But he said it is still difficult for the social security system to accommodate the country's 800 million rural residents.

"The social security system is still fragile, with a great shortage of funding," Zhang said on the sidelines of the ongoing session of the 10th National People's Congress. "Our primary job is to solidify the hard-won fruits in this regard."

Those benefiting from the nation's pension system will increase from 130 million to 150 million by the end of the year, said Zhang. Those covered by unemployment insurance will grow from approximately 100 million to 110 million and those covered by the medical insurance will increase from 90 million to 100 million, he said.

These three programs form the backbone of China's social security system, which has already taken shape in the nation's cities.

Efforts will also be made to create 8 million new jobs, half of which will be offered to laid-off workers, to keep the jobless rate at below 4.5 percent, he said.

Addressing the same press conference, Vice Minister of Civil Affairs Yang Yanying said a living allowance had ensured a minimum standard of living for nearly all the urban poor.

Some 20.53 million urban residents have been helped by the monthly allowance so far, of whom 95.8 percent are people laid off from State-run factories and their families, Yang said.

"Governments at all levels have strongly supported the scheme," Yang added. She noted that the expenditure set aside for this purpose from the budgets of the central and local governments reached 11.26 billion yuan (US$1.4 billion) last year.

Providing social security remains a tough task given the great number of retired people and workers laid off during the State-owned sector's market-oriented restructuring, Zhang said.

China's registered unemployment rate stood at 4 percent last year, with 7.7 million classified as jobless and 4.1 million workers laid off from State-owned companies.

Absorbing the excess labor largely hinges on small and labor-intensive businesses, which are not necessarily State-owned, he said.

The central government's budget for this fiscal year has earmarked some 4.7 billion yuan (US$568 million) to promote employment in western China and in traditional industrial centers, in addition to cash for the social security fund and funding for laid-off workers.

The government will also experiment with old-age insurance and medical insurance programs in affluent coastal areas in a step-by-step manner, though doing so nationwide is not yet realistic, he said.

(China Daily March 13, 2003)