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Determined efforts needed to eliminate excess industrial capacity

Updated: Sep 13,2016 5:16 PM

To completely eliminate excess industrial capacity, it is necessary for the government and market players to stand firm on the target by cutting outdated capacity and controlling new capacity with detailed subsidy policies, according to Economic Daily.

It said that some steel firms had shrugged off their initial targets for cutting excess capacity and resumed their production, as prices rebounded on improving industrial situation.

Their wavering attitude would largely undercut previous efforts in streamlining the steel and coal industries and push the economic restructuring endeavor backward, it said.

According to the China Iron and Steel Association, sales revenue of its member enterprises in the first half of this year stood at 1.29 trillion yuan ($193.2 billion), a year-on-year decrease of 11.93 percent, while their profits more than quintupled to reach 12.59 billion yuan in the same period.

Meanwhile, from January to July, industrial profits saw a year-on-year increase of 6.9 percent, expanding 0.7 percentage points from the first half of this year.

However, statistics from the National Development and Reform Commission showed that during January-July, the coal industry only completed 38 percent of this year’s target for cutting capacity, while the iron and steel industry finished 47 percent.

The road ahead is rough, and more efforts should be made to better meet the targets, said the newspaper. On the one hand, tougher standards should be set in safety, environmental protection, quality and energy consumption to guide enterprises to actively cut industrial capacity.

On the other hand, related government departments should carry out incentive policies, such as subsidies and capacity replacement, to motivate enterprises and local governments.