Stormy overcapacity meeting shows scope of problem

Hu Zucai, vice-minister of the National Development and Reform Commission, and Zhu Hongren, chief engineer of the Ministry of Industry and Information Technology, agreed it would take a long time to digest the overcapacity, as it is divided between different sectors.

"Some are apt to be transferred, some should be upgraded, and some illegal firms must be closed," Hu said.

"The government should end its preferential tax policies. The land, environment and resources must be priced according to their value to force the enterprises to weed out overcapacity and improve efficiency," he said, adding that "boosting domestic demand is another way to digest redundant production".

The ministers' approach however, was greeted by harsh criticism.

"Similar remedies were prescribed five years ago. They are useless. It's better to directly tell the local governments which enterprises can go bankrupt, to what extent you can tolerate a decline in tax revenue and how many jobs you can afford to lose in a year," said Zhang Xiaoji, a researcher with the Development Research Center of the State Council.

"You created the overcapacity problem through an 'almighty government' way. It is ridiculous that you intend to solve the issue in the same way. The problem cannot be solved until you know what market is," Zhang forcefully told ministry representatives.

Han Qide, vice-chairman of the CPPCC National Committee, suggested in his concluding speech at the meeting to consider the government like a doctor that treats "chronic diseases".

Steel sector still facing profitability problems	China's economy grows 7.7% in 2013