The success or failure of this year's key tasks of 'cutting overcapacity, destocking and deleveraging’ and the effectiveness of the supply-side structural reforms depend very much on the cleaning up of the zombie enterprises.

ANBOUND’s research team believes that the axing of the zombie enterprises is not merely a measure to clean-up the micro-entities but more importantly from macro view, it helps to push forward the nation’s economic and market-oriented reforms.

We recommend the Chinese government to use mutual fund method as a way to reform the state-owned enterprises and switching from the management of the enterprises to management of assets while encouraging the more efficient private enterprises to become the important pillar in supporting the economy.