They said that the rates of basic medical, unemployment, workplace injury and maternity insurance for urban residents can be reduced (in some areas) by a proper margin for a maximum of 12 months next year.

The Ministry of Human Resources and Social Security, the Ministry of Finance and the State Administration of Taxation said companies in financial difficulties can delay payment of social security funds for up to six months.

But, the statement said, without elaboration the criteria of “financial difficulty”, the rate of contribution to pension funds should not be cut.

Typically, 20% of an employee’s basic salary are paid by companies to the pension fund while 8% by employee.

Medical insurance comprises payments of 6% of the salary by a company and 2% by the employee.

The ministries will also allow local governments to use unemployment insurance funds to subsidize jobs at struggling companies for a maximum of six months. But only companies that promise not to lay off workers or cut only a small number of jobs will be subsidized.

At the same time, all the measure should not decline people’s social security benefits and cause a shortage of the funds that back social welfare.

Other measures include:

• Setting up of special funds to help train workers;

• Encouraging employers and employees to negotiate and sign economic compensation agreements on job cuts.

The moves above are the latest ones from central government to help raise the rate of employment.

Before the Spring Festival, hundreds of thousands of more than 200 million migrant worker have lost their jobs and have had to go back home.

The rate of China’s urban registered unemployment stood at 4% in the third quarter, but may rise in the next quarter, according to officials earlier.

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As Customs authorities said, exports decreased to $114.99 billion by 2.2 percent in November, and it was the first monthly decline in 7 years. What’s more according to the Ministry of Commence, FDI dropped to $5.3 billion and fell 36.52 percent year-on-year.
However, the trade surplus of China soared to a record $40.09billion in November because import also decreased by 17.9 percent year-on year although increased by 15.6 percent in October.

The consumer price index (CPI), the main index to measure inflation, is expected to fall. In October the CPI, moderated to an 18-month low of 4 percent year-on-year. It had peaked to 8.7 percent in February.

And the producer price index (PPI) rose 2 percent year-on-year, the lowest since April 2006. Wholesale inflation eased to a 31-month low, dues to a fall in commodity prices because of rising inventory and weak demand.

Analysts said weak business sentiment has pushed up inventories of raw materials nationally, and it in turn depressed factory gate prices.

Inflation weakened for the most part owing to the recent decline in commodity prices, including those of crude oil and non-ferrous metals.

The wholesale inflation is in all probability to decline further in the coming months because the depression in global oil and commodity prices haven’t been fully taken into account in the latest data.

Business and consumer demand is also expected to weaken further in the short term, as the effect of government’s $586-billion stimulus package needs time and is expected to take a few months.

The analysts said that the exports and imports figures indicate domestic companies are wary of importing raw materials and investing anew because of the economic downturn.
“China’s exports and imports growth collapsed in November … showing that demand is simply disappearing,” said Wang Tao, an economist with UBS Securities. “We expect more negative growth in exports in the coming months, given the deteriorating global economic outlook.”

Jing Ulrich, JP Morgan chairman for China Equities, said: “It has become all the more important for the government to take steps to rebalance the drivers of growth.” “And with few options left to revive exports, the government is understandably focusing on boosting domestic demand and pushing forward infrastructure initiatives to absorb some of the migrant workforce.”

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The jobless rate could rise next year from 4% this year because of massive job cuts. If the rate rises above 5%, social stability could be threatened, a senior lawmaker warned.

So the government at the conference discussed measures to create new jobs and maintain the existing unemployment rate during the global financial crisis as rate above 5% will lead to a series of negative consequences. What is more, the number of poor urban residents would increase and living standards in cities would decline.

As a result, in order to keep the jobless rate low, local government should promptly hire more urban residents instead of migrant workers so that losing jobs would force millions of migrant workers to return to their hometown.

Although we don’t want to see the things above happen, it is the only way to keep the jobless rate low currently.

Due to the falling demand overseas having forced many factories to close, the job market in the labour intensive exports sector shrunk in the third quarter of this year.

According to a survey, because of the global financial crisis, the job market will get a two-year recession in the first quarter of next year.

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The conference which began in Beijing on Monday will come to an end today. The three-day event is expected to how more details on how the government will use fiscal and monetary measures to support employment and domestic demand, while reducing excessive dependence on exports.

According to Song Hong, a researcher with the Chinese Academy of Social Science (CASS), the meeting will announce the detailed measures for the goal of economic growth in 2009, the minimum required to control the unemployment situation.

Song was one of the two economists who attended a Nov 28 meeting with top Party officials to discuss economic priorities for 2009.

The nation’s economic growth dropped to 9% in the third quarter, and the situation may be worse because of the global crisis, the World Bank forecast earlier.

Such growth is absolutely not enough for China, because the nation needs to create 10 million jobs for fresh job seekers each year. Over the past months, the bankrupt of a number of factories in the costal export bases have caused layoffs of hundreds of thousands of migrant workers.

The government has to announce several stimulus packages and cut interest rates to spur domestic demand in the bleak situation.

It is said that the government may express how and where to use the stimulus package in detail at the conference.

The package could bolster annual GDP growth by 1% point by 2010, Zhang Ping, minister of the National Development and Reform Commission said earlier. Based on the data, 1% growth could create about 1million jobs.

Song forecasted that the policy makers may continue to the ongoing stimulus measures, because the $586 package is not enough in the worsening world economy.

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But analysts said the measures may not change the situation completely because the current prices have been much out of purchase ability of many buyers.

In order to lower the cost of home buying, the Ministry of finance and the central bank announced that property purchase tax would be lowered to 1 percent for people buying their first home if it is smaller than 90 sq m.

The rate before was 3 percent, while those buying houses smaller than 140 sq m paying 1.5 percent. The new rate will be taken to effect on Nov 1.

If it is the first time buying their house, the down payment ratio will be reduce to 20 percent, and banks will be allowed to charge as low as 70 percent of benchmark lending rates for such mortgages. Both measures are effective today.

Currently the down payment ratio is 30 percent, or even higher. In this case, those buying large luxury houses or in areas where property prices were deemed to be rising too fast.

The ministry and the central bank said the moves are aimed at increasing consumption to shore up the national economy reducing the damage we got from the global the domestic economic slowdown.

Because of the global financial turmoil, the world economy is expected to be further dragged down, which will reduce demand for Chinese exports. There has been obvious reduction in China’s economy.

Based on the opinion of Wang Lina, economist with the Chinese Academy of Social Sciences, the central government moves were expected to be a downturn, but we are still observing how the measures work.

Property prices in 70 major cities rose 3.5 percent in September from a year earlier, the slowest pace in at least three years, down from 5.3 percent in August. In month-on-month terms, they fell by 0.1 percent in September, which was the second month that prices dropped.

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