China's overall plan to resolve overcapacity is about to be introduced
2025-08-23 12:21:19
Abstract According to reliable sources, the National Development and Reform Commission, the Ministry of Industry and Information Technology, and relevant departments are currently working on addressing the issue of overcapacity. A comprehensive plan has been drafted to tackle this challenge, with a particular focus on five key industries: steel, cement, electrolytic aluminum, flat glass, and shipbuilding. The initiative aims to improve efficiency and stabilize market conditions by reducing excess capacity in these sectors.
Authorities have confirmed that the main strategy to resolve overcapacity involves setting strict access standards and leveraging market mechanisms to phase out outdated production capacities. This approach is expected to bring the industry’s overall capacity utilization rate up to around 80%.
According to data from the China Nonferrous Metals Industry Association, in 2012, the utilization rate for alumina was at 72.5%, while that of electrolytic aluminum stood at 78%. This indicated that the aluminum industry was already facing overcapacity issues. Additional public data also revealed that the steel industry operated at only 67% capacity, while both the cement and flat glass industries had utilization rates below 75%.
Addressing overcapacity has become a major priority for the central government’s economic agenda this year. On May 10th, the "Notice on Resolutely Curbing the Blind Expansion of Overcapacity Industries" was officially issued. The notice clearly outlined that the industries of steel, cement, electrolytic aluminum, flat glass, and shipbuilding would be the main focus of this year's efforts.
It is reported that, in line with the guidelines set forth in the notice—emphasizing "respecting the law, differentiated policies, multi-pronged approaches, and addressing both symptoms and root causes"—the Ministry of Industry and Information Technology is actively studying and formulating an overall plan to resolve the overcapacity problem. The plan includes measures such as phasing out some outdated facilities, relocating others, integrating certain businesses, and eliminating uncompetitive operations.
On July 25th, the Ministry of Industry and Information Technology released the first batch of enterprises targeted for the elimination of outdated production capacity. A total of 1,294 companies across 19 different industrial sectors were included in this initial round of action. This move marks a significant step forward in the government's broader effort to streamline the economy and promote sustainable growth.
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