China orders production cuts in some industries

Jul 27 2013, 15:51 IST
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SummaryChina’s government has ordered companies to close factories in 19 industries where overproduction has led to price-cutting wars, affirming its determination to push ahead with a painful economic restructuring despite slowing growth.

of industry and information technology said it aims to eliminate “backward production capacity”, indicating it also is meant to improve efficiency in energy and resource use.

Other industries targeted include coke, calcium carbide, aluminium, smelting of lead and zinc, paper, alcohol, monosodium glutamate, citric acid, leather, printing and dyeing, chemical fibre and batteries.

The production glut is in part a lingering cost of the multibillion-dollar stimulus that helped China rebound quickly from the 2008 global crisis.

Beijing pumped money into the economy with a wave of spending, much of it financed by state banks, on building new subways, bridges and other public works. Higher revenues for state-owned construction companies and suppliers of steel and other building materials propped up inefficient producers and encouraged some to expand.

In the cement industry, Thursday's order calls on companies to shut down facilities with annual production capacity of more than 92 million tonnes. Steel producers were ordered to eliminate 7 million tonnes of production capacity.

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