During a Tuesday teleconference, the People's Bank of China (PBOC), the nation's central bank, and the Ministry of Labor and Social Security announced that the guaranteed small loan system for laid-off workers will be extended to cover 100 major cities by the end of the year.

Vice Premier Huang Ju said the loan system is an important reemployment policy, and he urged local governments and related ministries to implement the policy fully.

The Chinese government started encouraging the granting of small guaranteed loans to the growing ranks of laid-off workers in 2002.

There were 1.2 billion yuan (US$145 million) in such loans outstanding at the end of May, according to the PBOC.

The Ministry of Finance subsidizes most such loans, which are typically smaller than 20,000 yuan (US$2,400) and for terms no longer than two years. Commercial banks are generally reluctant to grant them owing to their low returns and high risks.

To help the loans play a bigger role in the nation's reemployment drive, the risk-sharing mechanisms need to be improved and procedures simplified. Efforts need to be made to ensure that fiscal subsidies are promptly granted, and financial institutions need to improve their services.

The central bank and the labor ministry also urged greater financial support for small and medium-sized enterprises, which are major generators of new jobs.

More than 28 million workers in the state sector had been laid off by the end of last year as a result of the reform of state-owned enterprises. Nearly 19 million of them have found work.

Tuesday's teleconference was attended by senior officials from the State Council and related government ministries, and major banks and local governments of 31 provinces, autonomous regions and municipalities.

(China Daily July 7, 2004)