For two decades, China's economic reforms have sometimes been compared to trying to cross a river by feeling the stones under the water. Now, in the reform of our employment policies and practices, it is fair to say that China has already stepped to the other side of the river, though it has yet to completely dry itself.

For the first time since the beginning of the 1990s, Beijing has claimed a decline in urban unemployment. In 2004, Chinese cities created more jobs than set goals, according to the Ministry of Labor and Social Security, causing the national urban unemployment rate to go down from 4.3 percent in 2003 to 4.2 percent.

This is not a small improvement. In a large country like China, even when all the rural figures are not included, 0.1 percent is a lot of people. In fact, the target set for 2004 was 14 million jobs created, while in fact there were 14.9 million new jobs.

By contrast, this index, which counts urban adults who have registered with the government after losing their jobs, once rose from 2.9 percent in 1995 all the way to 4.3 percent in 2003.

Social scientists say that the actual number of unemployed people could be higher if we consider workers who have not officially registered and those who have not been officially laid off.

The initial fast increase in the unemployment rate was an inevitable result of the reform of State-owned enterprises (SOEs), and an effort to redress their poor management. The situation became worse as more workers, who had not been working properly, were laid off.

This added to the increasing under-employment in rural China and the rising demand from the millions of job seekers migrating from the countryside to the cities.

In 2005, despite the progress in 2004, there is still an enormous demand for jobs. According to figures from Chinese language media, there are 8.9 million urban adults who need jobs. They will be joined this summer by another 3.4 million university and college graduates.

In the meantime, SOE reform is continuing, with some old industries being phased out. There is a likelihood that more workers will be affected. This will be a problem particularly for middle-aged people who might find it harder than others to find new jobs.

In the long run, according to the National Bureau of Statistics, over the next 20 years the number of people aged 16 and over will remain above 900 million in China, and each year 10 million more people will join the workforce.

However, if the Chinese Premier is asked whether he feels the nation's unemployment challenge is now more daunting than before, he has good reason to be optimistic. And his confidence should come not just from 2004's decline in urban unemployment.

A more important source of confidence lies in the country's change in approach in dealing with its employment crisis. After many years of debating and experimenting, we have developed a new set of policies and practices.

The main thrust of these is to encourage private and foreign direct investment to help small and medium-sized enterprises flourish, and give them more freedom in recruitment. Life and work is also to be made easier for migrant workers.

The fact that more than half of migrant workers in a recent survey voted Beijing, the nation's capital city, as "a tolerant society able to accommodate differences," is a telling example of the changes as seen by of those who were often victims of the discriminatory recruitment policies of the 1990s.

Under central government guidance, more and more cities, which used to be run like self-enclosed fiefdoms, are welcoming outside investment and labour. Also, people are increasingly accustomed to the idea of building a career outside the State sector, and of working with colleagues from all over the country.

It should not be viewed as just a coincidence that these things are happening as our urban unemployment threat seems to have passed its peak.

(Xinhua News Agency March 4, 2005)