The Chinese Communist Party's (CCP) ongoing efforts to reduce state sector employment might be called the “third rail” of contemporary Chinese politics. Like their counterparts in the United States for whom social security reform is a politically perilous endeavor, officials in China who are dismantling the state sector are tampering with a highly charged social welfare institution upon which many millions of urban Chinese depend. Despite the risks involved, in the 1990s the Chinese government undertook a comprehensive reform of the state sector, in part because of the enormous financial burdens caused by the provision of enterprise welfare services to state workers. Today, the ranks of state enterprise employees, which once reached 100 million in the 1990s, are declining by five million to six million per year. Those who leave state sector employment, voluntarily or otherwise, stand to lose benefits that previous generations of full-time state workers enjoyed as part of membership in a “work unit” (danwei): free or low-cost housing, medical insurance, meals, educational and cultural resources, and other collective benefits that state enterprise managers in the past were expected to provide. Retirees from the state sector also depend upon their former places of employment for pensions and medical care, as government agencies struggle to take on such functions as social security and health care administration. Rising unemployment, declining social services, and the inability of some enterprises to meet payroll and pension distributions have brought a remarkable number of labor protests, involving an estimated 3.6 million participants in 1998.