Name: Foreign Capital Is Leaving China as A... | China Deep Dive | Gan Jing World
Uploaded: 2026-02-14T13:27:52.672Z
Duration: 17 min 3 s
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Similar scenes have occurred across China. In Shenyang, the Brilliance Auto system, which once supported the industrial confidence of an entire city, is now just an empty shell. Inside the Dongxing auto parts factory, the machines are no longer roaring. The signs outside the factory buildings are still there, but inside, there are almost no permanent employees; only a few temporary workers smoke in the cold wind. That silence doesn't mean relaxness; it's a deathly stillness, a silence forgotten by time.

Brilliance once covered a complete product line from minibuses to sedans. Now, except for its joint ventures, it's almost entirely unprofitable. It's not unique among the vast number of "zombie companies," whose profits are insufficient even to cover debt interest, making them unable to generate their own revenue. Following the restructuring, Brilliance Auto was merged into the new local state-owned enterprise platform, Shenyang Automotive, resulting in a significant reduction in its scale. It retains only the "Jinbei" minivan brand and some parts manufacturing, and some old factory buildings have been completely abandoned.

A longtime employee recalled that the factory used to employ 7 or 8 hundred workers, but now just around 100. His office building is almost entirely empty, only used for handling pension matters for retired employees.

Alicia Garcia Herrero, Chief Asia-Pacific Economist at Natixis, pointed out that "zombie companies" in China now account for more than 12% of the total number of registered companies, more than double the figure in 2018, far exceeding the global average, demonstrating a clear divergence between seemingly stable growth and continuously deteriorating corporate profits. At the local level, cities like Shenyang are experiencing the growing pains of transformation. Having shifted from a heavy industry center to an automotive industry base during market-oriented reforms, it is now expected to further develop emerging industries such as electronics. However, local governments are generally unwilling to let their "favored companies" fail, and can only continue to bail them out through fiscal and resource support.

In the last month of 2025, a similar downfall occurred in another highly anticipated sector: the LED industry. Within a short period, two LED-related companies entered bankruptcy liquidation proceedings. One was once a star exporter, and the other possessed the halo of "specialized, refined, and innovative" technology. This outcome shocked the entire industry.

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Foreign Capital Is Leaving China as Automakers Exit and Manufacturing Is Hollowed Out

China Deep Dive