Out-Law / Your Daily Need-To-Know

Chinese steel and iron-making capacity to be closed down by Beijing government

09 May 2014, 10:15 am

Millions of tons of steel and iron-making capacity must be closed down across China next year, the country's Ministry of Industry and Information Technology (MIIT) has said, according to state press agency Xinhua.

In a list of tasks which local authorities must undertake next year, a total of 28.7 million tons of steel production capacity must be shut down along with 19 million tons of iron-making capacity, Xinhua said.

Cement production capacity must be reduced by 50.5 million tons next year, and excess capacity in other areas of metal smelting, glassmaking and paper manufacturing must also be reduced.

The measures are designed to help combat pollution across China as well as assist with the restructuring of China's economy, the news agency said.

According to Xinhua, overcapacity in the steel and iron industries has been a problem for China's policymakers for some time. China steel companies posted combined losses of $380 million in the first quarter of 2014, compared with profits of more than $120 million a year ago, according to data by the China Iron and Steel Association (CISA). However crude steel output continued to expand by 2.4% in the first quarter, reaching 203 million tons, CISA said.

The measures come as China forges ahead with its stated goal of creating a more mixed and market responsive economy, and as it tightens its environmental laws.

Under recent revisions to China's environmental laws, companies in China found guilty of polluting the environment will face unlimited fines under revised environmental laws, according to the state-owned newspaper China Daily.

Polluters will also be liable to be sued by environmental organisations under the updated legislation. This is the first time that those organisations will have the right to bring cases against businesses alleged to have caused environmental pollution, the newspaper said.

In order to be eligible to bring cases, the organisations must be registered with prefecture-level governments' have been focusing on environmental protection for more than five years, and have a "good reputation".

Under the new measures, law polluters risk uncapped fines which could be charged on a daily basis, said China Daily. According to the Financial Times, previous caps meant that it could be cheaper for companies to pay the fines than to change their operating procedures to be more environmentally friendly.