2015-12-09

Li Keqiang Wants to Kill Zombies, Steel First, Rick Says Watch The Herd

Li Keqiang says the government will deal with zombie companies. Among the targets:
These include, do not meet the national energy, environmental protection, quality, safety and other standards and long-term loss overcapacity enterprises, shut production, transfer or strip assets reorganization, continued loss of more than three years and not in line with the restructuring of enterprises to take direction assets restructuring, equity transfer, closure and bankruptcy and other ways to be "clearing" the Disposal "zombie companies" to the end of 2017 to achieve a significant decline in operating loss-making enterprises; accelerate the exit from non-core business areas, and control of overcapacity in industry investment, and key areas of the state capital more to promote national security, national economy in key industries concentrated.

Coincidentally, a few days ago Prime Minister Li Keqiang has been raised, for more than two years time, spend a greater effort to transform the kinetic energy of the old upgrade. According to "First Financial Daily" from near the official who was informed, recently appointed by the main leaders of the research group has started for steel overcapacity research, and strive to achieve the transformation and upgrading of production capacity as soon as possible, to prevent systemic risk.
Can China shut steel production equivalent to Western European and Japanese combined output without any systematic risk? Bad debt is also an issue:
Fourth, innovation policy support to promote the implementation of commercial banks non-performing assets disposal policy, increasing efforts to write off bad debts related to industrial overcapacity.

Here is video of Li Keqiang giving orders for dealing with the zombie steel mills in 2016. The tractor trailers (government support for steel mills) are keeping the zombies locked up. As with the zombies below, China may find it is forced to deal with an out of control situation with rapidly changing variables, not to mention a few surprises.

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