The nation's State Council, or cabinet, said it would help train one million unemployed graduates in the next three years to boost their qualifications, the official Xinhua news agency said.

The government would also give preferential loans of up to two million yuan (300,000 dollars) to companies that recruited graduates, the report said.

Graduates who were willing to set up their own businesses would qualify for loans of 50,000 yuan.

The announcements come days after China announced that more than half a million people lost their jobs in the last three months of 2008 due to the global economic crisis.

As of December 31, 8.86 million urban residents were registered as jobless, up 560,000 from the end of the third quarter, ministry of human resources spokesman Yin Chengji told reporters on Tuesday.

The urban jobless rate stood at 4.2 percent at the end of last year, up from 4.0 percent at the end of 2007, Yin said.

But the actual jobless population may be much bigger than the official figure, which does not include millions of migrant workers and university graduates.

Chinese authorities fear that rising unemployment could provoke deep unrest in the country, and have already taken a number of measures to try and tackle the problem, including ordering state-run firms to ease up on job cuts.

Despite the measures, the government has scaled down its ambitions, targeting the creation of nine million jobs this year, one million fewer than last year, according to Yin.

The State Council also announced that the civil service and state-owned companies should not charge job application fees to graduates whose families faced financial hardship, Xinhua reported Sunday.

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