News came from Guangdong a few days ago that 104 bankruptcy and compulsory liquidation cases of "zombie companies" have been collectively adjudicated and accepted. According to previous data from the Supreme People's Court, the number of newly accepted bankruptcy cases nationwide last year increased by 53.8% compared with 2015. The concentrated efforts of judicial disposal means that the cleanup of "zombie companies" in various places has entered a new stage.
The reason why loss-making companies are described as "zombie" is because they are stagnant and have no core business still running. At the same time, corporate debt is rising instead of falling, and the leverage ratio remains high. They completely rely on the government. Or the constant transfusion of financial institutions to survive. At present, governments and institutions at all levels are sparing no effort in dealing with "zombie companies", but some local governments are still doing everything possible to extend their lives due to various considerations. It is factors outside the market that prevent "zombie companies" from going bankrupt, liquidating, and reorganizing, and falling into the embarrassing situation of "cannot die and live poorly."
A research survey and analysis of 78 "zombie companies" among listed companies found that the total debt of these companies that had lost the ability to continue operating before 2014 did not fall but increased, from 2010 to 2010. 0.25 trillion yuan continued to rise to 1.09 trillion yuan in 2016. Inefficient "zombie companies" occupy a large amount of social resources such as land, capital, and labor for a long time, which puts the creditor-debt relationship between companies in a stalemate, pending, and suspended state, and interrupts the flow and value-added of social resources. However, some truly healthy companies find it difficult to obtain financial support and can only continue to starve. Their ability to innovate, develop and create jobs will be suppressed to varying degrees.
The allocation efficiency of core economic resources determines the overall economic vitality of a country. To promote supply-side structural reform and improve the efficiency and level of financial services for the real economy, it is necessary to release misallocated financial resources from "zombie companies". As my country's current total debt ratio is not low, new financial loans are extremely valuable resources and should be properly utilized. The meeting of the Political Bureau of the Central Committee specifically mentioned the need to thoroughly and solidly rectify financial chaos, strengthen financial regulatory coordination, and improve the efficiency and level of financial services for the real economy. For the "zombie companies" that should be liquidated, we should resolutely revitalize the existing loans of "zombie companies" through debt liquidation, restructuring, valuation of existing assets, and promotion of asset securitization.
As more and more "zombie companies" are liquidated, we also need to pay attention to how to ensure that the loans after revitalization are used wisely? Administrative measures can shut down "zombie companies", but more importantly, we must stop the practice of frequently giving blood to companies. All localities should take this opportunity to transform their economic management methods and give better play to the role of the government. They should never intervene in those that should not be interfered with, but they should not let go of those that should be managed, so as to create a fair and relaxed development environment for enterprises; in addition, they must keep up with self-reform as soon as possible. The pace of development will truly allow the market to play a decisive role in resource allocation, allowing the released resources to automatically flow into the "enterprise pool" with market demand.
Not only government departments, but also financial institutions must adjust credit methods and credit structures in a timely manner. In terms of methods, more direct financing will be developed, the proportion of medium and long-term loans will be reduced, and more short-term financing will be provided to enterprises in the form of one-year terms. Structurally, the credit extension to overcapacity industries, local financing platforms, real estate and other industries will be reduced, and more financial resources released will be invested in state-supported industries such as high-tech, intelligent manufacturing, and emerging business formats, with high efficiency, new momentum, and In the field of new driving forces and new business models, capital can play a guiding role in resource allocation, improve the efficiency of capital use, and reduce ineffective supply.
In the past two years, the central government has resolutely taken serious action against "zombie companies", which has not only helped various localities get rid of some historical burdens that have hindered the development of enterprises, but also made people deeply aware of the harm of imperfect market mechanisms. . In the final analysis, the exit of "zombie companies" will ultimately be decided by the market, rather than by the government deciding who "lives" and who "dies."