Premier Li Keqiang vows to kill off China’s ‘zombie firms’
Pledge comes ahead of key economic work meeting, suggesting Beijing will continue to push forward with market reforms
Chinese Premier Li Keqiang pledged on Wednesday to kick out industries mired with overcapacity and moribund businesses that constantly posted losses in order to help buoy the slowing economy.
“We should speed up the move to knock out backward industries and zombie firms while enhancing corporate performance and efficiency of resource allocation,” Li told a meeting of several leading economists, according to Xinhua.
His remarks, ahead of the annual central economic work conference in mid-December, suggest the leadership is determined to carry out a head-to-toe restructuring of the world’s second-largest economy.
The work meeting normally maps out strategy and goals for economic growth to be presented in a government work report presented by the premier during the annual session of the National People’s Congress in March.
The mainland economy grew 6.9 per cent in the third quarter, the slowest pace since the first three months of 2009 amid weaker external demand and lacklustre business activities.
The current leadership has been adamant in transforming the economy into one driven by buoyant consumer spending and vigorous entrepreneurship, a break with the past reliance on massive infrastructure construction to drive growth over last two decades.
Li told the economists that his cabinet would continue to support the urbanisation drive and improve the mix of industries.
“To kill those moribund businesses is important because they were a hotbed for bad debts and corruption,” said Ray Lu, a director with Hotung Ventures. “The premier is sending a clear message to the business community that a deepened reform is an irreversible trend.”
