During the last two decades China has experienced outstanding growth rates in its GDP, exports and industrial output value, leading to higher living standards, increased consumption and greater opportunities. However, the successes of this apparent miracle have not been equally shared; there are growing income disparities between coastal and inland regions, urban and rural residents, profitable and loss-making state-owned enterprises and the private, state and collective sectors. This article explores the impact of the economic reforms on the urban worker, focusing in particular on the state and foreign-invested sectors. It begins by exploring the emergence of labour markets, noting that these have evolved furthest in foreign-invested enterprises. Policy changes aimed at increasing flexibility in the allocation, employment and remuneration of labour have led to greater insecurity for the urban worker, increased income disparities, new forms of gender discrimination and deteriorating work conditions. Discontent with these changes culminated in the early 1990s in a wave of strikes in both state-owned and foreign-invested enterprises. With the official trade union unable to respond effectively to these grievances, new underground labour organisations have emerged, despite the harsh crackdown after Tiananmen. Unless the ACFTU prioritises the interests of workers and attains a more autonomous role from the Party, it is unlikely that it can play the much needed role of an adversarial union.