Work teams from the State Council, China's cabinet, have been dispatched to two provinces to see if steel capacity cut rules were breached.
They have arrived in the city of Qinhuangdao in Hebei Province and Xuzhou in Jiangsu Province to conduct on-site investigations into local steel companies' practices.
The investigation teams are composed of officials from ten government departments and industry associations including the National Development and Reform Commission and Ministry of Industry and Information Technology.
The move follows a State Council executive meeting earlier this week which revealed that some companies might still be seeking to add capacities.
China is the world's largest producer and consumer of steel and coal. Cutting overcapacity is a high priority as the two industries have become a drag on growth.
Steel capacity is set to be cut by 45 million tonnes this year.