The State's industrial sector has traditionally assured employment and social security cover for a large share of China's salaried employees. But in recent years, its pay-rolls have been cut strongly through the privatisation of small companies and the rationalisation of large ones. However, these reforms have not radically improved the financial situation of State enterprises. The banking system has been weakened by the continued accumulation of bad debts, while the development of collective and private sectors is constrained by limited access to bank financing. Yet, the expansion of this sector is important for job growth to pick up in industry and services, and to halt the rise in unemployment and informal labour.
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