Two steel producers will be punished for breaking capacity cut rules and over one hundred officials will also be held accountable, including two vice provincial governors, as was decided at the meeting of the Standing Committee of the Political Bureau of CPC Central Committee on Dec 22.

The decision was announced on Dec 26.

The State Council during the meeting reported on their sweeping on-site investigations of east Jiangsu province and northern Hebei province, targeting illegal production of industrial capacity, in late November.

The investigation found that Anfeng Iron and Steel Corp. Ltd, an iron and steel producer in Hebei province, illegally built iron producing facilities and had been producing excess iron and steel without receiving permission from local government officials.

Huada Iron and Steel Corp Ltd. in Jiangsu province was noticed to have been illegally producing low quality steel.

Such practices have severely disrupted market order and stability, and exerted ill impact to the industry, especially when the country is sparing no effort in retiring fat capacity in coal mining, iron and steel industry.

The meeting points out that cutting excess industrial capacity, especially in coal mine, iron and steel industry, is crucial for the country’s supply side economic reform, and no tolerance will be given for practices hindering the country’s capacity cuts efforts.

An investigation was carried out in both provinces via open and secret investigations, meetings and interviews, reviewing company documents, etc.

The investigation also found out that production of low-quality steel has been a common practice for a large number of factories in Jiangsu for a long time, and has caused adverse affects in iron production.

The meeting points out that both cases reveal there are local governments who neglect their duties in China’s nationwide effort to retire excess capacity. They are also blamed for their low efficiency and inefficient implementation of state policies in capacity cuts.

Both provincial governments are required to confess to the State Council. Ma Qiulin, vice governor of Jiangsu province and Zhang Jiehui, vice governor of Hebei province will receive administrative warnings, while a total of 138 officials will be held accountable.

The meeting orders Anfeng Iron and Steel Corp. Ltd to tear down all steel furnaces under 1,000 cubic meters. Jiangsu province is required to make an overhaul in the local steel industry to ban any new steel capacity and completely eliminate unqualified steel producers from the market.

Meanwhile, the State Council will carry out a nationwide investigation on cutting fat capacity in some less advanced industries such as iron, steel, coal mining, cement and glass, so as to ensure the unmitigated fulfillment of the country’s target in capacity cuts.