China's State-Owned Enterprises Battle Deflation: A Looming Financial Challenge

China's state-owned enterprises are under pressure to halt financial losses, as emphasized by Zhang Xiong, a general manager at Sichuan 15th Construction Company, in a recent address to staff. The company, along with at least six other state firms, is part of a national campaign against deflation initiated by President Xi Jinping in July.

Solar panel manufacturers, for example, face declining profits due to excessive supply outstripping demand. Zhang's company in Sichuan plans to increase revenue and reduce costs. Two loss-making subsidiaries of the state-owned Gansu Power Investment Group must shift their strategies to regain profitability by next year.

Despite various reform campaigns, the recent meetings have not shown concrete strategies to stem the financial decline. Without reforms to boost consumption, experts warn that renewed cost-cutting may exacerbate deflation problems. Officials risking concealing losses could further complicate efforts to resolve these financial challenges.

(With inputs from agencies.)