The National Metallurgical Bureau has adopted strict methods to regulate the mainland's steel market during the next three years in a bid to reduce production and cut losses.
No new steel-making projects will be approved for the next three years and projects without approval will be stopped immediately, the People's Daily reported.
The bureau will also reduce the number of steel production permits - which will reduce inferior steel production by two million tonnes - and mergers between existing bankrupt steel productions will be encouraged.
Steel-making enterprises that do not meet environmental, energy consumption, and quality criteria will be closed. Meanwhile, steel that does not meet a certain standard will not be allowed to enter the market.
The bureau hopes these methods will improve steel quality and steel companies' profits by narrowing the gap between supply and demand.
The amount of steel produced will also be cut 10 per cent this year through these measures.