The Chinese government is facing a "severe" employment crisis with 34.5 million people expected to come on to the labor market from 2006 to 2010, according to a senior member of the Chinese People's Political Consultative Conference (CPPCC).

Chen Mingde, said at a meeting of the Standing Committee of the CPPCC National Committee, China's top advisory body, that job creation would be crucial to the government's aim of building a harmonious socialist society.

He said 25 million new job-seekers would enter the market this year, of whom 11 million might find jobs in urban areas, leaving 14 million unemployed.

Chen said employment opportunities could expand if local governments put job creation atop their agenda and vigorously develop the service sector, and small and medium enterprises.

Governments should launch special foundations to encourage private businesses, such as favorable loans, risk funds and investment guarantees for the self-employed.

He said local governments should encourage university graduates to work in rural areas in western China with favorable policies such as minimum salaries and medical care, and subsidies for those who go to undeveloped and remote rural areas.

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