State Council set to release plan to tackle overcapacity

The State Council will soon release an overcapacity governance program in order to reduce administrative interference and strengthen market regulation, Su Bo, vice minister of the Ministry of Industry and Information Technology (MIIT) was quoted as saying Sunday by China News Service.

Administrative approval cannot help industry development or solve the overcapacity problem in industries, Su was quoted as saying at an annual industry meeting in Cangzhou, North China's Hebei Province on Sunday.

Overly preferential policies provided by local governments under the name of attracting investment have led to market disorder and unfair competition, eventually exacerbating overcapacity, Su said at the meeting, according to the report.

Experts believe enterprises' investment decisions have also been influenced by excessive government interference, adding to the overcapacity problem, the report said.

The government will further cut administrative interference in five major industries that are plagued by overcapacity - iron and steel, electrolytic aluminum, glassmaking, cement and shipbuilding - Su said, noting that administrative approval will be greatly simplified, according to the report.

Meanwhile, an open and fair market will be built by cutting interference from the government and adopting market entry standards, Su said.

To tackle the overcapacity problem, the MIIT released in July the first list of enterprises that need to reduce capacity, which features 1,294 enterprises in 19 industries, including coke, steel and cement, according to the announcement on its website.