China’s local governments are pushing ahead with state-owned enterprise reforms even as national-level reforms stall, piloting initiatives being hailed as bellwether restructurings.  

Overhauling the inefficient state sector, which accounts for about a fifth of economic output, is Beijing’s toughest challenge as it seeks to revive a slowing economy. Analysts say job cuts and factory closures are crucial to a reduction in high corporate debt and industrial overcapacity but unemployment and reduced investment raise the risk of social instability.

Local governments are taking up the baton, with a rash of restructurings or other big changes prompting the suspension of share trading in 56 locally owned SOEs since the start of 2016, according to data from Wind Information.