Zombie companies in China: policies of creative destruction and their implementation

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Parry, R. ORCID: 0000-0001-8285-2191 and Zhao, J. ORCID: 0000-0001-6430-2356, 2021. Zombie companies in China: policies of creative destruction and their implementation. Corporate and Business Law Journal, 2, pp. 371-409.

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Abstract

Zombie companies are a legacy of China’s industrial heritage and its planned economy. Recent government policies have emphasized the importance of businesses based on technology and the elimination of unviable zombie companies in efforts to transform China’s image. Paralleling Schumpeter’s idea of creative destruction, in which new ways of doing things replace old established ways, the elimination of zombie companies has been the subject of ambitious implementation targets for local governments. Ostensibly these targets are to be met in market-driven ways, however much of the Chinese infrastructure requires further development if this is to be the case. This article outlines the approach that has been taken to the resolution of zombie companies as well as the challenges presented by such cases that have so far militated against market-driven resolution. The paper adopts a structure which will consider how state policies decided at the macro level have been implemented by local governments at the meso level and will also consider potential impacts on communities at the micro level. It also considers how achievements in zombie company withdrawal have been reported, identifying narratives of creative destruction, as well as potential impacts of state policies.

Item Type:

Journal article

Publication Title:

Corporate and Business Law Journal

Creators:

Parry, R. and Zhao, J.

Date:

30 June 2021

Volume:

Identifiers: