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Low utilization rate spurs need to act
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China’s industrial capacity utilization rate stood at 78 percent in the first half of this year, the lowest since the final quarter of 2009, a government official said.
The figure highlights the urgent need for China to tackle overcapacity and inefficiency, which have not only caused firms to suffer hefty losses amid a slowing economy but also led to environmental problems.
Li Zhongjuan, an official at the industrial coordination division of the National Development and Reform Commission, also said 21 industries of 39 that had available data reported capacity utilization of below 75 percent.
The utilization rate in sectors such as photovoltaic products was even below 60 percent, she said, citing a survey by the National Bureau of Statistics.
Li was speaking at a recent steel industry conference on implementing government measures to deal with overcapacity, and her remarks were posted yesterday on the website of the NDRC, China’s top economic planning agency.
The State Council, China’s Cabinet, in October published a plan to tackle chronic overcapacity problems in sectors from steel to cement, calling for the use of market mechanisms to phase out outdated factories.
China will strengthen environmental, safety and energy standards. It will also impose punitive electricity and water prices on companies that violate environmental standards, according to the plan. China also will not approve new projects in industries facing oversupply.
Local governments, often obsessed with gross domestic product growth, have also helped create overcapacity, and the central government is now seeking to reduce their role in the approval process.
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