Chinese financial institutions should not use their role in serving the real economy as an excuse to help "zombie companies" and instead must help troubled firms with good fundamentals to ride out short-term difficulties, senior officials said.

In China, the term zombie companies refers to inefficient or loss-making enterprises whose production facilities are outdated and debt is mounting or unmanageable.

Liu Guoqiang, assistant governor of the People's Bank of China, the central bank, said at the Financial Street Forum 2017 in Beijing on Friday: "Financial institutions must reduce funding for so-called zombie companies, lower hidden local government debts and combat speculation in real estate to save financial resources for other parts of the real economy that meet the requirements of China's supply-side reform, so that we'll be able to cultivate a new economic structure and a new drive for growth."