Beijing steps up efforts to tackle industrial overcapacity
October 30, 2013 Leave a comment
Beijing steps up efforts to tackle industrial overcapacity
Staff Reporter
2013-10-29
The Chinese government implemented policies last week to deal with excess capacity in industries nationwide, which will affect the evaluation criteria of local governments’ performance. The measure can be seen as part of the central government’s efforts to bring about economic reform and a structural transformation under President Xi Jinping’s leadership. Over the past few years, China has introduced industrial policies several times to control capacity, but the effects have not been evident.Taking the iron and steel industry as an example, the capacity of which reached 180 million tonnes in 2002. The National Development and Reform Commission issued warnings in 2003 about excess capacity in the industry and implemented regulations to control production, but output still surged to 900 million tonnes in 2012. The capacity has grown even further despite the implementation of policies to control the industry’s production.
An official at the Ministry of Industry and Information Technology noted that the government had different ways of coping with overcapacity in different industries and that it had prohibited construction of new capacity and directed that the existing illegal capacity be eliminated gradually.
Efforts are also aimed at protecting the environment. In the Beijing-Tianjin-Hebei region, steelmakers were forced to shut down some of their outdated production lines due to worsening air pollution. The central government is now more determined to eliminate excess capacity through harsher supervision and punishments and the results will be assessed as part of local governments’ administrative achievements.
For some provinces, industries grappling with excess capacity had also sustained the local economy in terms of generating taxable income for local governments and providing numerous employment opportunities to the area’s residents. Phasing out outdated capacity would therefore hurt the provincial economy. Hebei, where 60 million tonnes of iron and steel capacity will be phased out, achieved GDP of 266 million yuan (US$43.7 million) in 2012, with iron and steel makers earning 241.1 billion yuan (US$39.6 billion) in added value for the industry.
Shi Wei, a director at the National Development and Reform Commission, pointed out that excess capacity had negatively impacted the Chinese economy and public living quality in terms of continued air pollution. GDP growth would become more meaningful after overcapacity is eliminated, Shi said.
About bambooinnovator
Bamboo Innovator 