China said on Monday it expects to lay off 1.8 million workers in the coal and steel industries, or about 15 per cent of the workforce, as part of efforts to reduce industrial overcapacity, but no timeframe was given.

It was the first time China has given figures that underline the magnitude of its task in dealing with slowing growth and bloated state enterprises.

Yin Weimin, the minister for human resources and social security, told a news conference that 1.3 million workers in the coal sector could lose jobs, plus 500,000 from the steel sector.

China's coal and steel sectors employ about 12 million workers, according to data published by the National Bureau of Statistics.

"This involves the resettlement of a total of 1.8 million workers. This task will be very difficult, but we are still very confident," Yin said.

For China's stability-obsessed government, keeping a lid on unemployment and any possible unrest that may follow has been a top priority.

The central government will allocate 100 billion yuan ($15.27 billion) over two years to relocate workers laid off as a result of China's efforts to curb overcapacity, officials said last week.

China's vice finance minister Zhu Guangyao quoted Premier Li Keqiang as telling US Treasury Secretary Jack Lew on Monday that the fund would mainly focus on the steel and coal sectors.

The number of layoffs was reasonable based on the government's capacity closure targets, said Jiang Feitao, an industry researcher with the China Academy of Social Sciences, a top government think-tank.

He said the funds being made available would be used only after the enterprises go bankrupt and settle their debts. He said local governments would also be responsible for dealing with those debts.

"It's difficult to predict a timeframe but it will not be a quick process. There are many issues to be dealt with, including how to pay debt as well as layoffs."

DOWNWARD PRESSURE

The world's second-largest economy grew 6.9 per cent in 2015, the weakest in 25 years, and the government aims to achieve economic growth of 6.5-7 per cent in 2016.

"The economy faces relatively big downward pressures and some firms face difficulties in production and operation, which would lead to insufficient employment," Yin said, adding that increasing graduates this year would also add pressure in the job market.

Despite of economic downturn, there have been no reports of mass layoffs as occurred during the global financial crisis, when over 28 million workers were laid off from 1998-2003.

The survey-based jobless rate published by the National Bureau of Statistics stayed at around 5.01 per cent at the end of last year.

Officials have said that the services sector has created more jobs to help absorb laid-off workers from the manufacturing sector.

In 2015, the contribution from the services sector to GDP climbed to 50.5 per cent, surpassing 50 per cent for the first time.

The registered urban jobless rate published by the human resources and social security ministry was at 4.05 per cent at the end of 2015.

However, many economists believe the few official employment readings in China underestimate the number of jobless. - Reuters