They suggested that the government focus on boosting labour-intensive industries such as factories during the current economic restructuring. And more support should be given to small- and medium-sized enterprises as these firms have become the biggest job-creators.

"Full employment should be given top priority ... and the growth rate of GDP should not be the ultimate aim of the government," said Tang Min, principal economist with the Beijing-based PRC Resident Mission of the Asian Development Bank.

Other leading economists and labour science experts have urged the government to strike a balance between economic development and employment in a bid to tackle the worsening job situation.

Failure in dealing with mass unemployment will finally drag down China's economic growth, they have warned.

This is because a tremendous number of jobless people with low purchasing power will lead to decreased domestic consumption, which in turn will hinder economic development.

The government must introduce an employment-oriented long-term strategy to ensure that economic growth is both stable and sustainable, they said.

It is the jobless rate, rather than GDP growth, that is the most important indicator of a country's economic development, Tang stressed.

His remarks came as China's urban unemployment rate is expected to soar in the coming four years. The rate stood at 3.6 per cent last year, with 6.81 million out of work.

But experts predict that more than 10 million people will join the jobless ranks in the next few years.

The Chinese Government had said that only by achieving an annual GDP growth of more than 7 per cent can the country guarantee full employment.

However, faster GDP growth will not necessarily lead to an automatic increase in job opportunities unless pro-active employment policies are put in place, said Mo Rong, deputy director of the Institute for Labour Studies under the Ministry of Labour and Social Security.

Mo said joblessness in China is caused by a quick decline in employment elasticity.

Employment elasticity indicates an increase in employment in response to economic growth. A reduction in employment elasticity suggests that the rate of increase in jobs is on the decline.

The elasticity fell from 0.323 to 0.064 during the past two decades and may continue to fall, according to a study by prominent economist Hu Angang of Tsinghua University.

Flaws in the government's economic-development policy are to blame for the problem, Mo said.

(China Daily July 8, 2002)