China will face serious employment difficulties during the next two quarters with 60 percent of new graduates facing unemployment, according to a report published by the National Development and Reform Commission.

The number of graduates will increase by 22 percent over the previous year to reach 4.13 million while the job market can only soak up 1.66 million new graduates, down 22 percent on the previous year.

"It is hard to create new jobs in large numbers due to surplus production capacity, more trade frictions and the revaluation of the yuan. As a result, it will be less easy to tackle employment pressure", said Zhang Xiaojian, vice minister of the Ministry of Labor and Social Security.

According to the report, due to stable economic growth, the first quarter saw a healthy employment situation with a registered urban unemployment rate of 4.2 percent, 2.52 million newly-added urban laborers and 1.03 million laid-off workers reemployed.

The level of surplus labor this year will reach 14 million, around one million more than last year, the report said.

(Xinhua News Agency May 8, 2006)