A Study On The Status And Causes Of Zombie Firms In China

By the end of 2016,GDP of China has reached 74.4 trillion yuan.As the world's second-largest economic entity,its' contribution to the world economic growth has exceeded 30%,becoming an important driving force for global economic growth.However,the problem of economic slowdown in China in recent years should be noted.Some provinces and regions ' economy has even shown negative growth,revealing deep-seated problems.The "supply-side" economic reform launched since the 18th CPC National Congress is impending,representative of which is the zombie enterprise problem in China.Zombie enterprises are the companies suffer from year-over-year losses,high debt-to-liability ratios and lifeless.Such enterprises rely only on bank or government bailouts to save them from bankruptcy,and the production capacity they output are mostly inefficient,excess and outdated.Zombie enterprises are different from the general problem enterprises,with long-term and dependence on external funds.However,nation,local governments or banks often continue to do blood transfusion to maintain their operation for various reasons.It is precisely because of the existence of these zombie enterprises which occupy a large number of state grants and bank loans,resulting in the funds cannot be used in practice,leads to a serious waste of resources.At the same time,the existence of zombie enterprises leads to overcapacity in the industry and market squeeze,hindering the healthy operation of the market economy.For our country,the solution to the problem of zombie enterprises is imminent.Therefore,in today's national condition of China,to classify the zombie enterprises of China and identify the most typical industry,analyze the status quo of the industry and the reasons which cause the zombie enterprises problem specifically,and give the right medicine to the problem which suitable for China's national conditions,have a very high practical value for the resistance to the"supply-side reform" of today.The purpose of this paper is to identify the zombie enterprises in listed companies of China basing on China's national conditions,and come to the conclusion of the industries' distribution.Because listed companies cover all kinds of representative enterprises on the market,the research results have higher value.Nowadays,the vast majority of literatures all focus on the theoretical analysis,seldom doing research from the perspective of typical industries' historical background,and the actual Chinese national conditions not being considered also.China had a long period of planned economy in history,so that many policy issues,the problems left over by history as well as incomplete market-oriented reforms in this period caused the current zombie enterprises.This is not compatible with the history of enterprise development of the western developed countries.Therefore,it may be biased to directly research the Chinese national conditions through the existing methods of identification and solution abroad.This paper is different from these literatures,trying to research the problem from the perspective of economic history based on the China's typical industries-the steel industry,and analyzing the crux of the zombie problem,which has a higher degree of agreement with China's special national conditions,and is the Innovation of this paper.In addition,in order to ascertain the status quo of the zombie enterprises more accurately,this paper synthesizes the foreign CHK index and the revision index which involves China's national conditions to identify zombie enterprises in steel industry,while research the causes of the zombie enterprises at the same time.It's also an innovation of this article.However,this article only induces deduction basing on historical data in perspective of causes analyzing,lacking certain empirical analysis,which may have some deficiency in persuasion.First of all,this article combines several methods of recognizing zombie enterprises with high recognition rate,identifies zombie enterprises of listed companies in our country,classifies them according to the distribution of different industries and regions,and analyzes the status quo of them.In terms of geographical distribution,the issue of zombie enterprises is universal in the northwest of our country.The proportion of zombie enterprises in Hainan,Shanxi,Liaoning,Yunnan and Guangxi is also very high.In terms of industries distribution,this paper finds that the proportion of zombie enterprises in China's steel industry is the highest,reaching 45.16%,and the problems are also the most typical.So this article chooses the steel industry as an example for further researching.Secondly,in order to further improve the research results,this paper makes a second identification of the zombie enterprises in the steel industry of listed companies in our country based on the index of CHK method covered and the revision index considering the national conditions of China,and makes use of the classification results to describe the status quo of zombie enterprises in the steel industry briefly.It was found that the problem of zombie enterprises in China's steel industry was the most serious in the "third-line area" during the third-nation construction period of our country.In addition,zombie enterprise problems in state-owned enterprises in the steel industry are far more serious than in other types of enterprises.Then,this article analyzes the historical development of China's steel industry from the perspective of economic history supplemented by the thought of modem economics,and summarizes the formation causes of the zombie enterprises in China's steel industry with induction and deduction.The external causes are as follows:the remaining problems of the "Industrial Great Leap Forward" and the third-line construction,the path dependence on the planned economic system,the remaining problems of the "4 trillion" economic stimulus,the tax-sharing reform and the local government's corporate protection policies,internal and external demands Inadequate and other causes;the internal causes are:the inappropriate reform of state-owned enterprises in relation to the relationship between government and enterprises,the low concentration of the steel industry,the enterprises poorly managed and blindly set up as a result of the low-end product competition,lack of the long-term strategic vision.In order to enhance the persuasiveness of the conclusions,this article choose Chong Qing Iron&Steel Company as a typical case to analysis,based on the identification of the zombie firms in steel industry.Refer to the summary reasons above,this article found that it can explain the reason of Chong Qing Iron&Steel Company 's becoming a zombie firm suitably.Finally,the viewpoint of this article based on the study of how Chinese steel company becoming zombie firms,for the government is insisting on market orientation and reducing administrative interference,enterprises should be encouraged to merge freely;Actively set up corresponding policies to encourage the introduction of advanced science and technology and high-end talents;Set up the Rescue Department of zombie firms;Mprove the laws and regulations,standardize the procedures of bankrupt enterprise,and do a good job in bankruptcy enterprises staff arrears,social security reimbursement and other rehabilitation work.For the internal level of the enterprise,This article argues that state-owned enterprises should encourage private capital to participate in business decision-making,reduce the resistance to enterprise management because of the adhesion of government and enterprises.