UPDATE 1-China says jobless rate lowest in years, but challenges persist

* Unemployment rate falls to 3.95 pct by end-Sept, lowest in years

* 10.97 mln new jobs created in China from Jan-Sept - ministry

* Jobs, social security still face challenges - ministry official (Adds background, comment from minister)

BEIJING, Oct 22 (Reuters) - China's unemployment rate has hit its lowest rate in multiple years at 3.95 percent by the end of September, but employment and social security still face challenges as the economy pushes ahead with structural reforms.

The ministry of human resources and social security said in a statement on Sunday that 10.97 million new jobs had been created in China from January to September this year, a growth of 300,000 compared with the previous year.

The figure represents having essentially fulfilled the ministry's year-end target, the ministry said in a pre-prepared statement given to reporters.

Premier Li Keqiang said in March that China added 13.14 million new urban jobs in 2016 and aims to add another 11 million this year while keeping the registered unemployment rate below 4.5 percent.

Despite being ahead of schedule, Yin Weimin, head of the ministry, told reporters that employment and social security in China sill face difficulties and challenges. He did not elaborate.

The announcement was made as a part of a once-ever-five-years congress of the ruling Communist Party, which opened on Wednesday and runs until next Tuesday.

At the congress, the Party sets broad policy directions and reshuffles top leaders. As China's economy slows, Beijing has made increasing efforts to stave off mass unemployment that may spark social unrest.

China's official unemployment rate has remained generally stable as economic growth has dipped to a 26-year low and the government forges ahead with ambitious plans to cut back on industrial capacity.

Many analysts say, however, that the government figure is an unreliable indicator of national employment conditions.

On an annual basis, the official unemployment rate was last below 4 percent in 2001, when it was 3.6 percent, according to data from the National Bureau of Statistics. The rate ended 2016 at 4.02 percent after not budging from 4.1 percent from 2010-2015.

The government has said that some sectors, especially those targeted by capacity cuts, such as coal and steel, still show signs of unresolved employment challenges.

The ministry of human resources in April said that China would need to resettle about half a million workers that lose jobs in the coal and steel sectors this year and will speed up development of a "black list" system for firms with wage arrears. (Reporting by Yawen Chen; Writing by Christian Shepherd; Editing by Jacqueline Wong)