Jan. 7 (Bloomberg) -- China may face social unrest in 2009 as unemployment rises because of the global financial crisis, a state-run weekly magazine said in a report this week.

The Outlook (Liaowang) Magazine, issued by the official Xinhua news agency, said slowing economic growth may provoke anger among migrant workers and university graduates if they lose their jobs.

“We’re entering the peak of mass incidents,” Huang Huo, Xinhua’s bureau chief in the southwestern city of Chongqing, told the magazine. “In 2009, Chinese societies may face more conflicts and clashes that will test even more the governing capabilities of all levels of the Party and government.”

China is struggling to stave off the effects of a worldwide economic decline with 4 trillion yuan ($585 billion) in stimulus spending on new roads, railways, airports and low-rent housing. Asia’s second-biggest economy grew 9 percent in the three months from July to September, the slowest pace since mid-2003, threatening the expansion to which the Communist Party has pegged the credibility of its one-party rule.

There will be more than 7 million college graduates hunting for jobs this year, Huang said. The Chinese government’s goal for economic growth of 8 percent for 2009 would generate only 8 million new jobs for the nation.

“If in 2009 there are a large number of jobless rural migrant laborers who can’t find work for half a year or longer, fooling around in cities without any income, the problem will become even more serious,” Huang was cited as saying.

Labor Unrest

Labor strife is a “top concern” as the job outlook turns “grim,” Yin Weimin, head of the Ministry of Human Resources and Social Security said Nov. 20. The ministry is prioritizing pay and working-hour disputes to avoid “emergencies,” it said at the time.

As many as 20 million migrants may leave coastal cities in 2009 as the worst financial crisis since the Great Depression shuts factories making everything from clothes to toys and computers, Andy Xie, a Shanghai-based independent analyst and former chief Asia economist for Morgan Stanley, said last month.

Wages in the countryside are a third of those in the cities and officials are concerned that tensions may increase when workers return.

Such laborers make up a large percentage of the employees in hard-hit export manufacturers. They also aren’t covered by urban social security programs and have few job opportunities if they return to the countryside.

Fired workers smashed motorcycles and damaged company equipment during demonstrations in November in southern Guangdong.

To contact the reporter on this story: James Peng in Hong Kong at jpeng7@bloomberg.net

Last Updated: January 6, 2009 23:25 EST