Business / Economy

Stormy overcapacity meeting shows scope of problem

By Li Yang (China Daily) Updated: 2014-03-18 07:35

Stormy overcapacity meeting shows scope of problem

Tensions between ministry representatives and China's senior political advisers were palpable at a meeting on solving overcapacity last week in Beijing, driving home just how hard it will be to treat the "chronic disease" afflicting China's economy.

The meeting was held by the Chinese People's Political Consultative Conference's National Committee, the top political advisory body in China, at its second session.

The CPPCC National Committee received nearly 1,000 proposals on the overcapacity issue.

Attendees included vice - heads of nine ministries, dozens of senior economic and industrial experts, and authors of 47 registered proposals.

The organizers apparently thought a brainstorming session on the thorny issue could work to exert influence on decision-makers in the central government.

But it turned out the advisers' proposals were regarded simply as "predictably valuable" by their powerful listeners.

Overcapacity is a serious problem in the iron and steel, cement, sheet glass, electrolytic aluminum, ship-building, photovoltaic panel and wind power equipment sectors.

Statistics from the Ministry of Industry and Information Technology show that some industries were operating at only about 60 percent by the end of 2013.

Overcapacity drains money, contaminates the environment, wastes resources and hinders restructuring, but it also has had the effect of promoting local officials to higher rankings.

Local governments have created preferential policies to expand the scale of the industries to boost local growth, at least on paper.

Although President Xi Jinping has vowed to end the numbers game surrounding gross domestic product, GDP growth, in which environmental damage is not counted but every penny of investment is included, remains the main criterion for judging local officials' performance.

All of the 20-odd CPPCC National Committee advisers at the meeting pointed fingers, whether directly or indirectly, at the government, urging it to reform its method of evaluating officials.

The Organization Department of the Communist Party of China Central Committee, which is in charge of designing the evaluations, also had representatives at the meeting but gave no input on designing a new official evaluation, only voicing support for its direction.

Stormy overcapacity meeting shows scope of problem

Stormy overcapacity meeting shows scope of problem

Steel sector still facing profitability problems 

 China's economy grows 7.7% in 2013

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