National Development and Reform Commission Ma Kai pointed out that the next four measures to control overcapacity industry recently held by the Central Economic Work Conference to promote the structural adjustment of some industries with excess capacity on a very important position. State Council executive meeting held a special study of this issue, clear the principle of adjustment. Recently, the reporter discussed how to lay a good foundation for the adjustment of overcapacity industries next year and interviewed Ma Kai, director of the National Development and Reform Commission. How many industries have overcapacity? Ma Kai said that at present, the problems of overcapacity in the steel, electrolytic aluminum, ferroalloy, coke, calcium carbide, automobile and copper smelting industries are prominent, and the cement, power, coal and textile industries are also potential overcapacity. Specifically, the iron and steel industry production capacity is greater than the market demand of 120 million tons, but there are still under construction capacity of 70 million tons, the proposed capacity of 80 million tons. Aluminum production capacity has reached 10.3 million tons, there is 2.6 million tons of idle capacity. Ferroalloy industry's existing production capacity of 22.13 million tons, the operating rate of only about 40%. Coke industry capacity exceeds demand 100 million tons, as well as the construction and proposed capacity of 30 million tons each. Calcium carbide industry's existing production capacity of 16 million tons, half of the capacity to vent. The total capacity of copper smelting industry to build 2.05 million tons, 1.3 times the end of 2004, the end of 2007 will form nearly 3.7 million tons of capacity, far exceeding the expected capacity of domestic copper concentrate that year. The automobile industry has surpassed the production capacity of 2 million vehicles and the capacity under construction is 2.2 million vehicles. The new capacity that is being brewed and planned reaches 8 million units. Ma Kai pointed out that at present some overcapacity industries, product prices are sharply down. At the end of October this year, the prices of steel products have slipped to the level of the end of 2003, and a considerable part of the prices of steel products have fallen below cost. Some ferroalloy products prices fell 20% to 30%. At the same time, the efficiency of enterprises dropped significantly, and the loss-making enterprises increased. In the first ten months of the steel industry, finished goods inventories increased by 49%, profit growth of only 11.2%, down 52.2 percentage points year-on-year. Cement industry profit fell 60.6%. Automobile industry profits fell 36.7%, loss-making corporate losses increased 86.2%. Judging from the current trend, the consequences of overcapacity in some industries are still under further development. If we do not pay close attention to this problem, the contradictions of resources and environment will be significantly aggravated and the contradictions of structural uncoordination will become even more prominent. Overcapacity is both a challenge and an opportunity Ma Kai pointed out that overcapacity in some industries has many negative effects on economic and social development on the one hand and can also be a rare opportunity for structural adjustment on the other. Judging from past experiences, under the circumstance that the supply capacity is greater than the market demand, market competition will aggravate and enterprises will have the will and pressure to adjust their structure so that the market will be able to phase out some of its backward production capacity. Beginning next year, it is necessary to solve the problem of overcapacity in some industries as a breakthrough in the readjustment of industrial structure and put it in a more important position. The key is to give full play to the fundamental role of the market in allocating resources, make full use of market forces to promote competition and achieve the survival of the fittest. On the one hand, the role of the government in structural adjustment is to deepen reforms, standardize the market order and create conditions for giving play to the role of market mechanism. On the other hand, it is necessary to strengthen the guidance and promote the comprehensive utilization of economic, legal and necessary administrative measures. Four measures to promote substantive adjustment Ma Kai pointed out that promoting the adjustment of industries with excess capacity, the development and reform committee system to take four measures. First, strict market access, control of the new project. To develop a strict environment, energy consumption, water consumption, comprehensive utilization of resources and safety, quality, technology, scale and other standards to improve access threshold. Continue to clean up and reconstruct projects under construction and proposed, to distinguish between the situation, classification disposal. Second, according to laws and regulations, eliminate backward production capacity. While mainly relying on the survival of the fittest in the market, a number of small businesses that destroy resources, pollute the environment and do not have the conditions for safe production are closed according to law. Strive to phase out annual shaft kiln cement production capacity of 50 million tons. Elimination of open and small capacity of less than 10,000 tons of calcium carbide furnace, coke and coke facilities to improve the following 300 cubic meters of ironmaking blast furnace and below 20 tons of steel converter, electric furnace, and reach the scale and safety standards, do not have Integration of transformation conditions of small coal mines. As soon as possible to eliminate the following 5000 kilovolt submerged arc furnace, 100 cubic meters of ferroalloy blast furnace, and gradually shut down a small oil and 50,000 kilowatts below the condensing coal-fired small units. Third, promote technological innovation and speed up mergers and acquisitions. Increase support for the development of key technologies and complete sets of equipment in the textile industry as well as the construction of apparel-owned brands. Encourage large-scale steel group's major technological transformation and new product projects. In accordance with market principles, assets and resources as a link, to encourage mergers and acquisitions of iron and steel, cement, coal, chemical industry and other industries to support the dominant enterprises bigger and stronger and increase industrial concentration. Fourth, improve industry planning and industrial policies, strengthen coordination and cooperation. Mackay said that efforts should be made to strive for a substantial pace of structural control and optimization of the structure of industries in overcapacity next year and to achieve remarkable results through several years of efforts.
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