Unemployed workers in large cities such as Shanghai stand a better chance of landing another job than do workers in China's rust belt in its northeast or people living in towns dependent on a single coal mine that is closing down. Analysts estimate that the official urban unemployment rate of about 4 percent is probably understated by half, with far higher rates in one-industry towns that have all but ceased economic activity. As a possible solution, China is experimenting with the sale of rust-belt industries to foreigners, a practice previously barred on the grounds that steel, for instance, was a ''strategic'' industry. China also is considering opening up its banking sector to foreign competition, though the initiative is currently stalled. Since state banks lend overwhelmingly to loss-making state companies, there is little money left over for China's growing private sector.
Foreign banks are eager to lend in China but have yet to receive permission.
Negotiators on China's admission into the World Trade Organization had been hopeful that Beijing would loosen restrictions on foreign banks. But since the bombing of the Chinese Embassy in Belgrade by NATO warplanes in May, the talks have been on hold.