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It is a major and difficult task in the "11th Five-Year Plan" period to promote the strategic restructuring of the economy as well as to elevate the international competitiveness of all sectors. At the present time, some sectors make such blind investment and inefficient expansion that they have incurred production capacity redundancy, which has turned into a predominant problem in the economy. If not solved in a timely manner, the problem may further aggravate the conflict lying in the irrational industrial structure and thus impede a sustainable, fast, balanced and sound development of the economy. In order to accelerate the restructuring in those sectors with production capacity redundancy, we hereby notify the relevant issues as follows: I. IMPORTANCE AND URGENCY OF ACCELERATING THE RESTRUCTURING OF THE SECTORS WITH PRODUCTION CAPACITY REDUNDANCY In recent years, the incessant upgrading of the consumption structure as well as the acceleration of the industrialization and urbanization process have motivated a fast growth of such sectors as iron and steel, cement, electrolytic aluminum and automobiles. Due to the extensive growth pattern of our economy, imperfect institution and mechanism, such problems as blind investment and low-quality expansion have arisen in the fast development of the foregoing sectors. In 2004, the state adopted, in a timely manner, a series of macro control measures so that the blind expansion in some sectors has been preliminarily cracked down upon, the over-increase of investment has shrunk and the relevant goals regarding the acquisition, restructuring, close-down and bankruptcy of enterprises as well as the elimination of outdated production capacities thereof have been fulfilled. However, in view of the whole situation, the problem of production capacity redundancy in some sectors as incurred from an over-investment has not been solved in the root. There is an obvious redundancy in the production capacity of such sectors as iron and steel, electrolytic aluminum, calcium carbide, ferroalloy, coke and automobiles. As to such sectors as cement, coal, power and textile, although their production and demand could, for the time being, strike a balance, their ongoing construction scale is so large that a problem of production capacity redundancy potentially lies ahead. Under such circumstances, some regions and enterprises still keep on initiating new projects in the foregoing sectors, which will definitely further aggravate the conflict of the production capacity overwhelming the demand. Furthermore, except for the gross redundancy in such sectors, there exit other serious problems regarding irrational enterprise organizational structure, industrial technical structure and product structure. At the present time, the unfavorable aftermaths, as incurred from the production capacity redundancy of some sectors, have visualized in such forms as down-fall of product prices, increase of inventory, decrease of enterprise profit margin and increase of losses. If such situation is let go at random, the conflict rooting in the binding force of resource scarcity will pop up further, the issue of structural imbalance will be worsen off, there will witness an obvious increase in enterprise bankruptcy as well as in unemployment. So we should resolutely make efforts to solve all the problems. We should hold an overall picture that, to accelerate the restructuring of those sectors with production capacity redundancy, is not only an objective requirement to consolidate and advance the achievement in macro control but also an important and difficult task in this regard as well as is not only an urgent requirement to effectively direct the economic and societal development onto a track of scientific development but also an important measure to maintain a favorable current momentum of stable and comparatively fast economic growth on a continual basis. Though the production capacity redundancy in some sectors has incurred a negative impact on the economic and social development, it, at the same time, provides an opportunity to promote the restructuring. Only under such condition that the market supply overwhelms the market demand, and that the market competition is consequently heated may the enterprises be willing to or rather be compelled to adjust their structure and eliminate their outdated production capacity. The state has, in the process of carrying out the macro control, accumulated the relevant experience to coordinate the industrial policies with other economic policies so as to form comparatively standardized rules for market access, which provide definite institutional standards and means to promote the industrial restructuring and eliminate the outdated production capacity. All regions and relevant departments shall further build up and carry into effect the scientific development concept, further advance their understanding in the necessity and urgency of an overall and sound development as well as transition of economic growth pattern, intensify their prospective insight, avoid any blindness, elevate their initiation and self-consciousness, exploit a given situation for all possible favorable factors for development and turn harm to good so as to accelerate the restructuring of the sectors with production capacity redundancy. II. OVERALL REQUIREMENTS AND PRINCIPLES TO PROMOTE THE RESTRUCTURING OF THE SECTORS WITH PRODUCTION CAPACITY REDUNDANCY The overall requirements to accelerate the restructuring of the sectors with production capacity redundancy are: We should, under the guidance of the scientific development concept and on the basis of the market mechanism, exploit a given situation for all possible favorable factors for development, control the increased capacity, optimize the structure, give treatment on a case-by-case basis, support