Mr. Waikei R Lam, Mr. Alfred Schipke, Yuyan Tan, and Zhibo Tan
Nonviable “zombie” firms have become a key priority of the government in addressing corporate debt vulnerabilities and improving resource allocation in China. 2 Zombiefirms account for an increasing share of total corporate debt, operate inefficiently with low productivity, and have crowded out non-zombie investments.
Based on firm-level industrial survey data, the study assesses the vulnerabilities of, and potential gains from resolving, these weak firms. This paper extends previous studies ( Tan and others 2017 ; Nie and others 2016