'Early warning' on capacity
China aims to establish an "early warning system" that would aggregate industrial data from several sources and provide signals of possible overcapacity, officials said on Wednesday.
Chen Bin, director-general of the National Development and Reform Commission's industrial coordination department, told a news conference that an information platform covering industrial capacity will be developed.
The platform will exchange the NDRC's information with data from the Ministry of Land and Resources, the Ministry of Environmental Protection and the China Banking Regulatory Commission, to improve the accuracy of data analysis.
Overcapacity is seen as a major barrier to China's goal of maintaining sustainable growth in 2014.
Chen said he is confident of "partially" solving the problem this year as "many local governments have realized the downside and are working on it with us".
China's GDP grew 7.7 percent last year to 56.88 trillion yuan ($9.4 trillion), the National Bureau of Statistics reported on Monday. That was in line with the central government's target, but there are still problems to be resolved.
"Overcapacity is one of the most important challenges that China is facing in the economic development sector," said Fan Gang, director of the National Economic Research Institute of the China Reform Foundation.
He said that governments of third-tier cities and remote areas should be aware of the risks of excessive infrastructure construction, since so many people in those areas spend most of their time working elsewhere.
Migrant workers "go to big cities such as Beijing, Shanghai and Guangzhou for most of the year, which will result in low profitability for projects in their hometowns", he said. "That could lead to financial risks."
The central government acted to reduce overcapacity last year as it tried to achieve a long-term solution while also accelerating industrial upgrading.
President Xi Jinping stressed that the country will no longer evaluate local government officials' performance by GDP growth alone.
The government also announced guidelines for reducing overcapacity in five industries: steel, cement, electrolytic aluminum, sheet glass and shipbuilding.
The steel industry has been through a prolonged period of losses caused by rising imported iron ore costs and falling steel prices.
Li Xinchuang, head of the China Metallurgical Industry Planning and Research Institute, said the industry should avoid adding further capacity and the government should follow strict procedures to close polluting, low-efficiency steel plants.
In the electrolytic aluminum sector, the capacity utilization rate is as low as 78 to 80 percent, according to the China Nonferrous Metal Industry Association.
Although aluminum capacity was supposed to be cut by 1.9 million metric tons last year, the reality was quite different, and there's still much work to do, said Wan Ling, manager of China nonferrous metals at commodity data firm CRU International Ltd.
Facilities closed
The Ministry of Industry and Information Technology has said that obsolete production lines involving 1,569 companies in the five troubled sectors were shut down in the past year, indicating progress in dealing with overcapacity.
Ou Hong, deputy director of the investment department of the NDRC, said that the government will strive to optimize the role of investment in the country's economic growth this year.
He said the government will invest more in areas where the market isn't fully effective, giving support to environmental protection and technological innovation.
It will speed up formulation of regulations for private capital's participation in sectors including finance, oil and natural gas, power, rail transport, telecommunication, resources and public services, he said.
Zhang Yongjun, deputy head of the Research Department of the China Center for International Economic Exchanges, said that overall investment may decline in 2014 and conditions in the financial sector will have the largest impact on economic development.
Chen Wenling, chief economist of the CCIE, said there is still much uncertainty and risk with the global economy.
"China's macroeconomic policy should be more active and strategic to avoid any impact from external risks," he said.
The platform will exchange the NDRC's information with data from the Ministry of Land and Resources, the Ministry of Environmental Protection and the China Banking Regulatory Commission, to improve the accuracy of data analysis.
Overcapacity is seen as a major barrier to China's goal of maintaining sustainable growth in 2014.
Chen said he is confident of "partially" solving the problem this year as "many local governments have realized the downside and are working on it with us".
China's GDP grew 7.7 percent last year to 56.88 trillion yuan ($9.4 trillion), the National Bureau of Statistics reported on Monday. That was in line with the central government's target, but there are still problems to be resolved.
"Overcapacity is one of the most important challenges that China is facing in the economic development sector," said Fan Gang, director of the National Economic Research Institute of the China Reform Foundation.
He said that governments of third-tier cities and remote areas should be aware of the risks of excessive infrastructure construction, since so many people in those areas spend most of their time working elsewhere.
Migrant workers "go to big cities such as Beijing, Shanghai and Guangzhou for most of the year, which will result in low profitability for projects in their hometowns", he said. "That could lead to financial risks."
The central government acted to reduce overcapacity last year as it tried to achieve a long-term solution while also accelerating industrial upgrading.
President Xi Jinping stressed that the country will no longer evaluate local government officials' performance by GDP growth alone.
The government also announced guidelines for reducing overcapacity in five industries: steel, cement, electrolytic aluminum, sheet glass and shipbuilding.
The steel industry has been through a prolonged period of losses caused by rising imported iron ore costs and falling steel prices.
Li Xinchuang, head of the China Metallurgical Industry Planning and Research Institute, said the industry should avoid adding further capacity and the government should follow strict procedures to close polluting, low-efficiency steel plants.
In the electrolytic aluminum sector, the capacity utilization rate is as low as 78 to 80 percent, according to the China Nonferrous Metal Industry Association.
Although aluminum capacity was supposed to be cut by 1.9 million metric tons last year, the reality was quite different, and there's still much work to do, said Wan Ling, manager of China nonferrous metals at commodity data firm CRU International Ltd.
Facilities closed
The Ministry of Industry and Information Technology has said that obsolete production lines involving 1,569 companies in the five troubled sectors were shut down in the past year, indicating progress in dealing with overcapacity.
Ou Hong, deputy director of the investment department of the NDRC, said that the government will strive to optimize the role of investment in the country's economic growth this year.
He said the government will invest more in areas where the market isn't fully effective, giving support to environmental protection and technological innovation.
It will speed up formulation of regulations for private capital's participation in sectors including finance, oil and natural gas, power, rail transport, telecommunication, resources and public services, he said.
Zhang Yongjun, deputy head of the Research Department of the China Center for International Economic Exchanges, said that overall investment may decline in 2014 and conditions in the financial sector will have the largest impact on economic development.
Chen Wenling, chief economist of the CCIE, said there is still much uncertainty and risk with the global economy.
"China's macroeconomic policy should be more active and strategic to avoid any impact from external risks," he said.