the superior and eliminate the inferior so as to step forward substantially in the current year and achieve effective outcomes though years of efforts. The following principles shall be upheld in the specific work: (1) We should give full play to the fundamental role of the market in allocating resources. We should, based on the market orientation, utilize the restrictions on the market and resources to intensify the reversed transmission of the pressure for easing monetary condition so as to promote the gross balance and structural optimism. We should adjust and rationalize the prices of resource products so as to better exert the function of the price leverage in adjustment and thus promote enterprises' independent innovation and structural adjustment. (2) We should employ the economic and legal means as well as necessary administrative means in a comprehensive manner. We should intensify the guidance by industrial policies, support by credit policies, adjustment by the policies for finance and taxes so as to promote the industrial restructuring. We should elevate and strictly implement the relevant standards for market access regarding environmental protection, security, techniques, land and comprehensive utilization of resources so as to direct the orientation of market investment. We should improve and strictly implement the relevant laws and regulations and regulate the acts of both enterprises and the government. (3) We should insist on giving treatment on a case-by-case basis and promote the support for the superior and elimination of the inferior. We should, according to the specific situation in an industry, region or enterprise, offer classified guidance as well as relevant protection and restriction. We should insist on the combination of supporting the superior and eliminating the inferior, the combination of upgrading and restructuring and eliminating the fall-behind as well as the combination of acquisition and reorganization and close-down and bankruptcy. We should utilize and digest the present production capacity in a reasonable manner and further optimize the structure and allocation of enterprises. (4) We should improve institution safeguard that ensures a continuous restructuring. We should combine the current issues with long-term issues, accelerate the progress of reform, eliminate the obstacles in institution or mechanism on the way of restructuring, and promote the restructuring in the sectors with production capacity redundancy in an orderly manner so as to promote a continuous, fast and sound development of the economy. III. KEY MEASURES FOR PROMOTING THE RESTRUCTURING IN THE SECTORS OF PRODUCTION CAPACITY REDUNDANCY The key to promote the restructuring in the sectors with production capacity redundancy is to give full play to the fundamental role of the market in allocating resources and fully exert the market strength to promote the competition as well as the survival of the fittest. The people's governments at all levels shall, in the process of restructuring, play the role of not only regulating the market order by way of further promoting the reform so as to create the relevant conditions to exert the function of the market mechanism but also employing the relevant economic, legal and necessary administrative means in a comprehensive manner to intensify the guidance and make positive promotion. In 2006, we should, by means of restructuring, reform and elimination through selection, accelerate the restructuring progress in the sectors with production capacity redundancy: (1) We should effectively prevent any rebound of the fixed-asset investment, which is a key prerequisite to promote smoothly the restructuring in the sector with production capacity redundancy. In case the investment is inflated again, the fall-behind production capacity will be like dying embers that flare up. And consequently the conflict as incurred by the gross redundancy and unreasonable structure will be more and more thorny rather than be solved. We should continue carrying into effect the policies of the Central Government for macro control and strictly keeping watch on the strobes of land and credit, strictly control the investment scale of fixed assets so as to create the necessary prerequisites of and a favorable environment for the restructuring in the sectors with production capacity redundancy. (2) We should strictly control those newly initiated projects. We should, according to the relevant laws and regulations, formulate more strict standards regarding environment, security, energy consumption, water consumption, comprehensive utilization of resources as well as quality, techniques and scale and elevate the threshold for access. We should give different treatments to projects under construction and those under the planning of construction and continue the relevant straightening-out and rectification. As to any project that fails to meet the relevant requirements of the state for market access regarding the relevant planning, industrial policies, policies for land supply, environmental production and work safety, the construction thereof shall be stopped according to law. In the case of refusal to implement any relevant order, we should employ the relevant economic, legal means as well as necessary administrative means to settle it and investigate the liabilities of relevant personnel. As is the general principle, we should not grant any approval for the establishment of a new steel plant and shall carry out strict examination and approval on a project involving the relocation of a steel plant or involving the elimination through selection on outdated production capacity of a steel plant. We should elevate the standards for well-size in coal exploration and clarify the resource recovery rate as well as the requirements for work safety. As for a newly established automobiles and complete vehicle