AVIATION Industry Corporation of China (AVIC), China’s biggest State-owned aerospace and defense company, said it will eliminate 21 of its “zombie” subsidiary firms and cut debt leverage by the end of this year.

    The plan published Tuesday comes as China overhauls State-owned conglomerates to create leaner and more competitive giants in sectors ranging from railways to nuclear power.

    AVIC, which posted profit of 16.7 billion yuan (US$2.43 billion) in 2016, said it aimed to cut its debt ratio by 2 percentage points this year and reduce costs and expenses at its headquarters by 5 percent.

    Subsidiaries that posted more than three consecutive years of losses, or which had debt ratios of more than 80 percent, would also be designated as non-core businesses that could be disposed of.

    AVIC began by producing military aircraft and is now involved in industries ranging from airport construction to hospitals. It has more than 100 subsidiaries and employs more than 450,000 workers, according to its website. Just under a third of its subsidiaries are listed.

    The restructuring of AVIC begun early last year when the company finalized the 129 billion yuan merger of its aircraft engine businesses. Other listed units, such as AVIC International, have also disclosed that they are preparing for restructuring.

    Premier Li Keqiang said in 2015 the government would spend the next two years dealing with overcapacity and loss-making firms would go “under the knife.”

    Domestic media reported earlier this week that more than 100 Central Government-run enterprises were expected to complete ownership reforms by the end of this year. (SD-Agencies)