Bankruptcies of Chinese businesses have surged in the past two years, in a sign the state is beginning to take painful steps to trim the bloated industrial sector as it tries to rein in debt, The Wall Street Journal reports. The common practice: Keep failing companies alive with state support to preserve output and avoid the political risks that come with large-scale layoffs. Cash injections have saved jobs in the short term, and delayed harder decisions on how to shift economic expansion to a more stable footing. According to official figures from China’s Supreme People’s Court, from 2012-14 there were about 2,000 bankruptcy cases each year – just 0.25% of the roughly 800,000 companies that left the market each year. That jumped to a record 3,683 in 2015, and higher again to 5,665 cases last year, as corporate debt sharply surged and the court began to urge wider use of the law.
You must log in to post a comment.
Yes, I would like to receive emails from China Economic Review. (You can unsubscribe anytime)
Copyright © 2018 SinoMedia Group Limited All rights reserved