China’s Zombie Firms Everywhere! Tens of Trillions in Empty Shells, Financial Crisis Looms

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In China, “zombie companies” generally means businesses that can no longer sustain themselves. They have lost money for years and owe more than their assets are worth. They survive mainly on government subsidies or renewed bank loans. They used to be mostly local state-owned companies or traditional manufacturers with excess capacity, including state-run steel and cement plants. Now many companies in emerging industries backed by Chinese Communist Party policies, such as electric vehicles and solar power, have also become zombies with help from local subsidies. Lists of these companies touch on highly sensitive financial risks, including bad bank loans, local government finances, jobs and social stability. Officials and financial institutions usually keep those lists confidential and rarely release them.

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