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China will prune unneeded industries

Source:   Time:

China may halt new electrolytic aluminum projects and close down more than 2,000 inefficient companies in 18 industries this year because of overcapacity, high energy consumption and pollution, the Ministry of Industry and Information Technology (MIIT) said in a press release on Wednesday.

In an effort to limit excess investment and construction in the industry, MIIT is working with other ministries and bureaus on regulations to suspend some new electrolytic aluminum projects and withdraw subsidies to new projects, said Zhu Hongren, chief engineer of MIIT.

The new policy is intended mainly to remedy the excess capacity in the industry, Zhu said. China produced 15.6 million tons of electrolytic aluminum last year, he said, but its output capacity had reached 23 million tons. Currently, 36 new electrolytic aluminum projects are in the works, which could add another 10 million tons to capacity.

"Some local governments do not understand the macroeconomic situation," Zhu said. Several even want to build such projects merely to show off their political performance in the first year of the 12th Five-Year Plan period (2011-2015), he said.

Halting the new electrolytic aluminum projects fits in with the country's efforts to adjust industry.

Zhu said that last year, 2,087 companies were listed for closure, more than the target set by the ministry. The number of inefficient iron smelters closed last year was 32 percent higher than the target.

The ministry "will take serious action if false reports of shutdowns appear," Zhu said.

According to the ministry, 10 of the 18 industries targeted for closure are expected to have greater complications compared with last year, including employee placement and debt disposal.

Zhu said that China made significant headway last year in closing inefficient projects and those providing unneeded capacity and that this will continue to be an important part of the country's industry-growth plan this year. He said that further details will be announced soon.

The MIIT said in its press release that the nation's large-scale industrial output increased by 14.4 percent year-on-year in the first quarter of 2011.

In the first two months of this year, large-scale enterprises reaped profits of 645.5 billion yuan ($98.9 billion), up 34.3 percent year-on-year.

It is a "good start" and the second quarter is expected to maintain a high, but steady, growth rate, the ministry said.

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