Mianyang, a bastion of military industry in the southwest, is attempting to shrug off its image as a depressed area with unemployment problems. The second-largest city of inland province Sichuan has hit the headlines at times as workers sacked from ordnance factories and state enterprises took to the streets. But Mayor Huang Xuejiu said he was confident demonstrations would be unlikely in the future, as only 3,000 of the 40,000 laid-off workers had not found jobs. 'It is true that we went through a period of labour pain when we reformed our state sector. There were some demonstrations between 1996 and 1998, but most of the laid-off workers have now been settled.' Despite the upbeat note, the mayor declined to comment on whether escalating tension across the Taiwan Strait meant new opportunities for the region.'I can't comment on military production. What I can say is that we have largely finished the reform to turn ordnance factories into enterprises which produce consumer goods.' It is believed that some ordnance factories, which have ceased production due to losses, have resumed the production of some weapons lines. Mianyang is one of the most important military production bases in China and participated in the production of the Dongfang series of missiles and a number of nuclear weapons. Its flagship, Sichuan Changhong Electronics Group - now the largest producer of TV sets in China - has also retained its original role as a producer of military radars, with a production capacity of about 80 sets each year. Company officials approached for comment would not answer questions on the effects of the Taiwan Strait crisis. 'We will continue to pay close attention to cross-strait relations. If a war should break out, of course we will fulfil our national duty in terms of weapons production,' said Liu Haizhong, deputy director of the company's sales and strategy division. However a source said the company had already increased production of military goods, which normally make up seven to eight per cent of total revenue. Those Mianyang factories that had not yet shifted to consumer goods production were all operating in the red, said Mr Huang. The state initiated the massive campaign to turn military production facilities into commercial enterprises because of excess capacity for the production of low-quality weapons. The reforms generated large numbers of lay-offs. Mianyang is well-known for a demonstration three years ago, when about 3,000 disgruntled workers blocked the highway demanding the mayor offer a solution. The city came also under the spotlight two years ago when it tried to ban tricycles - used as taxis - from entering the city, instigating a massive demonstration by tricycle-riders. The Government gave in later.