On July 22, 2015, the State Council Information Office held a press conference to discuss key developments in China's industrial and communications sectors during the first half of the year. The Ministry of Industry and Information Technology (MIIT) spokesperson provided detailed insights into the industry's performance, while Deputy Director Huang Libin from the Operation Bureau addressed specific measures aimed at tackling overcapacity in key sectors during the 13th Five-Year Plan period.
Huang highlighted that industries such as coal, steel, cement, and flat glass are currently facing significant challenges due to overcapacity. He explained that rapid economic expansion in previous years led to excessive production scale, which has now contributed to a difficult situation as the economy enters a downturn. Structural adjustments remain a major challenge, and many of these industries have seen declining output. For example, crude steel production fell by 1.3% in the first half of 2015, while cement output dropped by 5.3%, and glass production declined by 4.2%. Profit margins have also suffered significantly—coal industry profits fell by over 60% in the first five months, and both cement and glass industries saw similar declines. The metallurgical sector experienced a 36% drop in profits, underscoring the severity of the crisis.
To address these issues, the MIIT outlined five key strategies for resolving overcapacity. First, strict control over new production capacity will be enforced, with a focus on implementing equal or reduced replacement for new projects. Second, the elimination of outdated and inefficient production capacity will be accelerated, with this year’s targets already set and efforts intensified to meet them. Third, the promotion of mergers and acquisitions is being prioritized, with special attention given to managing debt restructuring and employee reassignment during the process. Several supportive policies were introduced in the first half of the year, including tax incentives, M&A loans, and foreign exchange regulations to facilitate smoother transitions.
Fourth, expanding domestic demand is a crucial step, particularly through promoting the use of steel structures and green building materials in rural areas. This initiative aims to increase the consumption of high-quality steel and aluminum products. Finally, the government is strengthening international cooperation, especially with neighboring and emerging countries, encouraging leading enterprises to expand globally and seek new markets. These comprehensive measures reflect a strategic effort to stabilize and revitalize key industries amid ongoing economic challenges.
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