China intends to cut its crude steel production capacity by 100 million to 150 million tons over five years, according to a guideline released from the State Council yesterday.
The reduction is part of a structural reform in China's steel industry which has been hit by overcapacity and low technology, the guideline said.
The government will be more aggressive against allowing new capacities either by raising the general environmental standards for factories or controlling the numnber of new locations for steel plants.
Furnaces smaller than 400 square meters or below a capacity of 30 tons will be shut down and dismantled. The authorities will then use the land that is freed up for other tertiary uses. The funds got from selling the property can be used by local governments to help workers who have become unemployed after the steel plants shut down.
China also urges steel companies to seek acquisitions or mergers. They are also encouraged to take part in the government's "Belt and Road" initiative so that some of the overcapacity can be exported to other countries.
