The current situation in the job market is grim, with labor supply outstripping demand by 13 million people. Some observers have pointed out that the number of unemployed people in China is much higher than the government admits, and that China must step up its structural reforms, or else the huge army of unemployed people will have a huge impact on China's politics, society and economy in case of major economic fluctuations at home and abroad.

*The total employment problem is big and the contradiction is complicated*

Chinese Minister of Labor and Social Security Tian Chengping recently pointed out that the total employment problem in China is so big and the contradiction is so complicated that no other country has encountered it, with a gap between supply and demand of at least 13 million people.

Tian said China's severe job market is mainly manifested in the coexistence of total and structural contradictions in the supply and demand of labor, the superposition of increased pressure on employment in cities and towns and the accelerated pace of transfer of surplus labor from rural areas to cities and towns, and the intertwining of employment for the newly grown labor force and re-employment of laid-off and unemployed people.

China's economy has continued to grow at a high rate in recent years, with GDP growth exceeding 10 percent in the first three quarters of this year. Along with the rapid economic growth, China's employed population is also increasing dramatically. Information released by China shows that in the next few years, the number of people in need of employment in cities and towns will remain at more than 24 million a year, but the number of new jobs and supplemental attrition will be only 11 million, with the number of unemployed people exceeding more than 13 million.

China, in addition to the long-standing acute contradiction of labor oversupply and demand, there is also great pressure to re-employ laid-off and unemployed people in state-owned enterprises. at the end of 2005, the number of unemployed people in state-owned enterprises exceeded more than 2 million, and in the next three years, there will be more than 3.6 million people in state-owned enterprises and more than 4 million people in collective enterprises to enter the army of the unemployed. China expects that 1.24 million college graduates may not be able to find jobs during 2006, and more than 100 million rural laborers will be idle.

*ANALYSIS: REALITY FAR EXCEEDS GOVERNMENT NUMBERS*

The severity of China's employment situation is far greater than the Chinese government admits.

"The actual situation is much more serious than the stated figures. The employment problem for college students, our estimate of the gap must be at least 5 million to 6 million. The other thing is hidden unemployment. In fact, the employment situation is even worse when the state-owned enterprises go further down the road, and the face of bankruptcy and laid-off workers is even larger."

*Analysis: the reason is that structural reforms are not in place*

China's economy is growing fast, but structural reforms are not in place, thus giving rise to a lot of problems that are not adapted to or coordinated with the rapid development, and the employment problem is one of them.

He said, "The so-called structural reforms are not in place, one of which is the job market for labor, the development of small and medium-sized enterprises (SMEs), because the guidance of the government's policy does not encourage the development of this big part of the big head of the job-providing sector."

There are many problems constraining the development of small and medium-sized enterprises and private companies during China's economic opening up, including discrimination against these companies in lending at state-owned banks. He said the rapid development of China's economy relies mainly on foreign direct investment (FDI) and capital construction, but China's structural policy of maintaining the main socialist economy has led to the smoked cushioning of these FDI and capital construction without the development of small and medium-sized enterprises (SMEs), which has led to the accumulation of more and more serious employment problems over time.

*Analysis: small and medium-sized enterprises should be strengthened to accelerate the construction of small towns*

In the face of such a serious employment situation, China will be how to solve the problem of re-employment of laid-off people left over from history, how to solve the problem of rural labor force to the non-agricultural areas and the urban areas of the problem of transfer, how to solve the problem of adjusting the structure of the labor force and improve the quality of the workforce?

"There is no one hundred percent, very good solution to this way out, in addition to the painful determination to move forward, further marketization, further allow access to small and medium-sized enterprises to break the monopoly formed by the linkage between the rights and interests of the ****production party; the second solution to the way out is that we should accelerate the construction of small towns. At present, the policy guidance is very powerless, the money is not in place, the policy is not in place. Such investment in the development of small and medium-sized enterprises, coupled with urban construction, will be able to boost domestic demand. I think employment opportunities could increase by tens of millions."

China's official statistics show the unemployment rate for the first nine months of 2006 was just 4.1 percent. Although the figure is a far cry from the 15 percent unemployment rate in towns and cities and 30 percent in rural areas that some analysts have said, China acknowledges that the huge employment pressure will be a prominent contradiction in its economic and social development in the long term.

When there are big fluctuations in China's internal economic situation, and when there are major fluctuations in the world economy, especially in the US economy, which has a huge trade deficit with China, China's grim employment situation and its huge army of unemployed people will have a serious impact on the country's political and economic system.