The Cabinet has laid out detailed plans to curb overcapacity in industries such as steel, aluminum, cement and wind power, warning that the country’s economic recovery could otherwise be hampered.
In a reiteration of existing policy targets, the State Council said meeting the government’s long-standing goal of reducing overcapacity was urgent because the result of inaction would be factory closures, job losses and rising bad bank loans.
In a notice posted on the internet it said, “What especially requires our attention is that it is not only traditional industries such as steel and cement that suffer from productive overcapacity and are still blindly expanding.”
While highlighting overcapacity in sectors such as steel and cement — both energy-guzzling and polluting — it also aimed at new industries such as wind power equipment and silicon.
The Cabinet said it would no longer approve or support any new steel projects or any expansion in existing projects.
Shenzhen Daily also reports that the wind power industry was mentioned, which is perhaps surprising. It said that in 2010 Chinese companies would produce equipment equivalent to 20 million kilowatts of capacity, but that the country would install only 10 million kilowatts of actual capacity.
To tackle this oversupply, the Cabinet said it would in principle refuse approval the construction of complete wind-power equipment factories. It also banned investors in the sector from using locally produced equipment, aiming to prevent local governments from building their own equipment plants.