Tags: China | manufacturing | Li | economy

China to Cut Manufacturing Capacity as Li Reshapes Economy

Thursday, 25 Jul 2013 09:52 PM

China ordered more than 1,400 companies in 19 industries to cut excess production capacity this year, part of efforts to shift toward slower, more-sustainable economic growth.

Steel, ferroalloys, electrolytic aluminum, copper smelting, cement and paper are among areas affected, the Ministry of Industry and Information Technology said in a statement. Excess capacity must be idled by September and eliminated by year-end, the ministry said, identifying the production lines to be shut within factories.

China’s extra production has helped drive down industrial- goods prices and put companies’ profits at risk, while a survey this week showed manufacturing weakening further in July. Premier Li Keqiang has pledged to curb overcapacity as part of efforts to restructure the economy as growth this year is poised for the weakest pace since 1990.

“This detailed list shows the government is serious in its efforts to restructure the economy and is prepared to tolerate the necessary pain,” Zhang Zhiwei, chief China economist at Nomura Holdings Inc. in Hong Kong, wrote in an e-mailed research note.

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 under the government’s plan, Zhang wrote. Nomura maintained its forecast of 7.4 percent economic growth for China in this quarter and 7.2 percent in the fourth quarter.

Cement Company

Xinjiang Tianshan Cement Co., listed on the Shenzhen Stock Exchange, is among companies on lists published by the MIIT accompanying the statement. It was told to phase out 450,000 tons of capacity. One factory of state-owned Wuhan Iron & Steel Group Corp., has been told to eliminate 400,000 tons of steel capacity, according to the MIIT.

Separately, China central bank Governor Zhou Xiaochuan wrote in People’s Daily that the nation still faces large downward pressure on the economy. He reiterated that the country will pursue a “prudent” monetary policy and “reasonable” levels of money supply and credit, according to the article in the Communist Party mouthpiece.

The industry ministry said on July 24 that China will accelerate the phase-out of overcapacity in the second half of this year.

China is struggling to meet its annual economic growth target amid signs of weakening manufacturing. A preliminary reading on July 24 for a Purchasing Managers’ Index released by HSBC Holdings Plc and Markit Economics was 47.7, which if confirmed in the final report Aug. 1, would be the lowest in 11 months. Readings below 50 indicate contraction.

© Copyright 2017 Bloomberg News. All rights reserved.

 
1Like our page
2Share
Markets
China ordered more than 1,400 companies in 19 industries to cut excess production capacity this year, part of efforts to shift toward slower, more-sustainable economic growth.
China,manufacturing,Li,economy
408
2013-52-25
Thursday, 25 Jul 2013 09:52 PM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved