Date
17 January 2017
China is seeking to curb excess capacity in the steel industry, among other sectors. Photo: Reuters
China is seeking to curb excess capacity in the steel industry, among other sectors. Photo: Reuters

China to step up efforts to curb industrial overcapacity

China will toughen the enforcement of environmental, safety and energy-efficiency standards in a bid to curb overcapacity in key industrial sectors, the government said on Friday.

Authorities will also seek tougher credit controls on businesses plagued by capacity glut, the industry ministry said.

In a draft policy document, the ministry said it will “normalize the stricter implementation and enforcement of mandatory standards” to tackle overcapacity in sectors such as steel, coal, cement, glassmaking and aluminum, Reuters reported.

Also, authorities will implement a “differential credit” policy that will allow banks to extend loans to help firms restructure while cutting off funding for poorly performing entities targeted for closure.

Firms that fail to comply with new energy-efficiency targets will be given six months to rectify and would be closed if they fail to make progress.

Those that continue to exceed air and water pollution standards would be fined on a daily basis, the report said, citing a draft document published on the ministry website.

Authorities will cut off power and water supplies of companies that fail to meet environmental and safety standards. Facilities could also be sealed off to prevent them from going back into operation.

The tougher policy comes as China has fallen behind on its targets to eliminate industrial overcapacity.

Authorities said earlier that they plan to close 45 million tons of annual crude steel capacity this year, and 250 million tons of coal production.

However, only a third of the closures were completed by the end of July, according to the report.

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