China’s central SOEs continue efforts to cut overcapacity

BEIJING (Xinhua) – China’s central government-administered state-owned enterprises (SOEs) have pledged to continue to cut production overcapacity in some industrial sectors, aiming to reduce steel capacity by 5.95 million tonnes and coal by 24.73 million tonnes.

“Detailed plans have been made by central SOEs,” said an insider who prefers to remain anonymous.

For example, China Huaneng Group, a power company, is considering cutting 9.14 million tonnes of coal production capacity by the end of 2018 while dealing with 16 of the group’s “zombie companies.”

China Poly Group Corporation, a state-run conglomerate, has vowed to close inefficient coal mines and reorganise 39 of its subordinate companies to improve profits.

The latest efforts by the central SOEs will reinforce their achievements made in 2016 in reducing overcapacity.

Last year, the central SOEs eliminated steel production capacity by more than 10.19 million tonnes and coal capacity by over 34.97 million tonnes, both beating annual targets.

The capacity cut drive by central SOEs is only a part of China’s bigger picture in slashing overcapacity.