With the phasing out of inefficient capacity and upgrading of technology, China’s industrial restructuring over the past five years is on the right path, a minister told a news conference on Feb 25.
The country eliminated 91 million tonnes of outdated capacity in the iron industry and 94.8 million tonnes in the steel industry from 2011 to 2015, said Industry and Information Technology Minister Miao Wei.
For the cement industry, the capacity cut was 640 million tonnes, while the aluminum sector saw a reduction of 2 million tonnes, Miao told reporters.
These industries had stockpiled inventories before China’s economy protracted slowdown. Now, with shrinking demand both at home and abroad, their profits are being hurt, prompting the state to roll out plans to help reduce excessive capacity. The State Council announced earlier this month that crude steel production capacity will be slashed by 100 million tonnes to 150 million tonnes over the next five years.
While the market is forcing unneeded capacity to exit, hefty spending on technological upgrading has improved the level of industrial development, according to Miao.
During the 2011-2015 period, 37.5 trillion yuan ($5.7 trillion) was invested around the country to help companies upgrade their systems and equipment, 2.7 times the amount in the 2006-2010 period, he said.
The industry also became greener, with energy and water consumption for every 10,000 yuan of industrial output falling 25 percent and 35 percent respectively in five years from the end of 2010, Miao told reporters.
China’s industrial output continued to slow in 2015 amid downward pressure on the nation’s economy and rising costs. It grew 6.1 percent year on year, lower than the 8.3-percent rate in 2014.
Viewed against the economic backdrop in and outside China, the 6.1-percent industrial growth was not a low speed and still “in the reasonable range,” Miao said.
China’s economy grew 6.9 percent year on year in 2015, the slowest annual expansion in a quarter of a century.