On May 13, 10 Chinese governmental departments including the National Development and Reform Commission published a document called "Advice for the control of overcapacity and repeated construction aimed at healthy industrial development". The document requires local industries to reorganize their industrial structure and to restrict overcapacity and blind expansion, with the aim of achieving orderly industrial development.
According to the document issued by the National Development and Reform Commission, MIIT, Ministry of Supervision, Ministry of Finance, Ministry of Land and Resources, Ministry of Environmental Protection, The People's Bank of China, General Administration of Quality Supervision, Inspection and Quarantine, China Banking Regulatory Commissions and the China Securities Regulatory Commission, the related departments and local government should focus on the problem of overcapacity and implement a national policy to solve the problem.
The document states that, looking at current development, industry structural adjustment has achieved a certain improvement, but the rate of improvement is slow. There is also imbalance between various districts and various industries. In some areas, the situation of overcapacity and inessential construction is getting worse, especially with blind expansion of the steel and cement industries. In some districts, some projects starts construction before getting approval or legal certification.
The document pointed to the existence of the problem in more than 10 industries.
The document stresses that, if the situation is not brought under control in time, efficiency of industrial production will not improve, the impact of the policy for increasing domestic demand will be reduced and a structural adjustment opportunity will be missed.