Two labour leaders in China who took part in a big demonstration last year could face the death penalty, reports say.

The Liaoyang protest was the largest demonstration in China for years

Yao Fuxin and Xiao Yunliang were arrested in March following protests in the north-eastern city of Liaoyang.

A US-based labour rights group, China Labour Watch, says the two men are now facing charges of subversion, for which they could be executed.

The men were originally arrested for organising illegal protests against corruption and unpaid wages and benefits.

'They did nothing'

China Labour Watch says it believes the new charges relate to allegations that the men signed petitions from the outlawed China Democracy Party.

The group said it had been informed that Yao Fuxin and Xiao Yunliang would be charged with the "crime of subversion of the power of the state", the AFP news agency reports.

Yao Fuxin's wife told AFP that magistrates "will not be able to establish the crime".

"All they did was to denounce corruption to protect the interests of the nation. They did nothing against the (Communist) party or the social order," Guo Xiujing said.

Another Liaoyang protest leader, Wang Zhaoming, was given probationary release last week after nine months in detention, but is reported to have been arrested again after indicating that he intended to sue the police for illegal detention.

Crumbling companies

Large-scale demonstrations are still unusual in China.

But correspondents say the country's crumbling state-owned enterprises and increasing unemployment could spark increased unrest.

Most of those who took part in last year's protests in Liaoyang worked for the city's Ferro-Alloy Factory, a bankrupt, state-owned enterprise.

When the factory closed, employees were promised pensions and back wages.

But they never materialised and many of the unemployed workers suspected the factory's managers of embezzlement.

They took to the streets in China's largest public demonstration in years.

Across China, state-owned companies are faltering, weighed down by bad business practices and corrupt managers.

In Chinese cities, that has raised the unemployment rate to dangerous levels - perhaps as high as 15%.