Solution to China’s industrial overcapacity setting up more factories overseas, says official

China’s industrial overcapacity problems remain severe and the only way to solve them is by shifting production facilities abroad where demand still has the potential to grow, an official at the industry ministry said on Wednesday.

A decade of rapid industrial expansion has saddled China with price-sapping supply gluts in sectors such as coal, glassmaking, cement, aluminium and steel, but despite several policy initiatives, the government has struggled to force outdated and loss-making plants to restructure or shut down.

"The only route is to speed up going overseas for high-grade production capacity," Huang Libin, an official with the Ministry of Industry and Information Technology, told a briefing.

He said China’s efforts to boost economic cooperation along the old “Silk Road” route, known as the “One Road One Belt” plan, would provide opportunities for domestic industries to shift production abroad.

“For us there is overcapacity, but for the countries along the ‘One Road One Belt’ route, or for other BRIC nations, they don’t have enough and if we shift it out, it will be a win-win situation,” he said.

Huang said tackling overcapacity would be one of the key tasks of China’s next Five-Year Plan covering from 2016-2020.