China Warns Of Punishment For Delaying Coal, Steel Capacity Cuts

8 July 2016

China has threatened to punish regional governments for failing to close unneeded coal mines and steel mills, adding pressure to carry out reforms as the country shifts away from industrial production.

Provincial governments must set capacity reduction targets by July 15 and submit detailed phase-out plans by the end of this month, said Xu Shaoshi, chairman of National Development and Reform Commission, the nation’s top economic planner, according to a report by official Xinhua News Agency. About 800,000 coal and steel jobs are expected to be cut this year amid President Xi Jinping’s supply-side reforms, the Ministry of Human Resources and Social Security said separately on Friday.

Provincial governments that fail to stick to capacity cut plans or miss their targets will be “seriously punished,” Xu said, according to the report Thursday. Regions shouldn’t waver in the face of slowing economic growth and unemployment and refrain from restarting closed mines and mills, he said.

China’s coal output will fall by 280 million tons this year, and steel capacity will shrink by 45 million tons, Xu said at the World Economic Forum in Tianjin last month. The coal capacity cut target was modified in his statements Thursday to “more than 250 million tons,” while the steel target remains the same.

The country plans to eliminate as much as 500 million tons of coal production capacity, and consolidate a further 500 million tons, and cut as much as 150 million tons of steel making capacity by 2020. China is still targeting 1.8 million in total job cuts for both industries over three to five years, Xin Changxing, vice minister of the human resources ministry, said at a briefing in Beijing.

Output from both industries has fallen in the first five months of the year, with coal dropping 8.4 percent and steel down 1.4 percent.


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