Government's Administrative Means on Steel Capacity Reduction Can Not Be Relied on Alone

Reduction Facing with entire loss dilemma in China's steel industry, the government's administrative means on steel capacity reduction can not be relied on alone. More regulate and control means on interests should be put to use to force the retirement of steel backward capacity, that is, influencing the market supply and demand by regulating taxes revenue and realizing prices linkage.

Mr Song Jijun VC of Hebei Metallurgy Industry Association indicated the simple elimination on backward capacity just obsolete blast furnace and converters by capacity, and in order to survive, many steel mills successively enlarged their capacity to avoid being substituted.

As a result, the steel capacity not reduced, but increased.

Mr Wu Xichun chairman of China Iron and Steel Association said that "There is a big disparity in the effective tax burden between large scale and small scale steel enterprises in China."

Green taxes, means, environmental taxes is being proposed to put into effect in some pilot provinces, in a bid to innovate methods on steel capacity reduction.