Studies On The Local Government Intervene In Zombie Companies

"Supply-side structural reform" "address overcapacity,reduce inventory,deleverage,lower costs,and bolster areas of weakness" have been stressed in the 13th Five-Year Plan.One of the important missions of "Address overcapacity" is to speed up the processing of zombie companies.In recent year,people concern about zombie companies.The first comprehensive report on zombie companies in China was published in 2016,which is named The Research Report on Chinese zombie Enterprises-the present situation reasons and countermeasures.How to figure out the problem has been concerned by more and more people.What role that the government should be played and what method should be adopted in this problem is the most important issue.At the meantime,the question of relationship between government and market,the game between government,bank and enterprises are contained in the processing period.Speeding up the processing zombie companies is demanded in the macroeconomic policy,which should be done by local governments.The behavior and positive or negative effect of Local government settled zombie company are illustrated by the example of Guanlin town government deal with the AB Group.Guanlin town is located in the northwest of Yixing city in Jiangsu province,which is famous for its wire and cable industry.The Industrial taxable sale is up to a hundred billion yuan.Hundreds of private companies work on production of wire and cable.Since 2013,many private companies fall into financial crisis,the biggest one is AB Group in those companies.Local government cost more than two years to intervened with the AB Group issue.In November 2016,the biggest cable manufacturer in the world was introduced to buy the bankruptcy assets.This paper uses theoretical study and case study to discuss the behavior and the role of local government in the case.Firstly,this paper briefly introduces the study's background,research route and method.And literature review is composed with two sections including zombie companies and local government economic function,reviewing achievements by Scholars both at home and abroad.The second chapter is theory analysis.It defines the primary concepts referred to zombie companies and local government.It also describes the theoretical basis of government settle the zombie company problems.The third chapter analyzes present situation of zombie companies in our country and discusses their reasons,different types and negative effects.Besides this chapter also analyzes differentiated roles of local government played in the growth of zombie companies.The fourth chapter introduces the different methods in dealing with zombie companies by governments from Japan,USA and Brazil,and discusses the experience of Zhejiang province based on introducing a case.The fifth chapter describes Guanlin town government intervened with the AB group problem and analyzes the behavior of government.The last chapter is conclusion and recommendations.I hope this paper could provide a research on the method of local government intervene in zombie companies,which contain practical significance to settle down the "Supply-side structural reform".