China Keeps Unprofitable Firms Alive to Save Jobs, Avert Unrest

On the factory floor of a 69-year-old liquor plant in northwestern China, a dozen workers toil away sticking labels by hand on bottles of a fiery liquor known as baijiu, the nation’s most popular spirit.

The inefficiency on display at Shaanxi Qinyang Changsheng Brewing Co. — a firm that hasn’t turned a profit since 2020 — might seem like an anomaly in a country where robots are replacing manual labor. But it’s a scene replicated across the nation, as company owners and local officials go to great lengths to protect jobs and keep struggling firms alive.

“If we shut down, our ...