Southern China’s Guangdong province has set up a special tribunal to settle legal disputes arising from the closure of zombie companies. The province wants to eliminate 2,333 zombie companies by the end of the year, Kallanish notes.

China’s zombie steelmakers are producing steel despite not being economically viable. Studies suggest as many as 51.4% of listed steel firms can survive only because local governments and banks are unwilling to let them default on their debt or declare bankruptcy. This is because of the social and economic costs, and the hefty write-downs that would ensue.

The move is not likely to reduce oversupply of steel directly however. Guangdong province produced 17.62 million tonnes of crude steel in 2015. It has said however that it intends to ‘limit’ steelmaking capacity to 40m tonnes/year by 2020. Baosteel is in the process of commissioning its 10m t/y Zhanjiang steelworks in the province.