Overcapacity being cut amid power shortages

BEIJING - China will continue to phase out unneeded industrial capacity this year, with 2,255 enterprises closing facilities, while the government fights the worst power shortage in years, a statement on the Ministry of Industry and Information Technology (MIIT) website said on Monday.

Obsolete production capacity in 18 major industrial sectors - including iron, steel, coke, cement, flat glasses, paper making as well as printing and dyeing - will be eliminated, according to the statement.

The MIIT statement said that production capacity for 31.22 million tons of iron, 27.94 million tons of steel, 19.75 million tons of coke and 153.27 million tons of cement will be removed by the end of the year as the country continues to reduce pollution, conserve energy and upgrade industry.

China is facing the worst power shortage this year since 2004, while industrial power consumption is growing at 12 percent year-on-year, according to statistics from the China Electricity Council.

Some experts say the power shortage indicates a need for additional adjustment of the country's economic structure, arguing that the rising demand for electricity is due mainly to the operation of heavy industries with low energy efficiency.

The National Energy Administration (NEA) said the government will work hard to eliminate obsolete capacity in industries such as steel and cement to control excessive growth of high energy-consuming industries.

China's electricity consumption in the first five months of this year rose 12 percent year-on-year to 1.85 trillion kilowatt-hours (kWh), while about 887 billion kWh of electricity, or 48 percent, was consumed by heavy industries with low energy efficiency, such as the power, chemical, building material, steel and nonferrous metal industries, according to the NEA.

These energy-intensive sectors have contributed 5.1 percent of the total growth rate.

The government should do more to conserve energy by eliminating the capacity, because power shortages can be resolved only in the long term when China's development shifts to a more energy-efficient model, Lin Weibin, deputy director with the Chinese Energy and Strategic Resources Research Center of Beijing Normal University, previously said in a Xinhua News Agency report.

To meet the central government's target of conserving energy and reducing emissions in the period of the 11th Five Year Plan (2005-2010), many factories were shut down, cut off electricity or reduced production last year.

Since the beginning of this year, however, China has witnessed a sudden revival of the production of the heavy industries.

Power consumption in the iron and steel industry grew 14 percent during the first four months of this year from one year earlier, according to the National Development and Reform Commission.

China Daily

(China Daily 07/12/2011 page15)