Beijing working to curb ‘zombie’ company problem as they feast on new BRI projects
Embedded within China’s massive state-owned enterprise sector are thousands of “zombie” companies that do not produce enough revenue to pay debts, and are kept afloat by state funding. These companies have driven China’s growing corporate debt problem and the issue has been aggravated by China’s titanic Belt and Road Initiative. Experts within the government have been hard at work trying to adjust policies, improve efficiency, and, where necessary, shut down companies. Over 1,000 of these companies have been shuttered as part of recent efforts to streamline the state enterprise sector, which accounts for the majority of the country’s corporate debt. By the end of 2019, a projected 5-6 million state employees will lose their jobs at these companies, and efforts are under way to limit the negative impact this will have on the broader economy.