China Premier Li Keqiang calls for SOE mergers, disposal of 'Zombie' Firms

BEIJING: China's Premier Li Keqiang is calling for state owned enterprises to promote mergers and reorganisations to increase the effi ciency of their operations as the nation faces its slowest growth in 25 years.

State-owned enterprises need to deepen reforms with a focus on steady growth and increasing their competitiveness, Li said in a seminar which included senior officials on Friday. Officials from the State-owned Assets Supervision and Administration Commission and executives from companies in cluding China Railway Construction Corp. were present, according to the statement.

The world's second-largest economy is set to grow at its slowest pace in a quarter century this year even after five central bank interest rate cuts and fiscal stimulus Li's calls come amid an equity-market rout that's wiped $5 trillion in value off the nation's stocks and after a sudden move on Aug. 11 to change its exchange rate regime, a decision which triggered the yuan's biggest depreciation in two decades and roiled global markets.

Li also urged state-owned enterprises to dispose of “zombie“ companies and those suffering from longterm losses. To foster growth, Li said state-owned enterprises needed an innovation-driven development strategy and global collaboration.

China last week announced long-awaited guidelines to make its bloated state-owned enterprises more efficient as policy makers search for ways of reinvigorating its $10 trillion economy. The nation's leaders had announced their intention to overhaul SOEs at a gathering in 2013 in a move aimed at eliminating waste and boosting their competitiveness.