Overcapacity looms in China

BEIJING, Aug. 27 (UPI) -- China's State Council, warning of overcapacity in emerging sectors, said it plans to take action to guide development and deal with redundant projects.

The government already has placed a three-year moratorium on expansion in the iron and steel industry.

The State Council said overcapacity also has persisted in the cement sector, while redundant projects are seen in sectors like wind power and poly silicon, China's state-run Xinhua news agency reported.

The council's meeting was chaired by Chinese Premier Wen Jiabao.

"Overcapacity and redundant projects remain prominent because of slow progress in industrial restructuring in some of these sectors," the council said in a statement.

The statement said "guidance" would be particularly enhanced on the development of steel, cement, plate glass, coal chemical, poly silicon, and wind power sectors. The guidance would include strict controls on market access, reinforced environmental supervision and tougher controls over land use, the report said.

Banks would be ordered to lend to these sectors only on the basis of present industrial policies.

Other guidance measures would include relevant government agencies strengthening overcapacity monitoring and jointly providing information on current scale of operations and public demand, the report said.

The government has said overcapacity is "most evident" in the steel industry, where output this year is expected to reach about 726 million short tons, against estimated demand of 517 short tons. China is the world's largest steel producer.