China's top regulator is initiating a pilot program to force the exit of unviable 'zombie companies.' This move aims to curtail local protectionism and combat economic stagnation known as 'involution.'

China’s top market regulator is intensifying its crackdown on debt-laden “zombie companies” – rolling out a pilot programme in seven economic hubs to facilitate the forced exit of unprofitable firms often propped up by government subsidies or bank loans. The move signals a broadening of Beijing’s campaign against local protectionism and the low-quality vicious competition that officials say results in neijuan, or “involution”. With a change to China’s Company Law, the State Administration for...