Signal More than a quarter of listed Chinese firms unprofitable, a 25-year high

Summary

Eurasia Group reports that more than a quarter of China's listed companies are now loss-making, the highest share in 25 years. The report links this to involution, in which too many firms compete for too little demand and slash prices to stay alive. Collapsing margins force even well-managed companies to cut wages and jobs, which further weakens spending. US tariffs added pressure by closing a key market and pushing firms to cut prices elsewhere or route goods through third countries. Lenders and local authorities prop up zombie companies, so overcapacity persists and the debt-deflation spiral reinforces itself.