The Impact Of "Zombie Enterprises" On Investment

General Secretary Xi Jinping pointed out in the report of the Nineteenth National Congress of the Party that China’s economy is in a critical period of changing its mode of development,optimizing its economic structure,and transforming its growth momentum.However,a large number of outstanding problems in the current economic development have greatly hindered the process of economic system reform in China,and the existence of"zombie enterprises" is one of the main problems.The"zombie enterprnse"is the root cause of many economic and financial crises and must be resolutely removed.Therefore,the study of"zombie enterprises"can help us further clarify the governance direction of"zombie enterprises".According to the summary of previous literature,based on the data of all the listed companies in Shanghai and Shenzhen A shares from 2013 to 2017,this paper identifies the"zombie enterprises"existing in the listed companies in China.The results show that from the overall number,the number of"zombie enterprises"in China began to increase rapidly since 2013,and the growth rate has slowed after 2015 and has shown a downward trend after 2016.From the point of view of ownership,the number of state-owned"zombie enterprises"has been the highest among all kinds of ownership,followed by private enterprises.From a regional point of view,there are serious"zombie enterprises" problems in the underdeveloped western regions and the three northeastern provinces.By industry,most of the "zombie enterprises" are concentrated in overcapacity industries,such as transportation and transportation n leasing and business services and real estate,as well as government regulated pricing of public utilities,such as gas,electricity and heat industry.In addition,by comparing the efficiency characteristics and the situation of debt financing of "zombie enterprises"with that of "non-zombie enterprises",it is found that"zombie enterprises"have lower efficiency index than "non-zombie enterprise"’but they can obtain credit funds at lower cost and more government subsidies.In the empirical aspect,this paper takes the proportion of "zombie enterprise" in the industry as the main explanatory variable to discuss the influence of the "zombie enterprise"on the investment scale and the underinvestment of other"non-zombie enterprises"in the industry.This paper finds that the"zombie enterprise"has negative effect on the investment of other normal enterprises in the industry,specifically,the larger the proportion of the"zombie enterprise"in the industry,the smaller the investment scale of the"non-zombie enterprise";The larger the proportion of zombie enterprises in the industry,the greater the degree of underinvestment of "non-zombie enterprises".Besides the paper checks for heterogeneous effects based on the ownership of"non-zombie enterprises",the external financing dependence of the industry.Subsample regressions show that the crowding-out effect of the"zombie enterprise"on the investment of"non-zombie enterprises"is more profound for non-SOEs firms in industries with high external financing dependence.This implies that the"zombie enterprise"influence the investment of "non-zombie enterprises" by distorting credit allocation.Based on this,this article provides the corresponding policy suggestions for the relevant departments of the state to further control the"zombie enterprises".