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China To Curb Industry Overcapacity

Wed, 08/26/2009 - 4:30am

BEIJING (AP) — China's Cabinet said Wednesday it will try to curb overcapacity and excessive investment in industries including steel and cement — a possible side effect of its massive stimulus plan.

Regulators also will "enhance management" of areas including flat glass, chemicals, wind power and polysilicon production, said a statement on the Web site of the State Council, or Cabinet, after a meeting led by Premier Wen Jiabao, the country's top economic official. It said measures would include strict enforcement of environmental standards and market access.

Economists and business groups have warned that China's stimulus and efforts to boost flagging exports were creating a glut of excess capacity in a range of industries.

China's 4 trillion yuan ($586 billion) stimulus is based on higher spending on construction of highways and other public works, which has encouraged steel and cement companies to expand production. Beijing has encouraged banks to step up lending, which has fueled a sharp rise in investment in factories and other assets.

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