BEIJING: The Chinese Government has promised more steps to cut surplus steel production that is straining trade relations with Western countries, and to curb coal production. In a speech to the national legislature, Premier Li Keqiang yesterday said China would eliminate 50 million tonnes of steel production capacity, a move that would help to reduce the flood of Chinese exports depressing global prices and prompting complaints by Washington and Europe that thousands of jobs are in danger. Mr Li also promised to eliminate 150 million tonnes of coal production capacity. He didn’t mention other industries such as aluminium in which China’s trading partners complain excess capacity supported by government subsidies is distorting global markets. Mr Li trimmed China’s growth target and warned of dangers from global pressure for trade controls as Beijing tried to build a consumer-driven economy and reduce reliance on exports and investment. He set the target at “around 6.5 per cent or higher, if possible”. That is down from last year’s 6.7 per cent expansion but, if achieved, would be among the world’s strongest, reflecting confidence that efforts to create new industries are getting traction.
The speech said the yuan exchange rate would be further liberalised, and the currency’s stable position in the global monetary system maintained. That is a change from last year’s language saying the market-based mechanism for setting the exchange rate would be improved “to ensure it remains generally stable at an appropriate and balanced level”. Mr Li called for attention to the risks of China’s surging debt levels, which economists see as a rising threat to growth. At a time of demands in the US and Europe for trade controls, Mr Li warned China faced “more complicated and graver situations” at home and abroad. “Both the de-globalisation trend and protectionism are growing,” he said. “There are many uncertainties about the direction of the major economies’ policies and their spillover effects, and the factors that could cause instability and uncertainty are visibly increasing.” Growth has cooled since 2010 as communist leaders try to develop a consumer-driven economy and reduce reliance on trade, heavy industry and investment.
