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The growth of the informal economy over the last 30 years poses a major challenge for ILO's decent work agenda and the development of skills and knowledge is seen as a solution to this problem. This paper on China is one of a series of papers on skill development in the informal economy which was prepared as part of the InFocus Programme on Skills, Knowledge and Employability. Economic restructuring, globalisation and fierce market competition have led to State-owned Enterprises (SOEs) in China downsizing their labour force and retrenching workers. At the same time, the informal sector is growing in importance as the new force in job creation. This paper is based on research into the experience of re-employment training of urban retrenched employees, the implementation of a labour preparation training program and the ILO supported project on rural employment training. It is structured as follows: Introduction; The current situation of employment in the informal sector in China; Current situation of skills training in the informal sector in China; Conclusions and policy suggestions; Final remarks.