The steel industry has taken hard measures to reduce excess capacity


China used to take steel as the key link, a steel belt with all industries, and many areas that prospered because of steel have made great contributions in history. At present, China is still in the process of industrialization, it is impossible to "do not want steel", but it can no longer "rely" on the steel industry, can no longer over-rely on natural resources, but to give full play to the role of the market force mechanism, can be solved by market solutions must be solved by market solutions.

The Central Economic Work Conference listed capacity reduction as the first of the five major structural reform tasks in 2016, for the steel industry, relying on supply-side reform to solve its own long-term structural contradictions is the hope of the steel industry out of the transformation.

Recently, Li Puomin, Secretary general of the National Development and Reform Commission, said at the press conference of the State New Office that strengthening the supply-side structural reform, one of the most important is to reduce capacity. The next stage of supply-side structural reform will focus on steel and other industries, and strive to make breakthroughs in resolving overcapacity through a period of efforts.

"Hard measures" to reduce excess capacity

At present, the world economic situation is complex and volatile, the long-term overlapping contradictions in China are becoming increasingly prominent, environmental indicators are increasing, and capacity reduction, cost reduction, structure optimization, efficiency improvement, capital protection, and innovation are all contents of the supply-side structural reform of the steel industry.

However, China's steel industry is facing serious challenges: first, serious overcapacity, the international market is difficult to absorb, still mainly rely on the domestic market to digest; Second, high-end products are difficult to achieve import substitution, technology introduction began to encounter bottlenecks; Third, the demographic dividend is gradually lost, and middle and low-end products may face the risk of being replaced by products with lower costs and better market growth. Fourth, increasing pressure on energy conservation and emission reduction.

Xu Lejiang, vice president of the China Iron and Steel Industry Association, believes that in the past, the supply of China's steel industry is a typical demand-driven supply, what products are in large demand and high profits, steel mills will rush to produce what, the conversion cycle from insufficient supply to oversupply is very short, and there is no magic effect like Apple mobile phone supply to create demand.

Data show that China's steel industry currently has 400 million tons of excess capacity, but the steel industry overcapacity is not a simple "industry cycle" problem, but the structural supply of steel products is a problem, that is, a large number of homogenized product supply is seriously oversupply, and personalized, can stimulate the demand of effective supply is still insufficient.

Zhu Jimin, executive vice president of the China Iron and Steel Industry Association, pointed out that as far as the current situation is concerned, due to various reasons, China's iron and steel industry has difficulties in resolving the contradiction of serious overcapacity and progress is slow. Therefore, the steel industry must enhance the sense of urgency, based on the overall consideration, with "hard measures" to resolve excess capacity. However, the steel industry should no longer expand domestic demand through "strong stimulus" and "flood irrigation" investment, but to strictly control the increase, actively reduce the amount, optimize the stock, and deal with the three key issues of "money", "debt" and "people".

First of all, no new production can be built, especially in the name of technological transformation to expand capacity. It is necessary to further increase efforts to seriously demonstrate and reasonably determine the target of resolving excess capacity in the steel industry in the next three years. According to market demand, set the national total amount of steel "ceiling", in principle to stop the approval of new capacity technological transformation nuclear increase projects. The state has stopped filing steel projects with new production capacity since 2013, and must strengthen supervision and implementation and strict accountability.

Secondly, for the existing capacity, it is necessary to implement "reduction and replacement". For iron and steel production capacity that does not meet the standards of environmental protection, energy consumption, safety production and unqualified production or elimination, it shall be shut down and withdrawn in an orderly manner according to law and regulations. In this process, we must dispose of a number of zombie enterprises and loss-making enterprises with no hope of turning around. In addition, while reducing excess capacity, we should optimize existing capacity. Iron and steel enterprises should reduce the "quantity" in the process of resolving excess capacity, raise the "quality", promote the upgrading of enterprise products, and accelerate the transformation to high-end, intelligent and green production.

We will use market-based measures to reduce overcapacity

In fact, the process of resolving overcapacity in the steel industry is the process of supply-side structural reform in the industry, but behind the overcapacity, there is the shadow of strong government intervention. Similarly, the elimination of overcapacity cannot be separated from the active action of the government. Xin Guobin, Vice Minister of the Ministry of Industry and Information Technology, pointed out at the 2016 Council (expanded) meeting of the China Iron and Steel Association that the steel industry should resolutely fight the battle to resolve excess capacity and actively and steadily implement capacity reduction; To accelerate the transformation and upgrading of the steel industry, it is necessary to focus on the development of intelligent manufacturing.

The iron and steel industry to resolve excess capacity to adhere to the "market forced, enterprise main body, local organizations, central support, comprehensive policy", to "break the wrist" spirit, combined with deepening reform, enterprise restructuring, optimization and upgrading. In the process of resolving excess capacity, firmly adhere to the concept of reform, the central government will give support, local governments should bear the overall responsibility, and give full play to the enthusiasm of both the central and local governments. We will increase fiscal and tax support to properly solve problems left over from history when enterprises perform social functions. We will strengthen financial support, promptly handle corporate debts and non-performing assets through market-based methods, and guard against financial risks. It is necessary to properly accommodate employees, ensure the bottom line of people's livelihood, and safeguard the legitimate rights and interests of employees. It is necessary to strengthen supervision and assessment, incorporate the withdrawal of backward production capacity into the local assessment index system, strengthen social supervision, and prevent the "resurgence" of eliminated excess production capacity.

As the pace of supply-side reform in the steel industry accelerates, it is important to fully follow the laws of the market, play the main role of enterprises, and pay more attention to using market-oriented methods to resolve overcapacity. Therefore, the iron and steel industry should actively seek transformation, completely change the thinking concept of the planned economy from the bottom of its heart, and change to rely more on human resources, take the road in line with market demand, and take the road of innovative development.

At the same time, it is worth noting that the adjustment and optimization of industrial structure should not only focus on old industries, but also focus on the development of new industries and new forms of business and other new drivers, creating "twin engines", creating conditions for traditional industries to reduce surplus workers, expand new employment, and inject new vitality through innovation and improvement of labor productivity. It is necessary to deepen institutional reform and combine the reduction of excess capacity with the restructuring and optimization of enterprises. We should let the market play a decisive role and let enterprises play a positive sense of self-competition and self-elimination. According to estimates, the elimination of 400 million tons of excess capacity in the steel industry requires about 4 billion to 6.8 billion yuan in subsidies, after subsidies, backward enterprises have a certain power to withdraw from the market.

Therefore, we should continue to vigorously promote the streamlining of administration and decentralization, promote mass entrepreneurship and innovation and the "Internet Plus", cultivate new drivers and develop new forms of business as much as possible, and create a large number of jobs to create conditions for the elimination of excess capacity. However, capacity reduction is a process of both "subtraction" and "addition" and "multiplication", while eliminating backward production capacity, it can rely on technological innovation and national policy support, and new economic hot spots to radiate to other industries to achieve the "multiplier" effect.

(Source: Machine Economic network)