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China Subsidy Exchange

March 15, 2017

China Urges to Eliminate Backward Capacities

Along the line of the Chinese governments continuous efforts to eliminate backward capacities, 16 Chinese central government agencies, including the Ministry of Industry and Information Technology (MIIT), the National Development and Reform Commission (NDRC), and the Ministry of Finance (MOF), issued the Guidelines on Urging Elimination of Backward Capacities by Comprehensive Standard and in Accordance with Law (Gong Xin Bu Lian Chan Ye (2017) No. 30) ( Guidelines), following the 2010 Circular of the State Council on Further Strengthening the Work of Eliminating Backward Capacities and the 2013 Guidelines of the State Council on Resolving Severe Overcapacity Problem.Focusing on the iron and steel industry, the coal industry, the cement industry, the electrolytic aluminum industry, and the plate glass industry, the Guidelines aim to shut down a batch of backward capacities, reduce overcapacity, improve environmental quality, and perfect industrial structure. The Guidelinescall on the government to utilize the industrial enterprise structure adjustment special fund, the provincial backward capacity elimination special fund, and differential electricity pricing mechanism to support production shifting and industrial transformation. The Guidelinesalso call for credit loan support to enterprises that voluntarily eliminate low-efficiency capacities and reduce overcapacity.

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