Long way to tackling overcapacity
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E-mail Xinhua, May 22, 2014
Long road lies ahead for China to tackle the overcapacity and adjust its industrial structure, according to a conference held by the State Council Information Office on Thursday.
A survey by the Development Research Center (DRC) of the State Council showed 67.7 percent of the 3,545 enterprises represented at the conference believed that they need "more than three years" to cope with current overcapacity while 22.7 percent said "over five years".
Huang Qunhui, director of the Institute of Industrial Economics under Chinese Academy of Social Science, said that the survey showed that the problems of overcapacity will remain for a long time, unless something radical can be done.
Steel, cement, electrolytic aluminum, sheet glass and shipbuilding in China all have severe capacity waste rates, much higher than the global average . Emerging sectors like photovoltaic and wind power also struggling with overcapacity, the conference said.
Slower economic growth after decades of "full steam ahead" has meant fewer opportunities to ease the trouble through economic stimulus.
The central government has implemented measures such as timely monitoring, less administrative approval, a more free market and supportive laws, according to the conference.
Huang estimated that China is not likely to become a great industrial power until 2030 when the overcapacity issues are properly settled.
The key to solving such problem is to rein in market intervention, Huang added.
Zhang Liqun, an economist with the DRC, said that the former system should be changed to adapt to a market-oriented situation, and local government must abandon the blind pursuit for GDP growth that caused massive waste and irrational expansion.
He stressed that tackling overcapacity cannot be delayed amid slowing economic growth because more competitive enterprises will inject fresh vigor in stabilizing China's sustainable development. Endi
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