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No easy solution to overcapacity woes

2014-06-04 10:02 Global Times Web Editor: Qin Dexing
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Overcapacity has become one of China's biggest economic challenges. Authorities should take a wide view and explore scientific solutions to all issues related to excessive capacity.

Chinese factories, for example, churned out 13.86 million tons of phosphatic fertilizer in 2009, an amount well beyond local demand. This fertilizer can be exported to nearby Southeast Asian countries such as Vietnam or the Philippines where supplies are limited.

The same strategy could, of course, work for other industries. Domestic infrastructure enterprises should be encouraged to invest overseas - particularly in areas of Asia, Africa and Eastern Europe where demand for energy, telecommunications and transportation infrastructure is growing.

Meanwhile, wanton investment by local governments has also contributed to the country's overcapacity woes. Needless and self-serving administrative interventions must stop. Authorities have to step back and leave the market to steer the distribution of economic resources.

China's myriad overcapacity issues cannot be treated by simple one-size-fits-all orders. Each industry and each problem must be dealt with in its own right. Failure to do so will only lead to further market distortions.

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