The National Development and Reform Commission said that it’s roughly half way towards meeting its overcapacity removal targets for the Chinese steel and coal sector in 2017.
The latest data from NDRC indicates that China nationwide steel industry has withdrawn 31.7 million tons of productive capacity this year, completing 63.4% of the target for 2017.
The coal sector has withdrawn 68.97 tons of capacity, pulling through 46% of the annual target.
The reductions following the launch in January of inspections by government teams specially appointed to resolve the problem of overcapacity in the steel and coal sectors, who visited a total of 228 steel enterprises and 150 coal mines.
According to Meng Wei, vice-chairman of NDRC’s policy research office, the inspection teams had a mandate to require the shutdown or removal of “lagging” steel productive capacity as well as outdated coal mines.
These efforts were not without problems however, with Meng indicating that inspection teams had to be re-dispatched to 13 of China’s provinces at the start of May, following the recent revelation of forged work measures in various locations.
Meng also noted that the steel capacity removal data does not include illegal substandard steel production, which local governments have already brought to an end in the wake of heightened inspection work.
According to Meng the removal of excess steel capacity has dramatically improved industry efficiency, with member enterprises of the China Iron and Steel Association reporting profits of 23.28 billion yuan in Q1 2017, as compared to losses of 8.75 billion yuan for the same period last year.