Jobs. And more jobs. That will be the focus of the central government's economic restructuring this year as it seeks to generate more employment.

The labour-intensive sectors, which have been squeezed out of the limelight for years by a nation-wide passion for high-technology development, are back in vogue. Both State leaders and economists have been repeatedly stressing the importance of creating jobs urgently needed by the growing number of urban laid-off workers and the huge number of surplus rural labourers.

According to economists' estimates, 25 million registered urban residents are between jobs, with an unemployment rate of 10.2 per cent, close to the international warning line of 12 per cent.

Meanwhile, China has 470 million rural labourers, 190 million who are needed for agricultural production and 130 million absorbed by rural enterprises, leaving a surplus of 150 million, or 30.6 per cent.

Besides, China's current 713 million labourers will increase to a peak of 781 million in 10 years before dropping to 775 million in 2020.

There will be 162 million people needing jobs in the next five years, roughly 30 million a year. Deducting the roughly 10 million job vacancies created by retirees, the country needs to come up with 20 million new jobs a year.

According to most optimistic estimates - every 1 per cent GDP growth can bring about 700,000 to 1 million jobs, China will need 741 million labourers as late as 2020, indicating that the country will face immense employment pressure in the next 18 years.

Realizing the mounting unemployment pressure, China is looking back at labour-intensive sectors again for a solution.

Fostering faster urbanization, promoting private business development and rallying both central and local efforts to expand the service sector will be among the key focuses of national economic restructuring in 2003, according to the State Information Centre (SIC).

Job manufacturing

The SIC, a State Council thinktank, has suggested that the government use policy incentives and financial support to encourage the development of labour-intensive industries such as textiles, garments, food, plastic, machinery and construction to absorb laid-offs, which increased to 7.4 million in October 2002 from 6.8 million at the end of 2001.

For years, the manufacturing industries contributed 40 per cent of GDP, half the national fiscal revenue; created jobs for half of city labourers and migrant farmers; and produced three-fourths of China's export earnings.

Today China is the largest manufacturer of more than 100 important products such as steel, cement, digital switchboards and electric home appliances.

The SIC asked the government to take advantage of the flooding in of overseas manufacturing facilities as a result of world economic recession. By 2005, one-third of original-equipment-manufacturing (OEM) activities in the world are predicted to be based in China.

The creation of jobs by the manufacturing industries also has other factors in its favour.

The production of electrical home appliances is expected to pick up this year after last year's lull with exports witnessing a robust growth, the SIC predicted.

With the narrowing of the technological gap between domestic and foreign products, China-made products are expected to win the favour of foreign consumers; and reduction in the costs of imported raw materials and equipment as a result of lowering tariffs will also make Chinese exports more competitive.

Demand for energy and raw materials, which absorb large amounts of labourers, will rise this year thanks to soaring consumption and large infrastructure projects.

Consumption of electricity may increase by 8 per cent in 2003 because of growing demand in the steel, metallurgy, coal and chemical industries, the SIC predicted. Demand for coal and oil will also pick up.

Demand for raw materials is expected to increase greatly, thanks to thriving real estate market; the fast-growing automobile industry; and huge infrastructure construction projects such as the project to divert water from the Yangtze River to northern China, the West-East gas pipeline and the railway linking Qinghai Province with the Tibet Autonomous Region.

As a result, steel output will reach 207 million tons this year, increasing by 15 per cent; and cement output may reach 760 million tons, up 7.4 per cent.

However, Zhu Zhixin, director of the National Bureau of Statistics, warned that China should not only take the opportunity of the growth in the manufacturing sector to create more jobs, but also upgrade the sector with overseas technology.

Serving the jobless

The government will make more efforts to develop tertiary industries this year with a series of preferential policies in taxation and financial support.

The SIC said that the government will make more efforts to foster service sectors such as consultation, media, technological service, retailing, wholesale trade, logistics and tourism.

Furthermore, the government will encourage the establishment of service businesses in urban residential communities.

The tertiary industry, which grew by 6.6 per cent last year, is expected to increase by 7.4 per cent.

The SIC also said that the government will also further open the tertiary industry to foreign investors to help upgrade efficiency and services.

The thinktank predicted that a batch of foreign M&As will emerge in the banking industry. The foreign partners will be among the 400 foreign banks which have entered or prepare to squeeze into China, more than 30 of which have been authorized to deal in Renminbi.

Meanwhile, domestic insurers are expected to beef up capital and technology to raise their competitive edge.

China Life, one of the biggest domestic insurers is restructuring into a joint stock company preparing for listing.

The SIC said that 45 foreign insurance companies may set foot in China this year and the government will phase out geographical restrictions on foreign insurers in 2004 and allow foreign insurers into group, health and pensions in 2006.

In the securities market, four joint ventures will be allowed to sell fund units for the first time and qualified foreign institutional investor (QFII) scheme is expected to be introduced this year, the report said.

Besides these industries, the pharmaceutical and logistics industries will also see development opportunities.

Helping rural labourers

Urbanization will further pick up speed in the eastern areas with mega city groups to appear around metropolises such as Beijing, Shanghai and Guangzhou, said Chen Dongsheng, deputy head of China Society of Regional Economic Development.

Meanwhile, the vast western areas, which have only 121 cities, including seven cities each with a population of more than 1 million population, will start to see the establishment of a large number of medium-sized cities and towns.

China needs to increase its urban population from roughly 30 per cent to 70 per cent in the next 15 to 20 years to absorb the huge number of redundant rural labourers.

The nation's social structure is expected to see dramatic changes in the next 20 years, with 800 million farmers becoming residents of cities and towns, said Zhu Tiezhen, deputy chief of China City Development Society.

The country's urbanization rate will reach about 60 per cent by 2020, compared with only 37.66 per cent in 2001.

Private employers

The fast growth of non-State-owned businesses represents a long-lasting force to create jobs.

China boasts more than 2 million private businesses, which produce 20 per cent of the national economic output value.

More vigorous expansion of non-State businesses is expected this year as major moves decisions were taken at the 16th Party congress to encourage the development of the private economy and protect private properties.

A national survey by the China Entrepreneurs Research System revealed that the percentage of private businesses preparing to increase investment is 44.6 percentage points higher than those predicting cuts of investment. The figure for SOEs increasing investment is only 17.8 per cent.

China created over 170 million jobs in the last 20 years, with the proportion of people working in the State sector shrinking from 78 per cent in 1980 to 38 per cent in 2000.