China's small mines located within the boundaries of state key mines and those using underdeveloped technologies will be completely shut down this year to help cut coal output by 130 million tons.

China is reorganizing its entire industrial structure to prepare for across-the-board increases in market competition expected to come with China's entry into the World Trade Organization, according to the State Economic and Trade Commission (SETC).

The reorganization is marked by the setting of serious production ceilings in many sectors and the closing of numerous small plants that operate inefficiently and are sometimes the source of heavy pollution.

"Because of market conditions, controlling the overall production of some important products has become a very urgent matter if we are to adjust our economic structure and improve economic efficiency," said SETC minister Sheng Huaren, adding that many of the country's industrial departments have faced an awkward dilemma in recent years.

Serious oversupply of many industrial products has reduced market activities and has exerted downward pressure on prices.

The specific production capacity of some enterprises is too small to reach a rational economic scale which is affecting their earnings performance negatively.

Outdated technologies and equipment are hindering the progress of the industries. "Such fragile industrial structures are incapable of competing with international firms," Sheng said.

To salvage the ailing industries, the SETC has taken a comprehensive approach to the problem in recent years.

The textile sector is a successful example. It reduced cotton yarn production capacity by 9.06 million spindles over the past few years. And in 1999, the sector ended its six years of successive losses and cashed in to the tune of 800 million yuan in profit.

Still, the Chinese government is making favorable loans to support large textile works and assist them with technical upgrading.

A formidable money-losing trend in the coal industry is another headache for China's macro-economic supervisors.

Though annual coal production has decreased in recent years, oversupply is still a major problem within the sector, Sheng said.

China should do all it can to fulfill its task of producing no more than 900 million tons of coal next year, which will lay a sound foundation for reviving the industry, he said.