Sign of re­solve for re­form

China Daily (Hong Kong) - - COMMENT - —BEI­JING NEWS

In a show of its firm de­ter­mi­na­tion to elim­i­nate over­ca­pac­ity in the steel sec­tor, the cen­tral gov­ern­ment re­cently ex­tended pun­ish­ments to the of­fi­cials of two steel com­pa­nies who were re­spon­si­ble for the vi­o­la­tions of rel­e­vant laws and reg­u­la­tions. The in­spec­tion teams sent by the State Coun­cil, China’s Cabi­net, found that Huada Steel Cor­po­ra­tion in East China’s Jiangsu prov­ince was still pro­duc­ing ob­so­lete steel prod­ucts from scrap steel and iron, which the au­thor­i­ties had iden­ti­fied as back­ward steel pro­duc­tion that needs to be elim­i­nated, while An­feng Steel Cor­po­ra­tion in North China’s He­bei prov­ince had launched a steel smelt­ing project with­out gain­ing of­fi­cial ap­proval, as re­quired.

With­out the con­nivance and even en­cour­age­ment of the lo­cal gov­ern­ments con­cerned, the two en­ter­prises would not have had the bold­ness to ig­nore the di­rec­tives of the cen­tral gov­ern­ment. In fact, de­spite re­peated in­struc­tions from the cen­tral gov­ern­ment to cut over­ca­pac­ity in some sec­tors af­ter last year’s Cen­tral Eco­nomic Work Con­fer­ence, slug­gish progress has been made to this end in some re­gions, es­pe­cially in the steel and coal sec­tors that are se­ri­ously plagued by over­pro­duc­tion. Some re­gions have even seen the over­ca­pac­ity elim­i­na­tion cam­paign as an op­por­tu­nity to make new gains, trans­mit­ting a wrong mar­ket mes­sage.

China’s pre­vi­ous ex­ten­sive eco­nomic model played a role in in­creas­ing its gross do­mes­tic prod­uct, but that growth mode has also re­sulted in pro­duc­tion in some sec­tors far ex­ceed­ing the de­mand. If the ex­cess pro­duc­tion is not re­duced, the sur­vival of these sec­tors will con­tinue to be at the cost of re­sources and en­vi­ron­men­tal degra­da­tion, even put high-qual­ity pro­duc­tion or en­ter­prises in a dis­ad­van­ta­geous po­si­tion and cre­ate new in­equal­ity.

It is to be hoped the pun­ish­ments ex­tended to the two steel cor­po­ra­tions will serve as a re­minder to oth­ers that the cen­tral gov­ern­ment is se­ri­ous about ad­vanc­ing sup­ply-side struc­tural re­form and bid­ding farewell to the coun­try's old eco­nomic growth model.

Newspapers in English

Newspapers from China

© PressReader. All rights reserved.