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Horde of unemployed worries stability-obsessed China

More than a million jobless Chinese graduates could make coping with unemployment harder than it was during the Asian financial crisis, the head of a training group said as China frets over stability amid the economic downturn.

A commentary in the Communist Party mouthpiece, the People's Daily, said on Wednesday China faced an arduous task in maintaining social stability in the face of serious economic challenges.

China is worried that the thousands of factories shutting or laying off workers, especially along the export-dependent coast, could lead to unrest if the unemployed hit the streets, threatening Communist Party rule.

Chen Guangqing, of the National Association of Vocational Education, said the country would also have to find a way to absorb migrant workers who have lost jobs but are unable to return to farming in their villages.

“The employment situation may be worse than the 1990s ... This time, college graduates are not finding work, and there are so many of them,” Chen told Reuters.

In the late 1990s, China's government weathered mass unemployment as the Asian financial crisis and bankruptcies of state-owned enterprises slowed the economy to a crawl.

Inflation and poor job prospects for graduates also marked the run up to the 1989 student-led protests which were bloodily suppressed around Beijing's central Tiananmen Square on June 4 of that year.

Many college graduates now lack the skills needed to compete for jobs in a fast-changing economy but are unwilling to take less respected jobs, Chen said.

More than six million students will try to enter China's workforce next year, half a million more than last year. Up to a quarter could have difficulty finding jobs, the Chinese Academy of Social Sciences said on Monday.

At least four million migrant workers who have lost jobs have left the cities and are looking for part-time work in large towns and county seats, rather than going back to their villages. Urban unemployment is already at 9.4%, double the official figure, CASS estimated.

Labor strikes, small scale protests and land disputes are already cropping up across the country of 1.3 billion people. Disappointed students who will soon graduate add to the problem.

In a sign of local government's sensitivity to unrest, suburbs in the southwestern city of Chongqing raised retired teachers' pensions after coordinated demonstrations this autumn.

The People's Daily said economic development in China faced serious challenges due to the financial crisis.

“The factors for social instability have increased, contradictions happen more frequently and more easily, and maintaining social stability is still an arduous task,” it added.

The commentary said the key was to make sure protests - often termed in official parlance “mass incidents” - did not spin out of control.

“If the problem is grabbed early and when it is small, contradictions can be nipped in the bud and will not become big incidents,” it said. “Every department must do its job and fulfill its responsibilities; that way social stability can be maintained.”

Faltering economic conditions have raised the specter of growth falling below 8%, which the government regards as a benchmark to create enough jobs to sop up excess labor and guarantee social stability. (Reuters)