Cutting overcapacity, productivity and the recovery of Chinese-style zombie enterprises: based on the evidence of Chinese industrial enterprises
(2.Research Department, Tianfeng Securities, Shanghai, China 201204)
【Abstract】The disposal method and approach of Chinese-style zombie enterprises are not only related to the healthy development of China’s economy, but also an important content of the sustainable development of China’s economy in the new era. This paper used the Chinese Industrial Enterprise Database to explore whether Chinese-style zombie enterprises can recover, and whether capacity compression can promote the recovery of zombie enterprises. This paper considered the feature of Chinese-style zombie enterprises, which combines government subsidies and credit subsidies, and combined the CHK method and the over-borrowing method to identify Chinese-style zombie enterprises. In order to avoid the misidentification of zombie enterprises to the greatest extent, this paper used the more rigorous standard in the academia to determine the enterprises that meet the measurement standard of suspected zombie enterprises in two consecutive periods as zombie enterprises. Results showed that Chinese-style zombie enterprises are widely distributed, and have a high proportion, high leverage and low productivity. Similarly, based on the strictest identification criteria, a zombie enterprise can be recognized as recovered if it returns to a normal firm in the current year and all subsequent years. The average annual recovery of more than 20% of the zombie enterprises shows that these enterprises can be rejuvenated if appropriate measures are taken. We also found that the fixed assets cleanup and downsizing can significantly promote the recovery of zombie enterprises by increasing the level of enterprise productivity. The empirical results showed robust conclusions when using different identification standards of zombie enterprises, different resurrection standards of zombie enterprises and different fixed effects in the regression. When instrumental variables are used to solve any possible endogenous problem, the empirical results above are still robust. However, in the absence of improvement in enterprise efficiency, the increase in R&D investment will only further increase the cost burden on zombie enterprises, and have little effect on the recovery. In addition, the improvement of market environment and the reduction of government intervention will inhibit the formation and have a positive effect on the promotion of the recovery of zombie enterprises. Therefore, the most important thing in the current governance of zombie enterprises is to combine specific measures with the improvement of the viability of enterprises, so as to realize cost reduction and efficiency improvement. At the same time, it is necessary to improve the disposal mechanism on zombie enterprises and the market-based institutional environment, optimize industrial policies, and establish a long-term mechanism for the disposal of zombie enterprises.
【Keywords】 zombie enterprises; cutting overcapacity; productivity;