Pictures from a Chinese job fair in 2009 with locals desperate to find work.

The cabinet of China has revealed new incentives on Friday that will help increase employment, allowing a bit more flexible tax breaks for companies to hire unemployed people, also offering preferential loans and incentives for new graduates and farmers. While currently facing slowed economic growth the officials of China have stated that it is a crucial policy priority to avoid mass unemployment, even though it is widely believed that the rate for unemployment is much higher than the official number. The cabinet or the state council has stated that companies will get many tax breaks if they employ people who have been without a job for six months or more; rather than a year or more, which was previously the case.

The majority of the preferential loans will be given to those who want to setup their own business and the whole process will be made easier, while banks shall be encouraged to lend money to small firms. Workers who have migrated and wish to return to their home town and start a business will also be helped with tax breaks and with simplified procedures, while people who have just graduated will receive reduced tuition fees and loans if they get a job in a less developed area of China – this applies only for a certain period of time. “The bottom line is that a stable employment rate which increases gradually is a key goal for macroeconomic control,” said the council of state. “Encourage people to make innovations and start new businesses.” The state council also added that companies will get priority bids for most of the large scale projects if they plan on creating large numbers of jobs.

A senior official stated last week that urban employment in the first quarter has slowed down to a 6 year low despite economic growth. However the ministry of labor has warned the government that they should not be too optimistic and that the speed of job creation is slowing down.

The rate of unemployment in urban areas was at 4.05% at the end of March having changed only by little since the end of 2014 when it was 4.1%. The annual economic growth of China has slowed down to a six year low total of 7% in the first quarter, maimed by a downturn in manufacturing and investment, and by a housing slump.