BIZCHINA / Weekly Roundup

Industries dealing with overcapacity
(China Daily)
Updated: 2006-05-08 06:31

Investment-led growth in China's economy remains strong, but an increasing number of sectors are plagued by overcapacity, said Li Yong, China's vice finance minister on Saturday in a presentation at the Asian Development Bank's annual meeting in India.

Iron and steel

Last year, China produced 348 million tons of steel out of its annual capacity of 470 million tons, says the National Development and Reform Commission (NDRC).

China will cut annual iron production capacity by 100 million tons and annual steel production by 55 million tons over the next five years.

Aluminium

In 2005, total production capacity in the country's aluminium industry reached 10.7 million tons, but national consumption of aluminium only stood at 7.12 million tons, accounting for 75 to 78 per cent of production capacity.

China will continue to apply macro-economic control measures on the aluminium industry, in order to structurally readjust the entire sector, says the NDRC.


Chinese workers produce cars at the assembly line at the Changan Ford car factory in Chongqing in this May 27, 2005 file photo. [Reuters]
Automotive

Annual capacity now stands at 8 million units, already exceeding projected sales of 5.5 million units in 2005.

Ferroalloy

The State Council urged the further elimination of outdated facilities, including open carbide furnaces with capacities below 10,000 tons, ferroalloy ore furnaces below 5,000 KVA, and ferroalloy blast furnaces below 100 cbm.

Coke

Annual national coke output reached 300 million tons, with domestic coke consumption at a mere 230 million tons.

The NDRC says China will curb overcapacity in the coke production industry, and encourage consolidation to boost competitiveness.

Calcium carbide

The State Council urged the continued elimination of outdated facilities, including open carbide furnaces with capacities below 10,000 tons.

Cement

China produced 1.06 billion tons of cement last year, 9.3 per cent more than in 2004. That growth rate, however, was 3.2 percentage points lower than in 2004.

China will continue to adjust the structure of the cement industry, in order to ease overcapacity and centralize the industry, says the NDRC.

Coal

The State Council urged the continued elimination of outdated facilities, including coal-fired mills under 50,000 KW, as well as unsafe coalmines.

Textiles

According to some industry analysts, profit growth in the Chinese textile industry will slow down to a certain extent, with the overall profit margin slipping to between 2.5 per cent and 3.1 per cent.

Copper smelting

Total copper smelting production capacity currently stands at 2.05 million tons, and is expected to reach 3.07 million tons by late 2007. Copper ore from the domestic market can now only meet about 33 per cent of iron smelting capacity, and there is still room for further development in the copper smelting industry.

Electricity

Electrical production capacity reached 500 million kilowatts in 2005, with overall capacity now standing at 800 million kilowatts. This figure includes 300 million kilowatts of capacity from facilities in development or currently under construction.


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