A People's Daily article on Monday pointed out that cleaning up "zombie enterprises" is the key to solving the problem of excessive production capacity, and the authorities should improve the settlement arrangements for laid-off employees.

The article said that 2016 is the crucial period to propel structural reform. Of the five major tasks of supply-side structural reform advanced at the Central Economic Work Conference last December, cutting industrial overcapacity ranks first. Properly dealing with zombie enterprises is a top priority in this.

Zombie enterprises refers to those that have lost the capacity for self-development and vitality in the market and only survive because of government support. The article says that authorities should stop giving "blood transfusions" to these enterprises and let the market decide their fate.

However, it also says the authorities are responsible for dealing with the issue of laid-off employees. There should be sound settlement arrangements for laid-off employees to guarantee their basic living security. And the authorities should provide necessary skills training, re-employment guidance and favorable business startup policies.

With improvements in national economic strength and social security level, the authorities should be able to deal with the issue of laid-off employees when dealing with zombie companies.