2 deputy governors guilty of capacity violations

Two provincial deputy governors were punished for allowing steel mills that were previously shut down to restart operations, the first and most severe punishment that has been handed to provincial-level officials for failure to abide by capacity-cut policies.

Ma Qiulin, deputy governor of East China's Jiangsu province, and Zhang Jiehui, deputy governor of North China's Hebei province, received administrative punishment handed out by the State Council.

The decision was announced during a meeting of the Political Bureau of the Communist Party of China Central Committee on Thursday, Xinhua News Agency reported on Monday.

Premier Li Keqiang stressed the importance of forbidding construction of new capacity and renewing efforts to cut capacity.

A report released in September by the Alliance for American Manufacturing, a nonprofit formed by leading manufacturers and the United Steelworkers union, blamed China's sluggish progress in cutting capacity, which it said has caused a global importation crisis and led to 19,000 steelworker layoffs in the US.

But National Development and Reform Commission data show that the nation had completed yearly reduction goals by the end of November, ahead of the schedule.

China intends to cut 45 million metric tons of steel capacity and over 250 million tons of coal production capacity by year's end.

Lin Boqiang, a senior energy researcher at Xiamen University, said that the government may strengthen supervision and use of administrative orders to accelerate the pace of overcapacity cuts.

"Administrative orders would help in times when the nation faces more headwinds in capacity cuts next year," Lin said.

Zhang Lin, a senior analyst with dz18.com, an e-commerce platform for the steel industry, said the penalty given to the two provincial-level officials should warn officials in other places.

It shows that "cheating, say, submitting reduced capacity statistics that include data from operations that are already shut down, will not be tolerated", she said.