production enterprise as well as any investment project involving the production of trans-category products by a current enterprise, both the requirements of the industrial policies and the requirements for independent brand and independent development of products shall be satisfied. Where any current enterprise establishes a factory in a different place, its production and sales volume shall be over 80% of the approved production capacity, as is a requirement. We should elevate our efficiency in utilizing foreign investment and prohibit the access of any foreign investment with poor techniques and security, high energy-consumption and heavy pollution. (3) We should eliminate the outdated production capacity through selection. We should, according to law, close down those small-sized enterprises that destroy resources, pollute the environment and fail to meet the relevant requirements for work safety, eliminate through selection the outdated production capacity by stages and batches and dispose of the outdated production equipments by way of destruction. We should, in a step-by-step manner, eliminate through selection the outdated production capacity of cement such as vertical kiln, close or eliminate small open furnaces of calcium carbide or those with a production capacity of lower than 10,000 tons; eliminate, as soon as possible, ferroalloy submerged arc furnaces with a power of lower than 5,000 kilovolt/ampere (except special ferroalloy), ferroalloy blast furnaces with a volume of less than 100 cubic meters; iron-smelting blast furnaces with a volume of less than 300 cubic meters and steel-smelting converters and electronic furnaces with a production capacity of lower than 20 tons. We should eliminate thoroughly the facilities as involved in indigenous coking and improved coking; stop the use of mini petrol engines and condensing coal-fired mini-set of 50,000 kilowatts and eliminate those small coal mines that fail to meet the requirements for scale as prescribed in the industrial policies and standards for work safety. (4) We should promote the technical innovation. We should support large-sized enterprises' projects involving technique innovation compatible with the relevant industrial policies, of high technical level and conducive to industrial upgrading. We should, putting the focus on elevating the technical level, improving the varieties, protecting the environment, ensuring the security, debasing the consumption and elevating comprehensive utilization, carry out reforms and innovation in the traditional sectors. We should promote the project of replacing small thermal power generators with large ones and applying coal instead of petrol as well as any other project alike. We should support automobile enterprises in their building a research and development system and develop, on the basis of assimilating the relevant techniques as introduced, those techniques with independent intellectual property right. We should support the development of key textile techniques, research and development of the whole-set equipments and the public innovation platform of clustered industries as well as independent costume brands. We should support the major technical innovation of large-sized iron and steel conglomerates as well as their new product projects, accelerate the development of grain-oriented cold rolled silicon steel sheets, elevate the production of automobile sheets, and promote the domestic production of large-sized cold/hot continuous rolling sets. We should also support the construction of coalmines with high yielding and efficiency as well as the technical innovation regarding the security of coalmines. (5) We should promote the merger and restructuring. We should, according to the market principles, encourage those large-size enterprise conglomerates with competitive strength to carry out trans-regional and trans-industrial merger and restructuring by employing their assets, resources, brands as well as the market mechanism and promote the centralization of industry and develop them into those of large scale and of large bases. We should promote the joint restructuring between a predominant large-sized iron and steel enterprise and other iron and steel enterprises in the same region so as to form several iron and steel enterprise conglomerates with an annual production capacity of more than 30 million tons. We should encourage large-sized cement enterprise conglomerates to implement acquisition, restructuring and unification over middle/small-sized cement plants so as to intensify its influence on the regional market. We should break through the production and business allocation of current carbonization enterprises, carry out merger and unification between carbonization enterprises and iron and steel enterprises and chemical industrial enterprises and therefore develop them towards those featured by integration of production and application, on-scale business operation, diversification of products and comprehensive application of resources. We should support large-sized coal enterprise to acquire, merge, reform and re-construct a batch of small coal mines so as to realize the integration of resources, elevate the mining recovery rate and work safety level. (6) We should intensify the coordination between the policies for credit, land, construction, environmental protection and security and the relevant industrial policies. We should earnestly implement the Decision of the State Council on Promulgating and Implementing the Interim Provisions on Promoting the Industrial Restructuring (No. 40 [2005] of the State Council) and make efforts to detail the measures formulated to implement all the policies. As to the relevant development planning of as well as industrial policies for such industries as iron and steel, electrolytic aluminum and automobiles, we should intensify the implementation of these