Dwindling farmland and widening income gaps are among the most severe social problems China faces a quarter century after kicking off economic reforms, state media said, citing a top government think tank.

The China Academy of Social Sciences (CASS) has sounded the alarm in an annual report on the social situation in the country of 1.3 billion, the People's Daily reported.

Top among the list of potentially explosive issues are 40 million farmers who have lost their livelihoods because developers have confiscated their land to build industrial plants and houses, it said.

Another major challenge is widening income disparity, a problem that seems to worsen every year, according to the report. The richest 10 percent of China's population now earn 9.5 times as much as the poorest 10 percent, up from 9.1 times in 2003, it said, citing a CASS survey of 50,000 urban residents.

Pointing out social problems is becoming more politically correct in China, especially under the country's fourth generation of leaders who seek to rally support by profiling themselves as champions of the poor.

Other issues addressed by the CASS report include unemployment, which has ballooned with tough reforms and downsizing of inefficient state-owned enterprises. Every year, China needs to find jobs for another 24 million urban residents but at the economy's current growth rate only about nine million jobs can be created, it said. On top of this, the country's universities turn out growing numbers of graduates and currently 740,000 of these highly educated urbanites cannot find work.

Paradoxically, China's fast economic growth over the past two years has made low-income families less satisfied with their lives. This is because inflation has especially affected the price of food, which takes up as much as 60 percent of their total expenditure, CASS said

Source: AGENCE FRANCE-PRESSE