April 09, 2010

Beijing Ramps Up Heavy Industry Restructuring

The head of the policy department of the Ministry of Industry & Information Technology - one of Beijing's five "super" ministries - says a plan is underway to consolidate the power, coal, iron and steel, cement, nonferrous metal, coke, paper, leather and printing material industries. Specifically targeted is the iron and steel industry with the call to shut down furnaces less than 30 tons capacity. The plan also calls to eliminate outdated plants in the textile industry by the end of next year. The ministry warns it will take joint efforts of all government departments to achieve the aims.

The consolidation of China's massive but scattered and often inefficient heavy industrial plant is a long standing goal. It will be accomplished through corporatization of government-owned businesses and mergers and acquisitions leading to a handful of powerful industrial leaders. This is part of Beijing's overarching desire to see American style "big 3" players in all industrial sectors.

Economic restructuring is one of 5 key areas Beijing is channeling central government resources into in a bid to jump start a "third wave" in the Chinese economy. The other areas are agriculture, alternative energy, social services particularly education and health care, and "independent innovation"....

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