Deepening market reforms will help reduce overcapacity

The government vowed on Tuesday to accelerate efforts to reduce excess production capacity, a task that tops the central economic agenda. This is not the first time the central authorities have expressed their resolve to press ahead with the formidable task.

Still, policymakers should draw from the past lessons of corporate restructuring to ensure that reducing the overcapacity will not produce undesired side-effects as before.

Xia Nong, a senior official with the National Development and Reform Commission, China's top market regulator, said in the steel sector, 47 percent of the targeted excess capacity has been reduced and the pace will be accelerated in the coming months. It indicates that the capacity-cutting pressure has become heavier, triggering rising concerns that the government may fail to accomplish one of the key tasks it has set for this year.