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There will be millions of layoffs in China over the next few years as they work to eliminate industrial overcapacity and decrease the number of zombie companies. A zombie company is a business that relies on the government to stay open and doesn’t have the ability to stand on its own anymore.

Although the initial cost of solving these serious problems may frighten some people who worry about the economy, it will be a good thing in the long-run. Here is an overview of which industries will experience the most layoffs and why millions are being laid off:

Cleaning Up Zombie Companies

In order to fulfill their promise to clean up zombie companies over the next few years, China will be laying off millions of workers. The minister for human resources and social security, Yin Weimin, predicts that 1.8 million employees in the coal and steel industries alone will be laid off. China will have to spend almost 150 billion yuan to accommodate these layoffs. The number could potentially be higher.

Reduce Industrial Overcapacity and Pollution

One of China’s primary goals for this year is to reduce industrial overcapacity and pollution. Most of China’s zombie companies are in the industrial industry, and the country no longer has a need for such a high level of production. Therefore, it’s in the best interest for the country to gradually stop putting money into firms that can no longer thrive. China has been doing its best to minimize the impact of the clean up. For instance, they are encouraging mergers and acquisitions.

The Solar Power Industry Will Probably Be Spared

Despite being an oversupplied industry, the solar power industry in China will probably be safe from layoffs and large-scale restructuring because it still has growth potential. China has plans to continue adopting green energy, so those markets are expected to grow over the next few years.


Although China will have to spend over 150 billion yuan to cover layoffs, it’s the right choice for them to make. They need to solve the problem of having too many zombie firms as well as reduce industrial overcapacity and pollution. Moreover, they have already committed to these goals for the country. After they decrease industrial overcapacity and pollution, China can look forward to even better days. New jobs will replace those that were lost.

Contact us for more information on current news in China and how you can successfully set up a business there.

If you are interested in knowing more about China, download the first free chapters  of my book here.

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