National Development and Reform Commission: Promote key regions' steel enterprises to accelerate mergers and reorganizations
This year is a tough year for reducing steel production capacity. Relevant parties have conscientiously implemented the decisions and deployments of the Central Economic Work Conference, the 15th meeting of the Central Leading Group for Finance and Economics, and the Government Work Report on reducing production capacity, strengthened the "four consciousnesses", adhered to the overall work of seeking progress while maintaining stability, focused on playing the role of the inter ministerial joint meeting mechanism, strengthened overall coordination, improved policy measures, solidly promoted various work related to reducing steel production capacity, resolutely banned the production capacity of "strip steel", and made positive progress.
1、 The work of reducing steel production capacity is steadily advancing
In the first half of 2017, under the high attention and strong leadership of the Central Committee of the Communist Party of China and the State Council, all relevant parties worked together to strengthen work measures and completed the various tasks of reducing steel production capacity on schedule.
One is to determine the target task. At the end of 2016, based on in-depth research and extensive solicitation of opinions, a work plan for reducing steel production capacity in 2017 was proposed. With the approval of the State Council, we have formulated and issued the "Opinions on Doing a Good Job in Resolving Excess Capacity and Achieving Development in the Steel and Coal Industry in 2017" and the implementation plan for reducing overcapacity in the steel industry. Repeatedly communicate with relevant parties, determine annual goals and tasks, and deploy and arrange key work.
The second is to increase work supervision. Convene a conference on reducing steel production capacity and put forward clear requirements for reducing steel production capacity and completely banning "strip steel" in various regions, ensuring the implementation of the decisions and deployments of the Party Central Committee and the State Council. Provide timely guidance and supervision to local authorities for key tasks at different stages. We have launched a special inspection on the elimination of outdated production capacity and the ban on "strip steel" in the steel and coal industry, and reported the relevant situation to the State Council.
The third is to strictly investigate negative examples. Investigate and handle the illegal construction of steel projects by Shandong Jinhaihui Technology Co., Ltd., Jiangsu Delong Iron and Steel Co., Ltd., and Gansu Lanxin Iron and Steel Co., Ltd., as well as the illegal production of "ground bar steel" by Yunnan Hongxin Company. Require all regions to draw lessons from this and take it as a warning.
The fourth is to deal with 'zombie enterprises'. A notice has been issued, requiring all provinces (regions, municipalities) to combine their ongoing efforts to resolve overcapacity in the steel industry, identify the bottom line of "zombie enterprises" in the local steel industry, develop a work plan for dealing with "zombie enterprises" in the local steel industry, and use them as the nose to reduce overcapacity.
Fifth, attach importance to guiding public opinion. Interpret policies well, strengthen positive voices, and create a good social atmosphere for reducing steel production capacity. Strengthen external exchanges, actively promote the construction of a global forum on overcapacity in steel production, and conduct consultations on overcapacity issues under the comprehensive economic dialogue mechanism between China and the United States. Strengthen international public opinion propaganda, truly reflect China's determination, goals, measures, achievements, and contributions to the world economy in resolving excess steel production capacity, and demonstrate China's responsible image as a major country.
2、 The progress of reducing steel production capacity and banning "strip steel" is smooth
The Government Work Report proposes to further reduce steel production capacity by about 50 million tons in 2017. In 2017, 12 provinces (regions, cities) and central enterprises in China, including Tianjin, Hebei, Shanxi, Heilongjiang, Jiangsu, Zhejiang, Anhui, Shandong, Guangdong, Sichuan, Yunnan, and Xinjiang, arranged crude steel reduction plans. As of the end of May, the cumulative reduction of crude steel production capacity in China has accounted for about 85% of the annual target task, and three provinces including Guangdong, Sichuan, and Yunnan have completed the annual target task. As of the end of June, a total of 27 provinces (regions, municipalities) across the country have banned existing "strip steel" enterprises.
