Against the backdrop of the weak macro economy, a large number of enterprises will inevitably face serious losses, with some even at the verge of closing down.

When it comes to enterprises spearheaded by the local governments and the leading enterprises, it is usual for the local governments to step in and rescue them.

Anbound's research team is of the view that the measure to help the troubled enterprises have only temporary effects, it will worsen the soft budget constraint scenario, leading to vast zombie enterprises, reducing the efficiency of the financial and credit funds.

This will harm the adjustment of the local economic structure and it might lead to the bigger systemic risks.

Therefore, the local government should be moderate and selective when rescuing the enterprises.