BEIJING - CHINA will allow firms that are running short on cash to defer their payments into the country's social security fund next year, as a way of promoting a more stable employment situation, state media said.

Firms that encounter financial difficulty will be able to defer the payments for up to six months, the official Xinhua news agency said in an overnight report, citing unnamed officials with the Ministry of Human Resources and Social Security.

Provincial governments may also permit firms to temporarily pay lower rates for medical, work injury, unemployment and maternity insurance, Xinhua said.

Troubled companies that dismiss fewer workers than they otherwise would will be allowed to use unemployment insurance funds to pay their social security subsidies, it added.

Rising unemployment has fed Beijing's fears of unrest as forecasts for China's growth next year fall below 8 per cent, seen as a minimum needed to create jobs and maintain social stability after years of double-digit expansion.

Authorities have ordered banks to direct more lending to small- and medium-sized enterprises, which are major employers, and told companies to avoid large-scale lay-offs and to settle any labour disputes quickly.

Premier Wen Jiabao also signalled to the country's university students that the government is concerned about their plight, visiting a Beijing university over the weekend to reassure students they would be able to find jobs amid the current global slowdown. -- THOMSON REUTERS