At last December, the Center Economic Working Conference ranked “de-capacity” in the first place in the tasks of Five Structural Reform in 2016. On the twelfth day’ routine press conference, the National Development and Reform Commission announced that, we need to push 2016 reform and insist on de-capacity. Meanwhile, use five measures like “prohibit new capacity, strictly enforce the law of environment protection, reinforce the guiding policy, drive advanced capacity” to resolve the over capacity.
The direct harm of “over capacity” is reducing enterprise profits; besides, it also makes supply and demand of market out of balance; it is hard to guarantee industry’s profits and eventually influences the whole industry’s competition.
As the key industry of de-capacity, steel industry is eager to sweep away the “zombie companies”, then to make the low capacity which is long-term shutdown or difficult to reverse the deficit situation out of the market. In order to stimulate the benign development of steel industry, it needs to combine the marketing mechanism for the survival of fittest and tools of government to push the great readjustment of steel industry.