China has circled greater than 2,000 loss-making “zombie” and closely indebted corporations in its marketing campaign towards poorly performing enterprises, the deputy head of the nation’s state belongings regulator mentioned on Tuesday.
China in 2016 set a aim of eliminating 1000’s of unprofitable zombie companies – those who have survived on financial institution loans and native authorities backing – by 2020.
Nevertheless, it has offered little in the best way of a progress report this yr because the marketing campaign took a backseat to the combat towards the coronavirus pandemic, whereas a string of high-profile defaults by extremely rated state-owned enterprises shook the nation’s company bond market final month.
Official information company Xinhua mentioned in October final yr that China had cleared up greater than 95 p.c of zombie corporations and enterprises in excessive issue, nearing its aim of phasing out all zombie enterprises by the tip of 2020.
By the tip of 2019, 2,041 companies classed as zombie corporations or as affected by excessive hardship had managed to make up operational losses, Weng Jieming, vice chairman of the State-owned Property Supervision and Administration Fee (Sasac), was cited as saying by state-run China Information.
Nearly 700 zombie and hardship-hit companies have exited the market, whereas greater than 800,000 surplus personnel have been transferred and resettled, he added.
Weng mentioned Sasac would urge central government-run enterprises to consolidate this progress and keep away from a relapse into loss-making by plugging loopholes in enterprise administration.
Supply: Reuters (Reporting by Tom Daly; modifying by David Evans)