More than 1,400 companies in 19 industries in China have been ordered by the government to cut excess production capacity this year. The move is part of efforts to shift toward slower, more-sustainable economic growth, reports Bloomberg.
The Ministry of Industry and Information Technology said that steelmaking, ferroalloys, electrolytic aluminum, copper smelting, cement production and papermaking are among areas affected. Excess capacity must be idled by September and eliminated by year-end, it said.
Under the plan, more than 92 million tons of excess cement capacity and about 7 million tons of excess steel production capacity are expected to be wiped out, says Zhang Zhiwei, chief China economist at Nomura Holdings Inc. in Hong Kong.
China is struggling to meet its annual economic growth target amid signs of weakening manufacturing. Premier Li Keqiang has suggested that 7% is the minimum acceptable rate of GDP growth. However, the latest PMI indicates this could be difficult to achieve, according to the Bank of Singapore.