Is China’s bid to slash the size of its polluting steel and coal industries working?
Analysts have cast doubt on whether the cuts announced by the government will have any meaningful impact on production
China’s cabinet says it has “basically completed” its targets this year to reduce excessive production capacity in the nation’s steel and coal sectors, but analysts have questioned whether the government’s campaign will have any real impact.
Premier Li Keqiang ordered his ministers and local officials to shut down 45 millions tonnes of steel capacity this year and 280 million tonnes in the coal sector, with quotas allocated for each province to meet.
As the end of 2016 approaches, local officials have declared to Beijing they have done their part, leading the cabinet to say last week that the war against excessive capacity was “ahead of schedule”.
The move to cut the size of China’s coal and steel sectors comes as the government attempts to shift the focus of the nation’s economy away from heavy industry and cheap manufacturing in favour of the high tech and service sectors.
Beijing is also under pressure from trading partners including the European Union, who have accused China of dumping its glut of unwanted steel on their markets.
But a take deeper look at the government’s efforts to cut production capacity and the picture becomes much more murky.