China Issues Quotas to Cut Steel and Coal Output

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Last updated at: (Beijing Time) Tuesday, February 26, 2002

China Issues Quotas to Cut Steel and Coal Output

The State Economic and Trade Commission (SETC) has proposed a set of targets for the country's major industries in 2002. The quotas are actually government projections meant to help enterprises better understand market demands and increase their chances of making a profit.

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SETC sets Major industries' targets

The State Economic and Trade Commission (SETC) has proposed a set of targets for the country's major industries in 2002, according to Tuesday's China Daily.

In what appeared to be the first "guiding quotas" made public this year, the SETC said China aims to achieve coal production of 1.05 billion tons, with steel output of 125 million tons and cement turnout of 590 million tons.

Aim to better understand market demands

None of the quotas are mandatory unlike those usually set by the commission during the planned-economy period. They are actually government projections meant to help enterprises better understand market demands and increase their chances of making a profit, said Zhang Min, a division director of the commission's Economic Operations Bureau.

"All the proposed quotas are based on the commission's analysis of domestic and international markets while taking into account the problems that emerge after China joins the World Trade Organization (WTO)," he said.

Measures in line with WTO requirements

If enterprises produce coal, steel, cement and other products beyond the proposed limits, market supply and demand may be affected and enterprises may risk losing money, Zhang said.

Considering the impact of the country's WTO entry on the metallurgical sector, the commission has reduced steel output by 24 million tons from that in 2001.

Analysts said more steel is bound to come to China this year since WTO rules call for canceled quota limits on imports and slashed tariffs.

The commission also expects a slightly lower coal output for 2002, but it apparently has hopes of exporting more this year.

Steel Giant in Beijing to Cut Output by 2 Million Tons

Despite a lingering festive mood in Beijing, people from the Beijing-based Shougang Group feel more pressure than pleasure.

Luo Bingsheng, board chairman of the leading iron and steel producer in China, said 2002 is "very crucial" year with both challenges and opportunities ahead.

With China gradually phasing out the import quota system on steel products, Luo predicted domestic iron and steel companies have fierce market competition ahead.

To survive the challenges ahead, the management of the Shougang Group has mapped out three developing strategies for this year, hoping to build up its strength quickly. >>details

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