Abstract Following the 12th ministry jointly issued the rectification guidance on promoting the nine major industries such as automobile and steel, Zhu Hong, a spokesperson of the Ministry of Industry and Information Technology, reiterated on the 23rd that serious overcapacity will cause a series of problems. Since 2008, China has vigorously managed overcapacity. Of course...
Following the 12 ministries and commissions jointly issued guidance on restructuring the nine major industries such as automobile and steel, Zhu Hong, a spokesperson for the Ministry of Industry and Information Technology, reiterated on the 23rd that serious overcapacity will trigger a series of problems. Since 2008, China has vigorously managed overcapacity. However, in some industries, the fact that “more governance is over-remaining†and “low-end high-end surplus†means that in addition to market regulation, local GDP must be eliminated.
Reality: low-end high-end surplus
Overcapacity is an old problem in China's economic development. After the financial crisis in 2008, the government vigorously managed overcapacity, and the means adopted included “eliminating backward production capacity†and “improving the concentration of key industriesâ€.
Four years have passed, what is the reality? The answer is not optimistic.
First of all, in some industries, “the more the governance is over the surplusâ€, the steel industry is such a hardest hit. In 2008, China's steel production capacity was around 700 million tons, and by the end of 2012, the China Steel Association's caliber was 900 million tons. Some market institutions believe that counting those that are not counted by the government may exceed 1 billion tons.
Secondly, "the low-end surplus is also high." This is manifested in two ways: in the same industry, high-end products sometimes sell low-end products. For example, construction steel belongs to the low-end products of the steel industry. Many state-owned steel mills do not bother to do it and collectively turn to sheet metal production. As a result, the demand for hot rolled coils with higher technical content was lower than that of the simplest rebar due to insufficient sheet demand.
On the other hand, in addition to traditional industries, some strategic emerging industries also have excess. For example, in the photovoltaic industry, due to the large leap in production capacity and the “double opposition†in Europe and America, the supply and demand are seriously unbalanced, and once reached the edge of bankruptcy of the whole industry. "Emerging industries need government support, but such support must be based on principles and principles." Dai Haibo, director of the Shanghai Economic and Information Committee, told reporters.
Myth: investing in investment
Overcapacity, simply means that supply is greater than demand. To solve the overcapacity, either control the supply side and carry out “de-capacitizationâ€. Either implement stimulus policies and expand aggregate demand. From the current situation, the latter approach seems to be more popular with local governments.
Of course, it is not entirely undesirable to use stimulative methods to expand demand. In the midst of a sharp economic downturn, China has implemented stimulus policies to maintain full employment and social stability. However, when economic growth tends to be stable, the effect of adopting such a technique may not be good. For example, in order to solve the overcapacity of steel and cement, some places have become more and more civilized, and as a result, new investment has formed new capacity. In this cycle, excess is getting worse.
“China does not need investment, but it cannot invest in investment. It must make more investment in favor of consumption. For example, the construction of inter-city railways in the Yangtze River Delta has promoted tourism on weekends.†Deputy Office of the Financial Research Institute of the State Council Development Research Center Chang Ba Shusong said.
Another way to address overcapacity is to increase industrial concentration. According to this guidance, the industrial concentration of the top 10 steel mills at the end of the “Twelfth Five-Year Plan†reached 60%, and the industrial concentration of the top 10 cement enterprises reached 35%.
Increasing industrial concentration will help alleviate overcapacity, but it is not the only indicator. Jia Liangqun, deputy general manager of "My Steel" pointed out.
Roots: GDP Complex
Solving overcapacity is undoubtedly a complex system engineering. For our country, there are three major ills that need to be overcome.
First, strengthen industry access management. Looking at the overcapacity industries such as automobiles, steel, cement and electrolytic aluminum, it is necessary to have a higher threshold for entry in the industry. The reality is that the land is not involved in the north and the south, so that there is a shortage of water in the construction of steel mills, lack of electricity. The phenomenon of building an electrolytic aluminum plant.
Experts suggest that when setting up industry entry barriers, it is necessary to use more ecological indicators such as energy conservation and environmental protection, and use less economic indicators such as capacity volume. Before the steel industry eliminated backward production capacity, the blast furnace volume was used as the standard. As a result, some steel mills built large furnaces in order to meet the access conditions, and the more the production capacity was eliminated.
Second, strengthen financial reforms and change the tendency of enterprises to pursue scale. Hu Yuexiao, chief economist of Shanghai Securities, pointed out that in China's financial system dominated by big banks, credit resources are preferentially directed to large enterprises and large projects. Who can quickly make the scale bigger, and whoever has the ability to finance. Under this guidance, the game of “enclosure-financing-listing†has been tried and tested.
In the future, China's financial reforms will change the indirect financing model based on large and medium-sized banks, and vigorously develop direct financing models such as stock markets and bond markets. At the same time, the development of small microfinance institutions to meet the needs of SMEs.
Third, we must fundamentally let the local government get rid of the GDP. Overcapacity is the norm in the market economy. However, as Zhu Hongren said, in addition to the market, there are also reasons for institutional mechanisms and development methods.
A leader of the China Steel Association has expressed the feeling that the local government has a strong push in the development of the steel industry. “In Guangdong, the province supports the Guangdong Iron and Steel Group. When it comes to Shaoguan City, it supports the Handan Iron and Steel Group. When it comes to the districts and counties, it supports the small factories underneath.†The reason is that a GDP complex is still at work.
Guo Yu, director of the Comprehensive Development Division of the Shanghai Municipal Development and Reform Commission, said: “At present, all regions are undergoing transformation and development. This requires statistically diluting GDP indicators and increasing some transformation indicators. Many places have previously cancelled the accounting of districts and counties, and the future provinces and cities. Can the level be cancelled as well? This question is worth considering."
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