China aims to lay off between 5 million and 6 million workers from “zombie enterprises” over the next two to three years as part of efforts to curb industrial overcapacity and pollution, two sources with ties to the country’s leadership said.
Beijing is trying to rejuvenate its flagging economy by streamlining bloated industrial sectors, starting with coal and steel, but layoffs have emerged as one of the biggest concerns for cash-strapped regions ahead of next week’s annual session of parliament.
The government’s plans to lay off 5 million workers in industries suffering from a supply glut would be the country’s boldest retrenchment program in almost two decades, one source said.
The restructuring of state-owned enterprises from 1998 to 2003 led to about 28 million redundancies and cost the central government about 73.1 billion yuan (US$11.2 billion) in resettlement funds.
A second source with leadership ties put the number of layoffs at 6 million. Both sources requested anonymity, because they were not authorized to speak to the media about the politically sensitive subject for fear of sparking social unrest.
The Chinese Ministry of Industry and Information Technology did not immediately respond when asked for comment on the reports.
For China’s stability-obsessed government, keeping a lid on unemployment and any possible unrest that might follow has been a top priority.
On Monday, Chinese Minister of Human Resources and Social Security Yin Weimin (尹蔚民) said China expects to lay off 1.8 million workers in the coal and steel industries, but he did not give a time frame.
China aims to cut capacity gluts in as many as seven sectors, including cement, glassmaking and shipbuilding, but the oversupplied solar power industry is likely to be spared any large-scale restructuring, because it still has growth potential, the first source said.
Shutting down “zombie firms” has been identified as one of the government’s priorities this year, with Chinese Premier Li Keqiang (李克強) promising in December last year that they would soon “go under the knife.”
The term refers to companies that have shut down operations, but keep staff on their payrolls since local governments are worried about the social and economic impact of bankruptcies and unemployment.
The government has already drawn up plans to cut as much as 150 million tonnes of crude steel capacity and 500 million tonnes of surplus coal production in the next three to five years.
It has also earmarked 100 billion yuan in central government funds to deal directly with the layoffs from steel and coal over the next two years, Chinese Deputy Minister of Industry and Information Technology Feng Fei (馮飛) said last week.
However, the overcapacity action plans are still expected to face resistance from hard-hit regions like the northeastern rustbelt provinces of Heilongjiang and Liaoning, as well as the northern province of Hebei, which surrounds Beijing.
“There is bound to be a tussle between the central and local governments,” the second source said.
The funds being offered would do little to resolve the problems of debts held by zombie firms, which analysts say could overwhelm local banks if they are not handled correctly.
Factories shut down would have to repay bank loans to avoid saddling state banks with a mountain of nonperforming loans, the sources said.
“Triangular debt,” or money owed by firms to other enterprises, would also have to be resolved, they added.
China has drawn up dozens of policy documents since 2010 to try to deal with industrial overcapacity. The European Chamber of Commerce in China said in a recent report that the government had been “complacent” and had failed to tackle local government obstructionism.
“Overcapacity is a leftover problem from the Hu-Wen era,” the second source said, referring to former Chinese president Hu Jintao (胡錦濤) and former Chinese premier Wen Jiabao (溫家寶).
Hu and Wen poured 4 trillion yuan into infrastructure projects and saturated industries as part of a stimulus package to buoy the economy in the wake of the global financial crisis.
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last