Authorities from North China's Hebei Province said they will remove local government and Party officials from their positions if iron and steel factories are created or if existing ones resume operations after being closed, which experts said is part of their efforts to cut overcapacity.
The Hebei provincial committee of the Communist Party of China and the Hebei government jointly released the notice, saying they will put the blame on heads of the government and Party committees in cities and counties in the province for weak supervision and mismanagement over iron and steel projects, the Xinhua News Agency reported on Tuesday.
The notice said cases involving such officials will be referred to the local disciplinary watchdog or judicial authorities.
"As China's largest steel producer, Hebei is facing the daunting task of reducing excess lower-end industrial capacity, and needs such administrative orders to fulfill the task," said Lin Boqiang, director of the Center for Energy Economics Research at Xiamen University.
Cutting overcapacity in sectors like coal and steel is part of the country's supply-side structural reform and high on the government agenda, the Xinhua News Agency reported.
The Beijing Youth Daily reported in March that 60 percent of steel companies would be closed or merged by 2020.
Lin told the Global Times that the notice is a warning to some local officials who were passive in reducing overcapacity for fear of its consequences, including the resettlement of a large number of workers that have been laid off.
Feng Liguo, a vice-research fellow at the Beijing-based China Enterprise Confederation, told the Global Times that fluctuations in steel prices may be another reason that closed factories resume operations.
"Aside from administration intervention, the government needs to let market forces play their role. It could revamp the industry through mergers and reorganization," said Lin.
According to an April 17 Hebei government report, between 2011 and 2015, the province cut the capacity of the iron industry by 34 million tons and 41 million tons in the steel industry.
