HSBC: Zombie Companies Killing Economy, Shut Them Down Fast

WallStreet.cn: 汇丰:“僵尸企业”正在杀死经济 应该尽快让其倒闭
Thus, King believes that the ultimate solution is to let "zombie companies" close down, while the government has to make up the demand gap, but the way it can be "a series of public projects."
The zombie companies are concentrated geographically. The workers cannot be quickly transitioned to new employment if the need retraining. Also, the industries with the most zombies are mainly those who expanded due to the public projects launched by the 2008 stimulus. In terms of stability, the government should help workers maintain their consumer demand, but it should allow the market to develop new industries. Targeted tax cuts would be far more helpful in this regard.

We're already seeing how well the government can target stimulus. In an effort to increase home sales in third- and fourth-tier cities, China eased monetary, lending and housing policy, and the result was soaring prices in first-tier cities. Now months later, these cities are implementing or discussion housing restrictions.

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