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In political economy, a zombie company is a company that needs in order to operate, or an debt company that is able to repay the interest on its debts but not repay the principal.
The term zombie company returned to the economic professional discourse towards the end of the decade (2010 onwards) following the situation of 0 interest rate (i.e., Zero Lower Bound - ZLB) in the western countries.
By 2016, following the economic downturn in China (see also 2015–16 Chinese stock market crash), Chinese industrial companies (steel, aluminum, paper, etc.) had developed gross overproduction capacity problems, with overcapacity rising from 0% in 2007 to an average of 13% by 2015, with figures higher than 30% in some industries (cement, steel in 2014). At the 2016 National People's Congress, the country's government recognized the issue of the 'Zombie Enterprises' and announced that it was to close or reorganize many state-owned (public) industrial companies by 2020. In the coal and steel industries, the resultant loss of work was expected to result in 1.8 million redundancies (15% of the workforce), with total redundancies estimated to be up to 6 million workers.
The term has also seen an increased amount of usage in 2022, with concern over a number of "zombies" possibly going bankrupt or needing to layoff workers due to a spike in interest rates.
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