Baosteel moving plants out of Shanghai to cut pollution

Baosteel Group, the mainland's second-biggest steel producer, has begun moving part of its production facilities out of Shanghai in response to the city's efforts to reduce pollution.

In a pact with the municipal government signed in July, the steel giant pledged to cut iron and steel output in Shanghai by more than 12 million tonnes - about a third of its total output - over the next five to 10 years.

The facilities will be moved to other parts of the country, including Zhanjiang in Guangdong and Xinjiang, and new production lines will also be built outside Shanghai.

Shanghai residents are speculating that Baosteel's entire production process could be moved to underdeveloped areas, with China's commercial capital striving to transform itself into a global financial centre by shifting its focus from manufacturing to services.

Adopting the mantra "empty the cage and let the right birds in", the municipal government hopes to focus on creating environmentally friendly projects while shutting down heavily polluting factories.

Baosteel's profits represent about 6 per cent of the total net income generated by major Shanghai-based industrial companies. But its energy consumption has also accounted for about a quarter of the total used by the city's major industries, according to industry consultancy Mysteel.