Circular of the General Office of the State Council on the restraint of excess capacity and duplication of construction
Provincial, autonomous regional and municipal governments, ministries and organizations:
State Council approved on the “several opinion on the restraint of excess capacity and duplication of construction in some industries to lead to the healthy development of industry” that is issued by the National Development and Reform Commission and other departments. This is handing to you, please conscientiously implement.
In response to the impact of international financial crisis, the central government and State Council assessed the situation, designed and implemented timely the package of expansion of domestic demand and promotion of economic growth. In accordance with the general requirements of "capital growth, domestic demand expansion and structure adjustment", the government introduced a ‘ten key industries (iron and steel, etc) restructuring and revitalization plan’, and proposed a series of countermeasures including overall output control, eliminating the backward, mergers and acquisitions, technology improvement and innovation etc. to promote the structuring adjustment. Other local governments also proposed some countermeasures to support industry development. Currently, the policy has taken some initial effect and business operation difficulties are eased. The overall industrial development is prosperous. But look at the current state of industrial development, although some progress is made, the overall progress of structural adjustment is slow and not evenly allocated among regions and industries. The problems of excess capacity and redundant construction in some industries are still outstanding and even deteriorating in certain areas. Particular concern is that the iron and steel, cement and other traditional industries with excess capacity are expanding sightlessly; meanwhile wind power equipment, polycrystalline silicon and other emerging industries are duplicating construction. The phenomena of illegal approval, construction without approval and construction awaiting approval increased in certain areas.
If the excess capacity and redundant construction in some industries are not monitored and directed timely, it will be difficult to avoid market vicious competition or to improve economic efficiency, which will eventually cause business failure or underemployed, laid-off workers and significant increase of banks bad assets etc. All these problems will not only seriously affect the effective implementation of the package plan to expand domestic demand in addition to the hard earned stability and prosperous situation, but also cause the miss of the historical opportunity to take advantage of the post international financial crisis market situation to promote the structure adjustment.
All localities and departments should unite thinking and action and follow the central government and state council’s decision making arrangements based on the spirit of this circular. They should conscientiously make the scientific development concept into reality and follow it; further enhance the overall sense of responsibility and sense of risk; focus on promoting structural adjustment; adhere to the industrial policy; strictly follow environmental monitoring, land management, financial policies and relevant investment management provisions in the promise of economic growth; control the key issues of structure adjustment task, which is to resolutely restrain excess capacity and duplication of construction in some industries. Vigorously develop high-tech industry and service industry to meet the market demand; control the direction, intensity and speed of adjustment; change the mode of economic development; improve quality and efficiency of economic development; promote comprehensive, coordinated and sustainable economic and social development.
State Council
September 26, 2009
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