Rising unemployment rather than economic slowdown appears to be the biggest challenge for the Chinese economy this year, according to economists.
According to a report by China Economic Monitoring and Analysis Center, over 90 percent of the 100 economists surveyed expressed the view that the growing number of jobless is the top challenge for the economy, followed by economic slowdown and social instability.
The survey, conducted in December, also revealed that economists' confidence in the economy has dropped to its lowest since 2004, when it was first introduced.
"The survey results show that government policies should be directed at addressing unemployment," said Lin Yixiang, chairman and CEO of TX Investment Consulting Co, which helped to conduct the survey.
The rising concern over unemployment also underscores the gloomy prospects of the nation's job market. Over the past few months, more than 20 million migrant workers, or a sixth of the total, have lost their jobs due to the economic slowdown.
Policymakers also forecast the registered urban unemployment rate, which excludes migrant workers, will hit 4.6 percent in 2009, up from 4.2 percent in the fourth quarter of 2008.
China's economic growth dropped to 9 percent in 2008, compared with 13 percent of 2007. The International Monetary Fund has predicted that the nation's growth would further decline to 6.7 percent this year, far below the long-time 8 percent target of the Chinese government.
As a response to the economic slowdown, the government announced a 4 trillion yuan stimulus package last November to prop up the weakening economy. Meanwhile, it's also drafting a plan to bolster the development of 10 key industries. Policymakers later said in January that they plan to spend 850 billion yuan by 2011 to provide accessible and affordable healthcare to the country's 1.3 billion people.
A total of 86 percent of the economists said the government's fiscal policy should focus on social spending, including education, medical care and improving the social security system. Economists also want the government to reduce direct investment in infrastructure projects, due to concerns about misallocation of resources and corruption.
More than 70 percent of the economists surveyed believed that the Chinese economy would continue to lose steam this year with the lowest point likely to occur in the second quarter. Three-fifths of the economists said the global economy would only start to recover in 2010.