{
  "title": "Resolving China's Zombies: Tackling Debt and Raising Productivity",
  "publication": "IMF Working Papers, November 27, 2017",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2017/11/27/resolving-china-zombies-tackling-debt-and-raising-productivity-45432",
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  "summary": "Nonviable “zombie” firms have become a key concern in China. Using novel firm-level industrial survey data, this paper illustrates the central role of zombies and their strong linkages with stateowned enterprises (SOEs) in contributing to debt vulnerabilities and low productivity.",
  "sections": [
    {
      "heading": "Summary and central findings",
      "content": "- Nonviable “zombie” firms are a key concern in China and have strong linkages with state-owned enterprises (SOEs).\n- Zombie firms and SOEs, as a group, account for an outsized share of corporate debt, contribute to much of the rise in debt, and face weak fundamentals.\n- Empirical results indicate resolving these weak firms can generate significant gains of 0.7–1.2 percentage points in long-term growth per year.\n- The paper uses novel firm-level industrial survey data to document these relationships and quantify effects."
    },
    {
      "heading": "Quantitative impacts and key statistics",
      "content": "- Potential long-term growth gain from resolving weak firms: 0.7–1.2 percentage points per year.\n- Publication specifics:\n  - Pages: 26\n  - Volume: 2017\n  - Issue: 266\n  - Series: Working Paper No. 2017/266\n  - DOI: https://doi.org/10.5089/9781484330722.001\n  - Stock No: WPIEA2017266\n  - ISBN: 9781484330722\n  - ISSN: 1018-5941"
    },
    {
      "heading": "Role of SOEs and debt vulnerabilities",
      "content": "- Zombies have strong linkages with state-owned enterprises (SOEs), amplifying debt vulnerabilities.\n- As a group, zombie firms and SOEs:\n  - Account for an outsized share of corporate debt.\n  - Contribute to much of the rise in corporate debt.\n  - Exhibit weak fundamentals that underpin fragility in the corporate sector."
    },
    {
      "heading": "Restructuring options evaluated and their effects",
      "content": "- The paper evaluates effects of different restructuring options and finds significant benefits from:\n  - Deleveraging.\n  - Reducing government subsidies.\n  - Operational restructuring through divestment.\n  - Operational restructuring by reducing redundancy.\n- These measures have significant benefits in restoring corporate performance for zombie firms."
    },
    {
      "heading": "Subjects and keywords (as listed)",
      "content": "- Subjects: Asset and liability management; Asset management; Debt burden; Economic sectors; External debt; Production; Productivity; Public enterprises; Total factor productivity.\n- Keywords: Asset management; capital frowth; China; company; corporate debt; Debt burden; debt restructuring; firm identification code; government; liability-to-asset ratio; nonviable company; overcapacity firm; Productivity; public enterprise; Public enterprises; revenue data; state-owned enterprises; steel firm; Total factor productivity; WP; zombie firm; zombie firms.\n\nIMF Working Paper: Waikei Raphael Lam, Alfred Schipke, Yuyan Tan, and Zhibo Tan. \"Resolving China's Zombies: Tackling Debt and Raising Productivity\", November 27, 2017.\n\n---\n\n Content in this bundle\n\n- Resolving China Zombies: Tackling Debt and Raising Productivity, WP/17/266, November 2017\n  - Resolving China Zombies: Tackling Debt and Raising Productivity, WP/17/266, November 2017 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Resolving China Zombies: Tackling Debt and Raising Productivity, WP/17/266, November 2017 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2017/11/27/resolving-china-zombies-tackling-debt-and-raising-productivity-45432"
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    "Authors: Waikei R Lam, Alfred Schipke, Yuyan Tan, Zhibo Tan",
    "Published: November 27, 2017",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781484330722.001",
    "Nonviable “zombie” firms are a key concern in China and have strong linkages with state-owned enterprises (SOEs).",
    "Zombie firms and SOEs, as a group, account for an outsized share of corporate debt, contribute to much of the rise in debt, and face weak fundamentals.",
    "Empirical results indicate resolving these weak firms can generate significant gains of 0.7–1.2 percentage points in long-term growth per year.",
    "The paper uses novel firm-level industrial survey data to document these relationships and quantify effects.",
    "Potential long-term growth gain from resolving weak firms: 0.7–1.2 percentage points per year.",
    "Publication specifics:",
    "Zombies have strong linkages with state-owned enterprises (SOEs), amplifying debt vulnerabilities.",
    "As a group, zombie firms and SOEs:",
    "The paper evaluates effects of different restructuring options and finds significant benefits from:",
    "These measures have significant benefits in restoring corporate performance for zombie firms.",
    "Subjects: Asset and liability management; Asset management; Debt burden; Economic sectors; External debt; Production; Productivity; Public enterprises; Total factor productivity.",
    "Keywords: Asset management; capital frowth; China; company; corporate debt; Debt burden; debt restructuring; firm identification code; government; liability-to-asset ratio; nonviable company; overcapacity firm; Productivity; public enterprise; Public enterprises; revenue data; state-owned enterprises; steel firm; Total factor productivity; WP; zombie firm; zombie firms.",
    "**Resolving China Zombies: Tackling Debt and Raising Productivity, WP/17/266, November 2017**"
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