November 2008

China fears grow over job losses

By Michael Bristow
BBC News, Beijing

Looking for work in today's China

China has said its employment outlook is "grim", amid worries that economic problems could lead to social unrest.

Unemployment is expected to rise next year as businesses close because of a lack of orders.

Chinese leaders are already warning that an economic downturn could lead to further protests by those facing financial hardships.

It could also undermine the Chinese leadership, whose legitimacy has been built on improving living standards.

If people see that economic growth can no longer be maintained, then the very basis of the government has been eroded
Professor Joseph Cheng
City University, Hong Kong

Over the last few weeks, there have been an increasing number of signs that China is feeling the effects of a global economic slowdown.

Yin Weimin, minister of human resources and social security, said that had resulted in a "grim" employment situation in China.

"This is particularly the case for labour-intensive small- and medium-sized companies," Mr Yin told a news conference.

He said some firms had closed down altogether and others had reduced production, leading to workers being laid off.

'Mass incidents'

The authorities expect to keep the unemployment rate within its target of 4.5% this year, but that figure is expected to rise next year, it was revealed.

"It's extremely important to maintain employment stability," added Mr Yin.

Maintaining employment stability is important in China because the leadership fears people who lose their jobs could protest.

Meng Jianzhu, minister of public security, this week warned the police to be "fully aware of the challenges brought by the global financial crisis".

He said officers should be careful about how they handle "mass incidents", Beijing's euphemism for protests by ordinary people.

These protests are common in China, although they are often isolated incidents sparked by particular local grievances.

Several dozen protesters went on the rampage this week in the city of Longnan in China's western Gansu province.

According to reports from the state-run media, they attacked government buildings, damaged vehicles and injured police officers.

They were complaining at a local government plan to resettle them.


Video footage captured recent clashes in Gansu province

Professor Joseph Cheng, of Hong Kong's City University, said the legitimacy of the Chinese government was built on economic growth.

"If people see that economic growth can no longer be maintained, then the very basis of the government has been eroded," he said.

He added that the widening gap between rich and poor in China could exacerbate current economic problems.

"Because of this, the hardships of those who suffer might become unbearable," he said.

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