Beijing - As millions of migrant workers return to the countryside after losing their jobs with export-oriented factories, China is grappling with how to rebalance the economy to help the 900 million people living in underdeveloped inland areas.

"China's economy has slowed down together with the world economy, and its impact on our rural economy is deepening," Wei Chao'an, a vice agricultural minister said during China's annual parliament in March.

Yin Weimin, the social security minister, described China's employment situation as "very grave", but just how grave it is remains uncertain.

State media have used a ballpark figure of some 20 million migrants who have lost jobs in the wake of the global financial crisis. China has estimated a total of at least 130 million migrant workers among its 1.3 billion people.

The numbers are so huge, and their generation so politicized, that such statistics are only rough estimates at best.

"Jiangxi has more than six million migrant labourers working in coastal cities in ordinary years," said Hu Youtao, the financial director of Jiangxi, an inland province whose 40 million people provide cheap labour for Shanghai and south-eastern manufacturing cities.

"Now we estimate that about 800,000 people have come back and are staying in the countryside," Hu told German Press Agency dpa.

At least a dozen other provinces have similar stories, as China begins to pay the price of a heavy reliance on exports.

To address the problem, the ruling Communist Party is promoting domestic demand through easier bank lending, tax breaks, and infrastructure and employment programmes for poor rural areas.

It has promised to spend 4 trillion yuan (586 billion dollars) to stimulate the economy through infrastructure, social welfare and other programmes over the next two years.

State subsidies will also encourage rural residents to buy cars, motorcycles and household electrical appliances.

Premier Wen Jiabao recently said the development of small and medium-size businesses, including those started by returned migrants, would be crucial as they create 90 per cent of the jobs.

But many experts worry that the government measures will have only limited success and that China's already huge urban-rural income gap will grow even wider this year.

Researchers from Huazhong University of Science and Technology, in the central city of Wuhan, travelled to rural areas of 10 provinces to assess the impact of the global recession on migrant labour.

"There are very few cases of (returned migrants) starting businesses in our investigation," He Xuefang, a lead researcher from the university, told dpa.

The savings held by the migrants are too low and local banks are reluctant to follow government orders, making start-ups impractical for most migrants, He said.

He gave the example of a migrant in his 30's who returned to the south-western province of Guizhou and used savings to build a house that also serves as a small shop.

"Too many farmers have such an idea," He said. "So when I asked the small shop owner how much he could sell and how much he could earn in a full day, he told me he could sell goods worth about 50 yuan (7 dollars) and earn 7 to 10 yuan (1-1.5 dollars) per day."

Dong Leiming, another researcher from Huazhong university, also found that very few returned migrants were able to run successful businesses. "If you want to boost domestic consumption through returned migrant workers starting businesses, the effect is trivial," Dong said.

"On the other hand, building roads, for example - infrastucture is good and will boost employment in rural areas," he said. "But this is also not a 'regeneration' process."

"We're seeing more gambling, stealing and fighting," said Yang Qiping, the village head in Xiaobao in the eastern province of Anhui, where some 600 of the village's 2,000 migrant labourers have lost their jobs in recent months.

Rural incomes have grown steadily in recent years but not as fast as those in urban areas, creating a widening gap that the government has struggled to narrow. Economists warn that the gap could now widen again.

"With fewer job opportunities for migrant workers in the cities, the income of farmers as a whole will suffer a sizeable fall," Song Hongyuan, a senior economist with the agriculture ministry, told the official China Daily.

Many experts also see slim hopes of urban businesses coming to the rescue by moving to rural areas to take advantage of the cheap labour.

"Some people say the financial crisis is a chance for many industries to move to villages," Dong told dpa. "I think there is only a slight chance." (dpa)