Bejing announced on Wednesday new regulations to limit overcapacity in some sectors and encourage growth in others, the Wall Street Journal reported. The directive requires lending curbs be applied to companies and investment projects in violation of industry policies. Such companies, as well as others in sectors with excess capacity, will not be permitted to issues bonds or shares. Beijing fears that sectors such as steel and cement which are regularly plagued by excess capacity could lead to bad investments, bad loans and job losses if they are not reigned in. Meanwhile, sectors such as textiles and automobiles will benefit from government restructuring. Observers, however, remain wary, noting that comparable policy directives from on high are not always implemented on the ground, as with previous failed efforts to consolidate the steel industry.
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