China Plans to Eliminate Inefficient Production Capacity in Five Major Industries by 2015

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Researched by Industrial Info Resources China (Beijing, China)--The State Council of China published the "Guidelines on Solving Excessive Production Capacity" on October 15, 2013, in an effort to bring excessive production capacity in manufacturing industries under control.

According to the guidelines, China will form a "roadmap" to address excessive production capacity in five industries over the next five years: iron and steel, cement, electrolytic aluminum, flat glass and shipbuilding.

Official data shows that, as of the end of 2012, the average utilization rate of production capacity in the iron and steel (72%), cement (73.7%), electrolytic aluminum (71.9%), flat glass (73.1%) and shipbuilding (75%) industries were below the general international level. However, more projects remain under construction or in the planning stages.

"If no timely action is carried out, the situation will be even worse and result in even bigger problems, such as wider industrial loss; greater unemployment; increasing bad debt among banks; worsened bottlenecks in energy and resources; and a worsened ecological environment," the State Council said in its announcement.

The guidelines say that over five years, three major objectives will be achieved: the industrial scale will be reasonable and adaptive to the environmental capacity, market demand and resource supply; the industrial structure will be optimized with development quality improved; and a long-term effective mechanism and a fair market environment will be established.

Elimination of inefficient production capacity will be a major step in achieving these objectives. The guidelines also say that the original objective to eliminate inefficient production capacity set for the 12th Five-Year Plan (2011-15) will be achieved in a year.

An additional 15 million metric tons of iron making, 15 million metric tons of steel production capacity, 100 million metric tons of cement production (including clinker manufacturing and cement grinding) capacity, and 20 million weight-box of flat glass will be eliminated by the end of 2015.

China is the world's largest cement producer. From January to August 2013, China's cement output reached 1.52 billion metric tons, an increase of 9.24% from 2012.

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