China to restructure 'zombie' state-owned companies and allow some to shut down

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China wants to increase private investment in state-owned firms to increase their efficiency and competitiveness. Photo: Reuters

Published: 12:25pm, 14 Sep 2015

China will restructure state-owned firms that are performing poorly and allow some to close, the deputy head of the country’s state assets supervisor said on Monday.

“We will make more efforts in reforming ‘zombie enterprises’, long-time loss-making enterprises and in disposing those low-efficient and non-performing assets,” Zhang Xiwu, vice chairman of the State-owned Assets Supervision and Administration Commission, told a briefing in Beijing on plans to reform the country’s state-owned enterprises sector.

Zhang said China would use stock exchanges, property exchanges and other capital markets to sell assets at low performing state firms at fair prices.

The commission said in a statement issued ahead of Monday’s briefing that the reforms would give full play to the leading role of the state-owned sector.

In a long-awaited reform document, China said on Sunday that it would introduce mixed ownership into its sprawling state sector by introducing private investment.

The broad reform guidelines for state-owned companies aimed at making them more globally competitive and increasing transparency in a powerful sector of the world’s second-largest economy.