Central Economic Work Conference Convenes in Beijing

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Dec. 8 – China’s top economists are meeting in Beijing today until Wednesday to lay the ground work for 2009’s economic and fiscal policies.

Authorities want to maintain an economic growth rate of at least 8 percent and provide ten million new jobs for graduates. In the past months, the global financial crisis has led to massive layoffs for migrant workers employed in coastal cities.

Growth has already dropped to 7.5 percent and unemployment has been rising steadily. The government is concerned that if the trend continues it may result to social unrest and domestic instability thus top priority will given to job creation.

Official figures from the Ministry of Human Resources and Social Security says that unemployment rate is at 4 percent. Reuters reports that Zhou Tianyong, a researcher at the Central Party School, forecasts that the number of jobless people will climb as nation’s growth rate slows to about 7.5 percent next year.

He added that in his survey of the country’s prospects, the government’s firgure of 4 percent unemployment rate is artificially low and had deceived leaders into underestimating threats to social stability from slowed growth.

He contends that the real rate of urban joblessness came in at 12 percent this year and should rise to 14 percent.

“The meeting will detail measures for achieving at least 8 percent growth in 2009, the minimum required to keep the unemployment situation under control,” Song Hong, a researcher with the Chinese Academy of Social Sciences told China Daily.

According the China Daily, policymakers will discuss raising the threshold of personal income tax from RMB2,000 to RMB3,000 monthly. This will be combined with the previous tax cuts for local businesses that should increase domestic consumption and corporate investment. There have also been reports of the Chinese currency possibly depreciating after the conference to help the flagging export market.

Currently, domestic consumption contributes only half to China’s economy in comparison to the average rate of 70 percent for developing countries and 80 percent for developed economies.