The Chinese Communist party’s feared anti-corruption watchdog has joined the government’s campaign to shutter lossmaking factories, as the authorities resort to heavy-handed tactics to force through painful restructuring. Curbing excess production capacity is central to Beijing’s efforts to reverse years of agonizing deflation and financial losses by “zombie” companies. Yet closing factories requires sacrificing economic growth and local tax revenue while also shouldering the social-welfare burden from laid-off workers. After years of unmet promises, the campaign has achieved significant success this year, according to the Financial Times. Combined employment in steel and coal has already fallen by 1.6m since the end of 2015, according to official statistics, just shy of the 1.8m jobs the government wanted to cut and almost a quarter of the total workforce in those industries. The campaign’s success in reducing capacity has helped boost commodity prices and fuelled a profit revival at Chinese state-owned enterprises.
China Economic Review