Overcapacity still a problem in China - MIIT

BEIJING (Scrap Monster): China's industrial enterprises still face the problem of overcapacity, the country's industry watchdog said, noting that domestic demand will face downward pressure in 2014.

According to a report posted by the Ministry of Industry and Information Technology, since 2012, the overcapacity concern has started spreading from traditional industries including iron, steel and chemicals - to emerging ones such as carbon fiber and solar power, and capacity utilization is less than 75 percent in some sectors.

According to data from the National Bureau of Statistics, industrial companies saw their combined year on year profit growth slow for a third consecutive month to 9.7% in November.

The MIIT predicted that China's industrial output growth will be around 9.7% for 2013, down from last year's 10%.

Analysts said that overcapacity has become a threat to China's future development.

Authorities should encourage production of high-quality goods as well as cost-effective and energy-saving production lines, as this will help drive industrial consolidation and ease overcapacity, Zhou Hongchun, a researcher at the State Council's Development Research Center, told the Global Times Monday.

Based on guidelines issued by the State Council in October for resolving the country's overcapacity problem, the steel manufacturing industry is set to cut production over the next five years by 80 million tonnes.

Courtesy: www.steelguru.com