Massive layoffs coming as China confronts its overbuilt 'zombie economy'
In central China, the city of Jin Cheng gathers another layer of black dust.
It is surrounded by mines that pull coal out of the ground and load it onto trains headed for market.
Never mind that for much of that coal there is no longer a market. In a China where economic growth is officially 6.9 per cent — half what it was a decade ago and the lowest in a quarter century — these so-called zombie mines and factories continue to churn out products no one buys.
Delivery trucks idle outside a mine near Jin Cheng with nowhere to go.
"I borrowed more than I can afford just to buy this truck," says driver Wang Wei. "Now what? No work. I'm angry with the government."
Throughout industrialized China, thousands of these zombie enterprises stay open because the government and the ruling Communist Party have been afraid of exactly that reaction, on a massive scale.
Beijing has delayed a much-needed restructuring to reduce industrial overcapacity, even as economists have said such a move is inevitable.
But it is now coming. This week, China announced it expects to lay off 1.8 million workers in its coal and steel industries, about 15 per cent of the workforce.
Massive layoffs coming as China confronts its overbuilt 'zombie economy' - World - CBC News
In central China, the city of Jin Cheng gathers another layer of black dust.
It is surrounded by mines that pull coal out of the ground and load it onto trains headed for market.
Never mind that for much of that coal there is no longer a market. In a China where economic growth is officially 6.9 per cent — half what it was a decade ago and the lowest in a quarter century — these so-called zombie mines and factories continue to churn out products no one buys.
Delivery trucks idle outside a mine near Jin Cheng with nowhere to go.
"I borrowed more than I can afford just to buy this truck," says driver Wang Wei. "Now what? No work. I'm angry with the government."
Throughout industrialized China, thousands of these zombie enterprises stay open because the government and the ruling Communist Party have been afraid of exactly that reaction, on a massive scale.
Beijing has delayed a much-needed restructuring to reduce industrial overcapacity, even as economists have said such a move is inevitable.
But it is now coming. This week, China announced it expects to lay off 1.8 million workers in its coal and steel industries, about 15 per cent of the workforce.
Massive layoffs coming as China confronts its overbuilt 'zombie economy' - World - CBC News