policies, strengthen the examination thereover and improve them in practice as well. As to any industrial development planning or industrial policy that has not been promulgated, we should make efforts to formulate and perfect it for the earliest promulgation. Such departments as financial institutions and state land resources, environmental protection and security supervision shall, in strict accordance with the requirements of the state's macro control as well as the relevant industrial policies, optimize the credit system and the structure of land supply, support those projects and enterprises, which meet the relevant state industrial policies and requirements for market access in the supply of land and loans, and shall, at the same time, prevent any major up-and-down in the credit sector and positively support any merger or restructuring carrying favorable market prospects, producing good benefits and conducive to the formation of a scale economy. As to any project or enterprise that fails to meet the relevant state industrial policies, land supply policies and requirements for market access or which has been clearly eliminated by a state order, no loan or land shall be supplied thereto and the departments in charge of urban planning, construction, environmental protection and security supervision shall not handle the relevant formalities therefor. We should firmly crack down on any act of canvassing investment by unlawfully lowering the land price or debasing the standards for environmental protection or security, or any act of blindly initiating a project. We should improve the relevant policies and measures for restricting the export of those products of high energy-consumption, heavy pollution or resource products. (7) We should further carry out the reform in such aspects as the administrative administration, investment system, pricing mechanism and market exit mechanism. We should, according to the requirements for building a socialist market economic system, further promote the reform in the administrative administration and investment system, carry into effect the implementation of separating government function from enterprise management, improve and strictly carry out the system regarding the verification and archival filing of enterprise investment so as to achieve the goal of enterprises making their own decisions about investment, bearing by themselves the relevant risks and banks carrying out independent credit assessment. We should promote the price reform for resource products in an active and stable manner, improve the pricing mechanism that reflects the market demand and supply as well as the scarcity of resources and establish and improve an ecological compensation mechanism. We should establish and improve an enterprise exit mechanism and formulate as well as promulgate the relevant policies for reform regarding personnel arrangement, land use, asset disposal and guaranty for the employees' rights and interests, which will be conducive to promoting the merger and restructuring of enterprises and to enterprises' exiting out of the market and conducive to safeguarding employees' legitimate rights and interests. We should accelerate the establishment and improvement of the relevant legal bylaws that preserve a fair market competition and break the regional blockade as well as regional protection. (8) We should improve the industrial information disclosure system. The relevant departments shall improve the relevant statistical and supervising system and do a good job in the follow-up analysis on the dynamic operation of those sectors with production capacity redundancy. We should establish, as soon as possible, the relevant indicators to measure the production capacity redundancy as well as the data collection system and establish, in a well-planned and step-by-step manner, an information disclosure system on a regular basis so as to offer guidance for investment prediction in the market. We should intensify the guidance for information regarding the industrial development and bring into fully play the function of the industrial associations, do a good job in the market research and disclose, at a proper time, the information on the supply and demand of products, current production capacity, ongoing construction scale, development tendency, raw material supply and price fluctuation. At the same time, we should attach close attention to the production and investment of other related industries and the development of their market supply and demand so as to find and solve any up-coming problem and prevent the emergence of heavy production capacity redundancy in any other sector. The task of accelerating the restructuring in the sectors with production capacity redundancy involves many aspects, carries strong policy orientation, and is difficult and complicated. All regions and relevant departments shall intensify the concept of the overall situation, intensify the organization and leadership, carry out close coordination and do a good job in an active and orderly manner. They should correctly handle the relation between reform, development and stability and, based on the real situation of a specific region or entity, improve the supporting measures, earnestly solve any difficulty or problem arising from any merger, bankruptcy or restructuring of enterprises, do a good job in the personnel arrangement and asset preservation, control the losses to the minimum extent so as to avoid any societal instability. All regions and relevant departments shall report, in a timely manner, the implementation of the present Circular to the State Council. The National Development and Reform Commission shall, in collaboration with the relevant departments, make efforts to formulate the specific policies and measures and do a good job in the relevant implementation. |
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