China's cities are dotted with scores of state enterprises bankrupt in all but name. Earlier this month, the Beijing Internal Combustion Engine Factory, one of the capital's largest employers, fired 5,000 workers age 55 or over and left them with no benefits at all. That's hardly an exaggeration. The Ministry of Metallurgical Industry says steelmakers will cut 700,000 jobs within three years, the nonferrous-metals industry announced 200,000 layoffs in the same time span, the railways are set to drop 240,000 workers, and a plane maker is cutting 150,000. Tianjin officials say 10,000 factory workers lost their jobs in the third quarter alone, part of a wave of layoffs that experts say could increase unemployment from the official figure of 9.6 million to 30 million in two years.
Real unemployment is even higher.
It is masked by xia gang, an administrative label for workers sent home but not officially discharged. In Nanchang, the capital of impoverished Jiangxi province, residents estimate as much as a third of the labor force has been furloughed. People are calm this year, but it's going to get worse. Nearly a fifth of such firms lost money in the 1997 first half, more than double the number in the year-earlier period. Already, street protests are breaking out regularly across China as the state sector implodes.