The Chinese government will soon release guidelines to further tackle industrial overcapacity, according to a report by the Xinhua Economic Information Daily.
 
Xin Renzhou, an official from the Ministry of Industry and Information Technology, said his ministry and the National Development and Reform Commission (NDRC) has finalised details for a plan that will raise technology thresholds on environmental protection and energy saving to limit market access. Enterprises failing to comply with the requirements would be ordered to make adjustments or even have their permits revoked.
 
Jing Xiaobo, another official from the industry, said that according to the overall plan, China would reduce overcapacity mainly by expanding domestic demand, optimising organisational structures, and tightening environmental protection and energy saving standards.
 
In addition, the ministry planned to team up with the China Banking Regulatory Commission and other related authorities to issue a series of supporting policies on curbing overcapacity and adopt more commercial measures to strictly control the output capacity of major industries, such as the cement industry.
 
Data from the ministry showed that China's industrial capacity utilisation averaged at only 78.6 per cent at the end of this June, and that idle capacity reached 21.4 per cent. The overcapacity issue has led to oversupply in the first half of this year as the producer price index (PPI) fell 2.2 per cent YoY. Due to the overcapacity problem, China experiences considerable oversupply issues in the first halfthis year, when the producer price index (PPI) fell 2.2 per cent YoY, the 16th consecutive monthly fall.