Zombie corporations have been a serious problem for Chinese economic authorities since at least 2011. But when China's real estate sector entered a prolonged slowdown in 2014 , the companies became an even greater risk. A large majority of them are state-controlled (or closely affiliated) enterprises engaged in property-related sectors, including residential and commercial development, infrastructure construction, steelmaking, and iron ore and coal production. Over the past two years, steady declines in real estate activity — which by some measures accounts for over a quarter of China's total economic output — have dragged down income and profits across the thousands of businesses in those sectors. As a result, foundering businesses turned to bank loans and shadow financing to cover the costs of maintaining their workforces, sending corporate debt levels soaring.