China's cabinet on Wednesday called for the elimination of centrally-administered state-owned enterprises (SOEs) that survive only on government bailouts. Such "zombie companies" in oversupplied industries should be closed or restructured in a drive to "markedly reduce" losses incurred by central SOEs due to poor operation by the end of 2017, said a statement issued after an executive meeting of the State Council presided over by Premier Li Keqiang.
Central SOEs that have been in the red for three consecutive years and that are not conforming to the official directive of industrial restructuring should have their assets realigned, property rights transferred or go bankrupt, the State Council proposed.
"The SOEs should accelerate exiting from non-core business and strictly curb investment in industries with excessive capacity, while commercial banks must work to write off bad loans to oversupplied industries," it said.
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