China’s ‘zombie enterprises’ to cut 5m jobs as Moody’s downgrades outlook

China’s ‘zombie enterprises‘ are to lose between five and six  million workers  over the next two to three years as part of efforts to curb industrial overcapacity and pollution, two sources with ties to the country’s leadership said this week, as Moody’s announced that it was downgrading its outlook for the Chinese economy from ‘stable’ to ‘negative’.
The government’s plans to lay off five million workers in industries suffering from a supply glut would be the country’s boldest retrenchment programme in almost two decades, one source said,  and reflects growing concerns about the economy’s health, highlighted by Moody’s downward revision.
“Without credible and efficient reforms, China’s GDP growth would slow more markedly as a high debt burden dampens business investment and demographics turn increasingly unfavourable. Government debt would increase more sharply than we currently expect,” Moody’s said in a note today.
The downgrade was driven by expectations that China’s fiscal strength will continue to decline and the fall in its foreign exchange reserves which have shrunk by $762 billion over the last 18 months, the agency went on to explain, adding that policymakers’ credibility was at risk of being undermined by incomplete implementation or partial reversals of some reforms.

Source: indiatimes