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China earmarks funds to help reduce overcapacity

Updated: May 19,2016 9:12 AM     Xinhua

BEIJING — The Ministry of Finance said on May 18 it has earmarked a special fund of 100 billion yuan ($15.33 billion) to subsidize local governments and state-owned enterprises (SOEs) in reducing steel and coal overcapacity.

The ministry said in a statement that 80 percent of the funds will be distributed to local governments and centrally administered SOEs based on their respective capacity reduction assignments, as well as the number of laid-off workers that must be resettled and the difficulty of doing so.

The remainder will be allocated based on how well local governments and SOEs fulfill their assignments, the statement said.

The ministry added that it will continue to implement preferential taxation policies, including tax refunds for steel exports and tax preferences for urban land use by coal miners.

To encourage the development and use of coal bed gas between 2016 and 2020, the central finance subsidy for coal bed gas will be raised from 0.2 yuan to 0.3 yuan per cubic meter, the statement said.