After churning out a series of aggressive measures to stimulate its economy, the Chinese government yesterday announced interest rates for the fifth time in three months amid fears that economic growth may fall significantly in the fourth quarter leading to more job losses and unrest in the hinterland.

The world's fourth-largest economy cut one-year lending rate by 27 basis points to 5.31per cent from 5.58 per cent. The Chinese central bank, the People's Bank of China, also cut one-year deposit rate to 2.25 per cent from 2.52 per cent. The new rates will take effect on 23 December.

With recessions in the US, Japan and most parts of Europe, last month the POBC cut the benchmark one-year lending rate to 5.58 per cent from 6.66 per cent and the one-year deposit rate to 2.52 per cent from 3.60 per cent. These cuts, of 108 basis points each, were the largest since the Asia crisis of the late '90s.

The bank reserve requirement ratio, which was cut four times since September, has once again been cut by 0.5 percentage points by the POBC and will come into effect from 25 December.

Last week, Zhou Xiaochuan, governor of the People's Bank of China (PBOC), the central bank said that China will face pressure to cut interest rates until the beginning of next year. (See: China likely to further cut interest rates)

Many economists have said recently that China's revised growth of 9 per cent is most likely unrealistic and may hover around 5 to 6 per cent next year as the country's industrial output growth dropped for the fifth straight month, to 5.4 per cent year-on-year in November – the slowest in nine years.

China's industrial output grew at 11.4 per cent in September this year and declined to 8.2 per cent in October and 5.4 per cent in November.

According to the state Xinhua News Agency, Premier Wen Jiabao during a visit to a Beijing university, said "Currently we are most concerned about two issues, migrant workers returning home and employment for graduates and put the issue of graduate employment first."

The number of educated Chinese will grow from 5.59 million this year to 6.1 million next year and as 24 million from rural areas seek jobs in cities which can cater to only 12 million jobs.

Earlier last week, Chinese President, Hu Jintao had also warned that the country faced a "grim" jobs situation next year. ''Next year's employment situation, impacted by the global financial crisis, will be extremely grim," state media quoted Hu as saying during a visit to the north-eastern province of Liaoning. (See: China industrial output growth hits a 9-year low in November)

According to Chinese officials, unemployment was worse in the month of October and is likely to go down further in the first quarter of 2009 with China experiencing a stable growth of 4 per cent during the first six months but became worse last month and jobless figures could hit 4.5 per cent by the year-end with many company's resorting to massive layoffs which could lead to social unrest.

Evidence is mounting that an estimated 130 million rural migrant workers who have taken up jobs in Chinese cities as construction workers, factory workers and street cleaners in the boom time are facing bleak prospects.

The country is facing unemployment problem due to massive decline in exports and small and medium firms which have labour intensive work like the manufacturing hubs, in Zhejiang and Guangdong provinces have seen massive layoffs due to production cuts and factory closures

China's exports declined 2.2 per cent year-on-year to $115 billion in November - the first monthly fall since June 2001, China's General Administration of Customs (GAC) said.

November exports were down 10.4 per cent month-on-month, reflecting the slump in US demand after the financial bubble burst. (See: China's exports down 2.2 per cent in November)

Rises in the consumer price index (CPI) slowed for seven straight months because of the sharp fall in commodity prices on the world market and sluggish global demand amid the financial crisis.

Latest figures show the national economy is slowing drastically with exports dropped for the first time in seven years by 2.2 per cent and industrial output growth slowed to 5.4 per cent year-on-year in November from 8.2 per cent in October.

Global exports declined 26.7 per cent resulting in China's trade deficit recording to ¥223bn (£22 billion) and that to the US fell almost 34 per cent. Since current trade calculations were introduced in 1980, both these have fallen very sharply.

Moreover, China's major trade partners such as the US and Japan are in recession. Japan's exports plunged to a record 26.7 per cent month of November due to the collapse in global demand for its product (See: Global recession gives Japan's exports the chill) 

Japan was forced to bring its interest rate to zero in line with that of US last week on fears the economic downturn post-war period could be the longest and possibly deepest the country has faced in recent times. (See : Japan projects no growth in 2009 and Japan hints at rate cut after yen surges) 

China's leaders announced a 4 trillion yuan ($586 billion) economic stimulus package and a series of other fiscal stimulus initiatives in recent weeks to fend off a deepening economic slowdown and drastic reduction in sales.

China's annual inflation gauge fell to a 22-month low of 2.4 per cent in November, which gives the central bank scope to cut interest rates further, according to some analyst.

Last month, China announced a 4 trillion yuan ($584.8 billion) stimulus package to boost the economy. (See: China pumps $586 billion to bolster economy)

The Chinese State Council unveiled a three years real-estate stimulus package aimed at 7.5 million low-income urban families and 2.4 million households living in shantytowns in developing homes emphasizing ownership.