As part of local governments' massaging of statistical data in their respective jurisdictions, factories that are almost bankrupt are kept open up to its last breath for the city or town to have good employment and tax revenue data.

The cooling measures on China's real estate sector, plus the general economic slowdown, has caused a glut in steel inventory and other industrial output that causes businesses to lose money and ultimately seek bankruptcy.

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However, these factories are not allowed to shutter, like the case of Highsee Iron and Steel Group at the Wenxi Steel Industrial Park which used to support about 25 percent of Wenxi's population, reports Daily Star.

But when demand for steel contracted, Highsee stopped paying salaries of its 10,000 workers in mid-2014, the last straw for the factory which had been financially hemorrhaging the past years.

One Highsee executive compared the steel plant's situation to a dead centipede that hadn't yet become stiff due to rigor mortis. During its struggling years, the factory was underperforming, while suppliers demanded cash payment and the company's debts keep piling up.

Highsee was only allowed to begin bankruptcy proceedings in November after four years of poor performance.

Daily Star said that besides Highsee, at least nine other major steel mills have stopped manufacturing activities but are banned from declaring bankruptcy.

The poor financial standing of many Chinese factories is evident in the 50 percent hike of outstanding volume of non-performing loans in the Chinese banking sector since the start of 2013, according to Australian Bank ANZ.

But because of local governments propping up losing factories, the sector-wide NPL ration is a very low 1.2 percent plus, but in reality it is higher, said senior Chinese finance officials.

The impact of China's overproduction of steel when output trebled from 2006 through 2013, is the reason for the slump in the prices of iron ore in the global market by 45 percent from July 2011 to July 2014.

Tagschinese factories, steel