Miao Wei, minister of industry and information technology Wang Zhuangfei / China Daily

China will spend 100 billion yuan ($15.3 billion) over the next two years to relocate workers in steel, mining and other sectors suffering from overcapacity, officials from the nation's industry watchdog said on Thursday.

The government is also trying to close a large number of nonprofitable State-owned enterprises, known as "zombie" companies, to curb production of steel, flat glass, cement and more materials amid weak demand, said Feng Fei, vice-minister of industry and information technology.

"The 100 billion yuan fund, set up by the central government, is designed to help laid-off workers get new jobs by offering training and other services," he said at a news conference, adding that local authorities will play a key role in solving the layoff issue.

The central government is more in favor of mergers and acquisitions instead of bankruptcies in eliminating zombie enterprises, Feng said.

Because of sluggish foreign exports, China's industry output grew by 6.1 percent year-on-year last year, while the rate was 8.3 percent in 2014, according to Miao Wei, minister of industry and information technology.

Miao estimated that the growth rate this year will stay around 6 percent.

"It will not be practical to pursue faster growth," he told the same news conference on Thursday.

The minister said that besides encouraging growth of technology-intensive emerging sectors, eliminating surplus production capacity is a key to keeping industry readings on a healthy track.

The worst-affected industries in China's industrial restructuring include coal, steel, cement and glass.

As the country aims to cut crude steel production by 100 million to 150 million metric tons in the next five years, roughly half a million workers will need to find jobs elsewhere, according to an estimate from the China Iron and Steel Association.

Some companies in sectors with overcapacity are making attempts to send workers to industries that are better off.

Heilongjiang Longmay Mining Holding Group Co, an SOE that operates four major mines in Heilongjiang province, has relocated 22,500 workers to agriculture, timber and public service areas since November.

Declining demand sank coal prices, leaving 90 percent of the mining companies losing money, according to Jiang Zhimin, deputy chief of the China National Coal Association.

But skepticism remains. Gao Jianqiang, an instrument technician from a medium-sized steel factory in the inland industrial city of Lanzhou, said he does not put all his hopes in the government fund.

"There are just too many factories that are not doing well. One-hundred billion yuan sounds like a huge sum, but I do not think it will solve problems for everyone," said the 45-year-old.

The factory Gao works for lost 7 billion yuan last year.

Gao said some of his colleagues will be hired by a subway company after the city's first underground railway line opens in two years. He said he had no idea whether he will be able to find a new job.

Heilongjiang Daily contributed to this story.

gaoyuan@chinadaily.com.cn