The year 2016 witnessed great accomplishments in overcapacity reduction as China’s production of steel and coal was cut by 45 million tons and 250 million tons, respectively.

Overcapacity reduction is a significant part of the current supply-side structural reform, and the State Council is paying great attention to the initiative.

According to results of the third inspection led by the State Council, recent progress in overcapacity reduction is due to good planning and coordination, enhanced monitoring, and solid implementation of related policies by government departments.

Top-level designs

In 2016, State Council departments, including the National Development and Reform Commission and the Ministry of Industry and Information Technology, coordinated with local governments and State-owned enterprises in stipulating targets and missions.

A series of policies concerning special funds, taxation and financing, environment protection, and re-employment of laid-off workers were then released.

The top-level designs offered strong policy support, which ensured smooth development of overcapacity reduction.

Enhanced monitoring

Many illegal and substandard enterprises were forced to close, while rewarding policies were introduced to encourage transformation and upgrading of enterprises in steel and coal sectors.

Inspection teams were sent to local regions to monitor major coal production regions, according to an official from NDRC.

Transformation and upgrading

Efforts were made to integrate former large steel enterprises on the way to industry transformation and upgrading.

China Baowu Steel Group is a typical example of such efforts. It was created last year by the merger of Shanghai-based Baosteel Group and Wuhan Iron and Steel Corp in Hubei province.

Overcapacity reduction will also be coordinated with optimization of regional industries, upgrades of products and technologies, promotion of the Belt and Road Initiative and international capacity cooperation, according to NDRC.