Memories of the 1990s are haunting China’s rust-belt cities as strapped state-owned employers look at cutting jobs, with Wuhan Iron & Steel the latest company said to be laying off thousands of workers.

The dismantling of market pricing reforms and the “iron rice bowl” system of life-long jobs in the 1990s eliminated thousands of state-owned small or medium-sized enterprises, which specialised in everything from industrial boilers to wedding photographs. SOEs now account for about a third of China’s productive capacity and an even smaller portion of urban employment, even though in some smaller cities they still dominate.

Since then, years of precipitous growth and cheap state-backed credit have left many sectors of the Chinese economy bloated on debt and unprepared for a downturn. Heavy industry has been particularly hard hit by the sharp drop in prices for coal, energy, iron ore and steel.