3、 The effectiveness of reducing steel production capacity continues to emerge
With the deepening of overcapacity reduction, the transformation and upgrading effects and positive impacts of the industry's development and transformation are constantly emerging. Firstly, the profitability of the enterprise has further improved. From January to May 2017, the total profit of member enterprises of China Iron and Steel Industry Association was 40.7 billion yuan, an increase of 32.3 billion yuan compared to the same period last year. The second is to further optimize the industrial structure. The restructuring and integration of Baowu Iron and Steel Group Co., Ltd. continue to deepen, and the synergistic effects are gradually emerging. Some steel companies are implementing relocation and transformation through capacity reduction, mergers and acquisitions, and further optimizing their industrial layout. The third is to further standardize the market competition order. After the clearance of the production capacity of "ground steel" discovered through inspections in various regions according to the plan, the order of the steel market has been further regulated. Fourthly, it highly demonstrates China's sense of responsibility. Since 2016, China has actively promoted the withdrawal of excess steel production capacity. At the G20 Hangzhou Summit, China proposed and participated in the creation of the Global Forum on Steel Overcapacity, making Chinese contributions to resolving the contradiction of steel overcapacity worldwide.
4、 Key tasks for the next stage
The relevant parties will continue to conscientiously implement the decisions and deployments of the Party Central Committee and the State Council, adhere to the general tone of seeking progress while maintaining stability, handle the relationship between the government and the market, short-term and long-term, subtraction and addition, supply and demand, seize the opportunity to deal with "zombie enterprises", coordinate key work such as capacity withdrawal, employee placement, asset disposal, debt and credit, mergers and acquisitions, transformation and upgrading, optimization of layout, supply-demand balance, and stable prices, and welcome the successful convening of the 19th National Congress of the Communist Party of China with outstanding achievements.
One is to strictly implement the requirements for progress and quality. More market-oriented and legal means should be used to effectively deal with "zombie enterprises", resolutely eliminate outdated production capacity, resolutely clean up and rectify illegal and irregular production capacity, strictly control the addition of new production capacity, and prevent the resurgence of excess production capacity that has already been resolved. Guide and supervise relevant regions to complete the annual crude steel reduction task on schedule, and completely ban 'strip steel'.
Secondly, we will vigorously promote corporate mergers and acquisitions. Improve the policy environment and encourage eligible enterprises to implement cross regional and cross ownership mergers and reorganizations. Promote the accelerated merger and reorganization of steel enterprises in key regions, and strive to achieve new breakthroughs.
The third is strict supervision, inspection, and accountability. In response to the issues raised during the fourth major inspection by the State Council, further investigation work will be carried out to urge and coordinate relevant parties to rectify the problems and implement the suggestions. Organize special spot checks to crack down on "underground steel bars", and hold local governments, departments, and related enterprises accountable in accordance with laws and regulations for areas where the crackdown is not in place. Guide various regions to do a good job in publicizing information on overcapacity reduction and strengthen public supervision.
The fourth is to ensure the overall balance of supply and demand. According to the notice issued by our commission and five other departments on further implementing the policy of retaining and pressing to promote the stable operation of the steel market, we aim to improve the effective supply level of steel and avoid significant market fluctuations.
The fifth is to strengthen public opinion propaganda and guidance. Give full play to the positive guidance role of the media, widely publicize the effectiveness and experience of reducing production capacity, respond to social concerns in a timely manner, and create a favorable public opinion atmosphere and external environment. In response to the changes in the supply and demand situation in the steel market, experts and media are organized to actively speak out, stabilize market expectations, promote price return to a reasonable range, and promote coordinated development between upstream and downstream.
The sixth is to carefully evaluate and apply the results. Strengthen the monitoring and analysis of the implementation and effectiveness of policies and measures to reduce steel production capacity, carefully organize third-party institutions to conduct mid-term evaluations, timely summarize experiences, proactively identify shortcomings, adjust and improve relevant policy measures based on evaluation results, and further improve the work of reducing production capacity.
