BEIJING, July 8: China's economic priority should be to boost investment and create jobs for millions of unemployed workers in lumbering state enterprises, the Economic Daily said.

"The focus of our macroeconomic policy should change direction from economic stability to economic development," the official newspaper said without elaborating.

China tightened credit and curbed investment in 1993 to rein in galloping inflation, slowing down rapid economic growth for the sake of stability."On the one hand, we must implement policies with emphasis on development. On the other hand, we must implement industrial and investment policies that are beneficial to increasing employment," the newspaper said.

"Development... this has become a national consensus from top to bottom," the newspaper said, calling for investment in the energy and transport sectors.

China should try to attract domestic and foreign investment to create jobs, but should keep inflation in check, it said.

The financial news shrugged off widespread speculation that the government may ease the credit squeeze after whittling retail price inflation to 6.1 per cent in 1996 from 21.7 per cent in 1994. Retail price inflation was 0.8 per cent year-on-year in May.

Structural readjustments, or avoiding duplication of investment by state enterprises and provinces, was the key to avoiding a recession, the financial news quoted Ma Kai, vice-minister of the State Planning Commission, as saying.

The Economic Daily warned that China's army of unemployed was a problem worsening by the day."If unable to find work for two to three years, some jobless people could walk the road to crime. Society would be difficult to stabilise," it said.

"The basic problem in our society is... there are too many people who need to be fed, while the number of people who can create wealth and feed others cannot bear the burden," the newspaper said.

Chinese authorities would need to find jobs for 160-180 million workers between 1996 and 2000, the newspaper said without elaborating. China's official urban unemployment rate is about 2.9 per cent."There is a danger that the situation would unceasingly worsen," the newspaper said, adding that a planned unemployment relief fund was not the solution to the problem.

The Economic Daily blamed the problem on what it called "mistakes" in China's population policy and labour supply far outstripping demand.

The late chairman Mao Zedong promoted large families in the late 1950s and early 1960s to be ready for war.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.