China's top economic planning body the NDRC has set a deadline for provinces to submit their plans for the reduction of overcapacity in key industries such as steelmaking.
The commission has set a 31 August deadline for the remaining provinces to submit their overcapacity plans. The NDRC is also demanding strict regulatory implementation. The closure of illegally constructed, or unlicensed capacity will be an important part of efforts to reduce oversupply and potential sanctions against such producers will include punitive tariffs, non-renewal of production licences and the halting of lending by financial institutions.
The NDRC will prevent new production capacity coming on line by such means as halting construction projects. The completion of new capacity will be based on stricter state and departmental approvals and the NDRC promises penalities for any illegal developments.
China is looking to reduce overcapacity in a number of sectors, including iron and steel. The government aims to close 28.7mn t of steelmaking capacity this year, although much of that is already obsolete or off line. The measure hope to make the industry more profitable and efficient. And China has said it will not approve any additional iron, steel and cement capacity after 2017 as it focuses on quality development and reducing pollution.
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