China attempts to stop overproduction

CHINA is to cut overproduction in six of its largest industries - steel, cement, plate glass, coal-to-chemicals, polycrystalline silicon and wind power equipment.

According to Chinese state news agency Xinhua The National Development and Reform Commission (NDRC) says that reducing overcapacity is necessary for continued economic growth. Its new rules mean that approval and funding will not be granted for projects which do not meet state guidelines, new projects in the six target sectors will not be permitted, land will be more difficult to obtain and environmental and efficiency standards have been raised. Companies will also be banned from obtaining bank loans for unauthorised expansion.

NDRC will also look at overcapacity in soybean oil extraction, ship building and electrolytic aluminium.

Xiong Bilin, deputy director of the industry department under NDRC, said at a press conference: "Structural reforms in many industries have shown little progress in the past months. There are problems of overcapacity and duplication of facility construction. In some places, these problems are becoming even more serious."

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