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        Overcapacity is mainly concentrated in iron and steel, electrolytic aluminum and other 8 industries

        Date:16.02.23

        According to the European Union Chamber of Commerce in China issued the "China's production capacity surplus stand in the way of the party's reform process report in Chinese capacity surplus is mainly concentrated in the eight industries: steel, electrolytic aluminum, cement, chemical industry, oil refining, flat glass, shipbuilding, paper and paperboard industry.
        China's overcapacity problem has been a long time, and showing a worsening trend. Overcapacity in China and the world economy has become increasingly serious, especially in the context of the impact of the global economic crisis on the global market in 2009.
        To iron and steel, for example, China is the world's first major steel producing countries. Group data show that from 2004 to 2014, global steel production increased by 57%, of which China's contribution ratio reached a staggering 91%. China's steel industry production more than half of the world's total output, more than two times the total output of Japan, India, the United States and Russia and four times the total output of the United States and russia.
        "China's steel industry has such a huge production capacity, largely because the Chinese government has been pushing for decades to encourage industrial policy to achieve the" strategic "industry's prosperity and development. Until 2002, the central government continues to implement preferential policies for the iron and steel industry." The report points out.
        According to the results of the European Union Chamber of Commerce, China's iron and steel industry overcapacity mainly has the following drivers:
        Place wants self-sufficiency, resulting in the country's production capacity doubled;
        State owned enterprises are not sensitive to the profit / loss, small / high pollution / low efficiency steel mills in the price decline when the market is closed, the market to recover and resume production;
        The negative effect of the stimulus plan has prompted large steel mills to increase production capacity, and the government hopes to close the small and medium sized steel mills to profitability;
        Local governments to provide energy subsidies.
        The report by the European Union Chamber of Commerce in China said Boston Consulting Company issued a report on the problem of overcapacity in the global steel industry in 2013. The report pointed out that only when the merger of enterprises to enhance the efficiency and profitability of the new enterprise synergy effect, and the government allows new enterprises to use such synergies, mergers and acquisitions to become the solution. Otherwise, mergers and acquisitions only spawned a more massive low profit enterprises, which is to solve the problem of excess capacity, profitability and other fundamental problems play a very limited role 51.
        "Facts have proved that the government to ensure fair competition, lowering the exit threshold intervention is the most effective, if the effective implementation of the improvement of market exit criteria of the Ministry of industry and trade in 2015 in January announced, it will be government intervention step positive progress." The report pointed out that.

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