Abstract:
"Zombie enterprises" usually refers to those companies that are in financial crisis but rely on the help of creditors to survive. At present, the problem of "zombie enterprises" in China is increasingly prominent and has serious consequences. Despite a remarkable economic achievement, development in China’s financial system has lagged behind: the system lacks diversity, since resources are concentrated in a small number of state-owned banks, with heavy regulation and political influence on state-owned banks which have led to a bias in credit allocation towards state-owned enterprises and private enterprises. This thesis reviews the research on "zombie enterprises", the definition of the "zombie enterprises" and their history, identification methods, formation causes, and impact effects with related issues (such as the overcapacity issue); it reviews also the distribution of zombie firms across sectors and regions in China and some of the main policies and solutions adopted to break them down. The review found that the Chinese government issues loans to avoid dissonant social unrest and prevent business failures. Therefore, the definition of "zombie enterprises" needs to meet two criteria: the company is insolvent and relies exclusively on government subsidies and bank loans. This thesis aims to grasp the context and development of Chinese "zombie enterprises", providing also a supporting English-Chinese terminographic repertoire.
