The 30th “Theory and Policy” at RUC NADS

Regional-oriented Policy and Zombie Enterprises: A Quasi Natural Experiment Based on Revitalizing Strategy of Old Industrial Base in Northeast China

Speaker: CHEN Yongbing, Professor of the School of Economics, Xiamen University

Moderator: NIE Huihua, Professor of the School of Economics and Executive Deputy Dean of NADS, RUC

Time: April 12, 2019 (Friday) 12:00-13:30

Venue: Meeting Room 815, Chongde Building West Wing (Keyan Building Block A）

Abstract:

Proper management of zombie enterprises plays a critical role in supply side structural reform. Based on the statistics of Chinese industrial companies during 1998-2007, this paper investigates into the impact of the northeast revitalization strategy on the proportion of zombie enterprises, using a difference-in-differences model constructed from the northeast revitalization strategy, a quasi natural experiment. The research shows that the northeast revitalization strategy reduces zombie enterprises by lowering enterprise debt and tax burden rate and promoting fixed assets investment, whereas the rising of productivity is brought from the increase of fixed assets investment, rather than research and development renovation. Actual operating capacity of enterprises does not experience an increase. Moreover, the productivity of state-owned enterprises does not see a significant rise, though they are preferred in allocation of labor force and capital. The conclusion of this paper proves that reducing zombie enterprises help promote overall industrial productivity, while government intervention leads to another type of misallocation of resources, thus harming the implementation of northeast revitalization strategy to some degree. Therefore, it can be concluded that transferring the burden of the market to government is not a proper method to deal with zombie enterprises.

Speaker Profile:

CHEN Yongbing, professor at the School of Economics, Xiamen University and Doctor of Economics at RUC. His main research fields include international trade and applied micro-econometrics. He has published more than ten academic papers in Economic research, China Economic Quarterly, Management World, World Economy and other journals. He presided several National Natural Science Foundation projects and MOE Projects of Humanities and Social Sciences, as well as Fok Ying-Tong youth teacher research projects. He has earned twice the An Zijie Award of International Trade Research. Chen also serves as a judge for the National Natural Science Foundation of communication evaluation and an anonymous reviewer of journals such as Economic research, China Economic Quarterly, Management World, World Economy, China Industrial Economics.