China Begins to Tackle Its ‘Zombie’ Factory Problem

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Leaders will use National People’s Congress to push overhaul of state industries—but pace of reform is questioned.

[Mark Magnier| March 3, 2016 | The Wall Street Journal]

BEIJING—China’s leaders two decades ago decided that a combination of restructuring, privatization and massive job cuts was needed to revitalize the economy and shake up state industries weighed down by debt, overcapacity and declining profits. An estimated 20 to 35 million people lost jobs in the late 1990s.

The same ills are now back, and reform of the country’s swollen industries is expected to feature prominently in China’s next five-year plan as the National People’s Congress, China’s annual legislative session, starts Saturday in Beijing. But this time around, the government is taking a more modest approach to cutting off its “zombie” factories as it confronts slowing economic growth that has unnerved Chinese leaders and global markets and raised fears of social unrest.

To read full story:  The Wall Street Journal

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