Can private money revive a zombie steelmaker? – China’s latest business and technology news


The Financial Times reports (paywall) that Dongbei Special Steel, a state-owned enterprise based in the northeast province of Liaoning — which “has defaulted 10 times since last year on 7 billion yuan ($1.1 billion) worth of bonds held by more than 100 creditors,” entered formal bankruptcy, and recently lost its chairman to suicide — is going private.

  • The FT says that Shen Wenrong 沈文荣, “one of the country’s most successful private steel tycoons has agreed to invest 4.5 billion yuan ($0.68 billion) as part of a restructuring and will take over as the largest shareholder.”
  • In previous infusions of private capital into large state-owned firms, “the state has typically retained its controlling share,” so Shen’s investment is an interesting departure.

It is not clear whether Shen will “have a free hand to cut costs by laying off workers” or to what extent he will have to obey signals from the government rather than the market, but if the experiment works, look to see it replicated across China’s bloated and indebted state sector.


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Jeremy Goldkorn

Jeremy Goldkorn is co-founder of the Sinica Podcast and currently edits SupChina and its daily newsletter.