Zombie funds generally refer to funds that are dormant but are still collecting fees from investors.
During 2014, the CSRC directed fund management companies managing any mutual fund with assets less than RMB50m ($8.1m) for 60 straight days to propose feasible solutions to the regulator on how to address the situation.
The range of solutions could include fund liquidation.
"We don't expect a glut of terminations in the immediate term due to the fund management companies’ general reluctance and their unspoken desire to ensure capital protection for investors during fund closures," said Felix Ng, senior analyst.
As such, actively-managed products such as equity and bond funds might have a higher tendency to propose a strategy to the CSRC that involves switching investors from one fund to another, although "there is no guarantee that this will 'de-zombify' the funds in the near term," he added.
Broadly speaking, the regulatory changes by the CSRC will help facilitate a much healthier mutual fund industry in China.
“Distributors will have to play a bigger role in investor education and product gatekeeping, which is close to non-existent now,” Cerulli said.
China Universal Asset Management became the first firm to announce the closure of a mutual fund, shutting down its China Universal 28-day Wealth Management Fund in September.
ICBC-Credit Suisse Asset Management followed suit with the closure of its ICBCCS Margin Account Money Market Fund in November.