The Chinese government is eyeing to fast-track the restructuring of unprofitable state-owned enterprises (SOEs) to maximize their potential.
This comes after the State Council held an executive meeting presided by Premier Li Keqiang where the Chinese cabinet decided to encourage the market-oriented allocation of resources by speeding up the said reform in "zombie enterprises."
According to the National Bureau of Statistics, the profits of China's major industrial enterprises have dwindled by 0.1 percent year-on-year in September. The figure has already narrowed from August's 8.8-percent decline.
Official data also shows that state-owned industrial firms have seen their profits decline by 24.4. percent for this year's first three quarters. Nonetheless, private companies posted better results after increasing their profits by 7.1 percent during the same period.
In a statement released after the meeting, the State Council said that it is crucial to "put forth efforts to stabilize industrial growth, prioritize its structure and improve efficiency."
The Cabinet also said that pushing SOE reforms is an important step in creating more jobs and sustaining the country's good momentum for economic development.
For Zhang Chunxiao, an expert affiliated with the State-Owned Assets Supervision and Administration Commission, the move shows the government's goal of improving efficiency and prioritizing state assets.
Zhang added that the so-called zombie enterprises could be firms that are burdened by debt, overcapacity or mismanagement. They could also be remaining parts of a firm that have lost the capability to be profitable after being divested.
Meanwhile, the draft of the 13th Five-Year Plan has also proposed measures to deepen reforms in SOEs to strengthen their vitality and control and reduce risks.