By Zhou Jianqi, Enterprise Research Institute, DRC

Research Report No.72, 2018 (Total 5347) 2018-4-24

Abstract: Significant headway has been made in cutting steel and coal production capacity, but inefficient operation is not totally solved. The two sectors are merely out of difficulties, and the operating efficiency remains low. The industrial performance is on the whole following the old track of scale management, with heavy debt burden and uneven development. The short and medium-term plans cannot solve the structural problems relating to capacity, indicating that the aggregate reduction itself is inadequate, measures to encourage early movers are insufficient, the mechanism to cut low efficient capacity is weak, and unified standards for fair competition are deficient. To upgrade the quality of the steel and coal industry, we need to establish a market-oriented and law-based capacity management model. It is suggested that relevant departments should take the comprehensive standard system as the key driver and adopt a multidimensional, pluralistic and real-time supervision mode so as to impose strong restraint on steel and coal production capacity; comprehensively implement law-based policies to ensure that the inefficient capacity could exit the market in time; guide the industry to optimize the capacity structure and improve the supply quality in light of market demand; set up benchmarks for upgrading production capacity, deepen relevant reforms, support technological innovation, and enhance the capacity of market players for self-governance.

Key words: capacity management, de-capacity effect, inefficient capacity problems, policy options