The Big Call

Beijing's battle against overcapacity to hold firm before easing

  • Published 23 Sep 2010

Our survey shows local government officials are acting strongly to implement Beijing's crackdown on excess industrial capacity but several factors are likely to erode the force of the policy several months from now.

China is getting tougher on excess capacity as the world's biggest emitter of greenhouse gases struggles to meet an energy efficiency target set for this year. So eager is Beijing to address the problem that it not only planned to close a large number of factories, but it also stopped approving new plants until existing ones run at full capacity. Local governments, once the biggest backer of small and outdated mills, have gone even further by cutting power supply to heavy industry in some regions. This has resulted in a very significant shutdown of production across the country, according to a China Confidential survey of more than 70 regulators, manufacturers and traders in seven provinces.

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China Confidential Funds, a new research service launched by FT China Confidential, is dedicated to illuminating the mainland fund industry. Our team of fund industry experts in Shanghai search out the interesting trends in fund performance, strategy, interactions with overseas funds, regulatory changes, distribution and management. We also use a proprietary system to track the emerging flows of Chinese money. Click here to find out more.

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