Thursday, July 28, 2016

Zombie companies China reported about 7 5 collusion between Government and enterprises

Chinese zombie companies how much?

July 27, people University national development and strategy research hospital anti-corruption and new Economics Research Center released of name for China zombie enterprise research report--status, and reasons and countermeasures report to out has answers: 2005-2013, China industrial sector of zombie Enterprise proportion about for 7.51%, points industry view, zombie Enterprise proportion highest of five a industry respectively is steel, and real estate, and building decorative, and commercial trade and integrated class, Bank, and media, and non-silver financial, and Computers and leisure service industries account for more than the minimum.

Report noted that zombie companies concentrated in the Southwest, Northwest and Northeast, and zombie companies significantly higher than that of private enterprises in State-owned enterprises, at 13%, which is only 7%.

The so-called zombie companies, refers to the number of indebted enterprises, although they can generate cash, but after deduction of operational costs and fixed costs, only interest payments on loans, while unable to repay the loan principal. In other words, such companies should have been killed, but depend on Government subsidies or bank loans to eke out a living and cannot be revitalized.

Zombies are caused by overcapacity, high inventory, leverage is too high for important reasons. Supply side structural reform is economic reform and macro-control of the strategically important and the main handle, the key supply side reform, is accelerating the Elimination of zombie companies.

Central Government in the past two years has been asked many times, "zombie companies". In March 2015, Li at the State administration for industry and Commerce investigated and commercial reform, during which he told at the seminar held that "not only to lower the business threshold, so that enterprises ' raw ', and to avoid the formation of ' zombie ' businesses."

A State Council Executive meeting, held November 4, 2015 is clear, to accelerate the "zombie companies" reorganization and integration or exit the market. December 9 after a State Council Executive meeting on "zombie companies" made specific cleanup standards, continuing losses for more than 3 years and do not meet the structural reorientation of enterprises asset reorganization, property rights transfer, closure and bankruptcy be "cleared". Contrary to irrevocable commitments Faw do I need

Report of clean up zombie firms are given specific measures proposed to reduce government intervention in the assessment of State-owned enterprises, improve SASAC standards, strengthen budget hardening and other aspects.

Zombie companies, China reported about 7.5%, collusion between Government and enterprises is the first

Cause zombies five reasons, Government collusion at the top

Research Group of zombie companies made by the national people's Congress's research data from the 1998-2013 database of industrial enterprises in China, as well as the 1998-2015 database of listed companies.

For identification of the zombie companies, reported in the official standards and academic CHK standard was amended on the basis of the popular, that is, if an enterprise in the current and previous year is recognized as a zombie by FN-CHK enterprises (that is, business loan interest rate lower than the normal market minimum interest rate), then the company is in the year zombie companies.

Reports relative to the CHK standard, this method can be used to reduce the zombie companies identified in the process of "slip through" and reduce "friendly fire."

Report sorts out the five main factor leading to zombie companies, "collusion between Government and enterprises between the local government and enterprises" in first place.

Report notes that for performance and stability, local governments continue to brink of zombie companies for various forms of "blood transfusion", or zombie companies exerted pressure on employment and production expansion pressures, and then through subsidies and loans to maintain its situation. This isn't a zombie companies became "zombies", and is "zombie" companies are more difficult to clean up.

Research Group found that if a company won more subsidies, or more redundancy, or SOEs, becoming a higher probability of zombie companies.

Followed by "vicious competition between local governments and State-owned enterprises." As explained in the report, once the country's scope to include an industry focused on supporting local governments piled on to support the development of the industry, resulting in duplication and overcapacity. After a large number of zombie companies in the industry, local governments have provided preferential policies and subsidies to support local businesses, hopes his "support" to "crush" the rest of the enterprise. Many government policies encouraging mergers, "small", even in the sectoral aid directly provided relief only when a certain number of large enterprises, which directly caused the enterprise "racing to the big" prisoner's dilemma.

2008 4 trillion economic stimulus is the third leading cause. Report displayed, 2008-2011, non-focus industry (as food manufacturing, and furniture manufacturing, and plastic products industry,) of zombie Enterprise proportion has been above focus industry (as coal mining and washing industry, and ferrous metal smelting and the pressure extended processing, and General equipment manufacturing,), and both Zhijian of gap basic keep stable; 2011 zhihou, both Zhijian of gap constantly narrowed, 2013 Shi focus industry of zombie Enterprise proportion fast rose, even above non-focus industry zombie Enterprise proportion.

Report says 4 trillion investment mainly to stimulate the industry in five years suffered a more serious crisis of zombie companies.

In addition to the above three factors, external demand shocks and credit discrimination also causes the zombies to the banks.

Reducing government intervention in the business

"To clean up zombie firms, promote the supply side of structural reforms, promote industrial restructuring and upgrading to achieve long-term and stable economic growth, it is necessary to remedy, and only under drastic cure ills. "The report said.

Five reasons for zombie companies, the report gives five specific strategies to reduce zombie companies.

First, reduce government intervention in the business, especially using industrial policy. Local Government to reduce intervention in the business, do not use administrative powers to promote the merger and reorganization of enterprises, enterprises in the area not subjected to employment beyond their affordability pressures and fiscal pressures, not to lack of efficiency, no hope of survival zombie companies provide a variety of subsidies and forced banks to make loans.

Second, perfect the index of State-owned assets supervision of State-owned enterprises, a comprehensive understanding of "stronger better and bigger State-owned enterprises." To be alert to the end result is the State-owned enterprises just "big" but not really "strong" and "excellent". If State-owned enterprises bigger and stronger is bound into capacity expansion of the prisoner's dilemma, will inevitably lead to more excess capacity, resulting in more zombies.

Third, strengthening the Bank's budget hardens. First, we must strengthen supervision of the banking system, the second is to reduce administrative intervention by the Bank in the local government area, through the development of related laws and regulations to ensure the relative independence of the banking system.

Finally, multi-channel solution in excess capacity, encourage enterprise mergers and acquisitions and restructuring triage, speed up the establishment and improvement of the social safety net. Can think of excess iron and steel, cement, glass and other infrastructure construction in poverty-stricken areas, or helping local government through the issuance of bonds by the Central Government to pay.

Finally, accelerate the pace of reform of State-owned enterprises, the key is the specific orientation of State-owned enterprises. Used to further reform State-owned enterprises, clear what kinds of State-owned enterprises have to bear political and social functions, what kind of State-owned enterprises are purely market-oriented enterprises. For the former, the number, treated as a special enterprise; for the latter, strengthening market-oriented appraisal, encourages stronger better.

No comments:

Post a Comment