Beijing: China, the world’s biggest steel and coal producer, will cut excess capacity by a whopping 100 to 150 million tonnes in the two key sectors as part of the painful restructuring of the world’s second largest economy.
“China will cut crude steel production capacity by 100 to 150 million tonnes,” according to an official statement by the Chinese Cabinet chaired by Premier Li Keqiang.
During the meeting, Mr Li underlined the urgency and the government’s resolve to cut excess capacity in steel and coal industries, as the country strives to restructure its economy which saw its lowest growth in 25 years at 6.9 per cent last year.
The State Council did not specify the deadline for such cut, but pointed out that China has cut its production capacity of crude steel by more than 90 million tonnes in recent years, Xinhua news agency reported on Monday.
China will reduce the production capacity of coal by “a relatively large margin,” according to the statement. China is the world’s largest producer and consumer of coal.
“Digesting overcapacity in steel and coal sectors is an important measure to promote the supply-side structural reforms,” the statement said, adding that the process will deliver the industries out of trouble and achieve upgrading.
The decision could greatly benefit Indian steel makers, who have been adversely affected as China’s overcapacity finds a ready market in India.
The domestic steel makers have been demanding the Indian government to impose anti-dumping duty on the cheap Chinese imports.
China’s production of crude steel fell 2.3 per cent to 804 million tonnes in 2015, the first time the industry reported negative growth in 34 years.
