BEIJING - One of China's largest steelmakers plans to shed up to 50,000 jobs, its chairman said, as the country struggles to reduce overcapacity while growth in the world's second-largest economy slows.

The comments by Ma Guoqiang, the head of state-owned group Wuhan Iron and Steel, are a stark illustration of the challenges facing Beijing as it seeks to retool the economy while avoiding social unrest -- anathema to the leadership.

The firm's steel division currently has 80,000 employees but might retain only 30,000 of them, Ma said on the sidelines of the National People's Congress, the country's rubber-stamp parliament.

"Probably 40,000-50,000 people will have to find other ways forward," he told people.com.cn, a news portal run by the Communist Party's mouthpiece the People's Daily, according to a transcript on the website.

China's economy grew at its slowest pace in a quarter of a century last year and its outlook remains bleak, with the government last week lowering its 2016 growth target to 6.5% to 7%, down from "about seven percent" previously.

Authorities have prioritized reducing borrowing, overcapacity and inventory as they seek to maintain growth and make it more sustainable.

The government has announced a goal of cutting steel capacity by up to 150 million metric tons within five years. 

But much production is already inactive. Wuhan Iron and Steel is only running at 70% to 75% capacity, Ma said.

Global steel prices have plunged in the face of a worldwide glut and both the United States and European Union, whose own steel industries are deeply troubled, accuse China of selling underpriced steel in their markets.

China's minister of human resources and social security in February estimated there would be 1.8 million layoffs due to restructuring in the coal and steel industries, without giving a timescale.

The prospect raises the threat of mass unemployment and the possibility of protests as a result.

To cushion such blows, Chinese Premier Li Keqiang said Saturday the central government would allocate 100 billion yuan ($15 billion) over the next two years for a labor resettlement fund.

Wuhan Iron and Steel grew out of the first large steel plant built in Communist China, which started operations in 1958. According to the World Steel Association it was the country's fifth-largest steelmaker by output in 2014.

Ma did not specify the timeframe of the layoffs.

He said older workers will be allowed to retire early while some others will be offered positions at the firm's non-steel affiliates, and the company will subsidize those who have to seek jobs elsewhere.

Copyright Agence France-Presse, 2016