|
Making markets matter
2013-12-26
In a bid to tackle overcapacity in China's steel industry, the central government plans to cut production by 80 million metric tons by the end of 2017. With a reduction quota of 60 million tons, Hebei province will bear the brunt of the measure. Hebei is the heartland of steel production in China, and consequently has some of the worst air pollution in the country.
However, officials and experts stressed the importance of the market, rather than political will, in achieving that goal.
"Administrative measures may help to cut production capacity effectively over the short term, but there is the danger of a rebound if the influence of the market is not taken into consideration," said Yang Chaofei, former chief engineer at the Environmental Protection Ministry.
However, he pointed out that an imbalance between administrative measures and market-driven reform poses a big problem, and so the next step must be to discover a fast and effective method of increasing the influence of market forces.
Xu Xiangchun, director of information at the industry consultancy Mysteel, said administrative measures only provide temporary remedies and will not address key factors in the problem. By comparison, market-oriented measures are a long-term and effective tool.
"The government has to create a level playing field for every candidate in the market and not interfere with the companies' operations," said Xu.
Li Xinchuang, head of the China Metallurgical Industry Planning and Research Institute under the China Iron and Steel Association, urged the government to introduce strict environmental standards to help reduce production capacity and to ensure that the standard applies equally to every producer, no matter whether they are large State-owned enterprises or small private businesses.
(China Daily 12/26/2013 page5)
|
