In 2016, the Chinese government has ascertained deleveraging, cutting of both overcapacity and excess inventory as the economic reform policies.

However, in a bid to prevent themselves from being labelled as zombie enterprises, many state-owned enterprises have organized various activities to secure resources, making them the biggest barrier to cutting both overcapacity and excess capacity.

ANBOUND Consulting is of the view that in this round of debt restructuring, the SOEs should undergo surgery as the only way to achieve structural reform is to clear up SOEs by allowing them to file for bankruptcy.