China reduced its steel production at a year-on-year rate of 3% in 2021, to 1,032.8 million tons, according to the World Steel Association (worldsteel).

Worldwide, steel production was 1,950.5 million tons, an advance of 3.7%, at an annual rate.

According to a World Trade Organization (WTO) report, China’s efforts to eliminate excess production capacity in the steel sector are governed by the Opinions on Reduction of Excess Capacity in the Steel Sector to Boost the Development through Problem Solving (Guo Fa No. 6, 2016).

Among other measures, the Opinions prohibit the creation of new steel production capacity.

China also intends to urge companies to eliminate part of their steel production capacity through the following measures, among others: active elimination of capacity; mergers and acquisitions and restructuring, transformation and conversion of production lines; relocation and reconstruction; and global cooperation on production capacity.

Steel production

China has continued to reduce capacity through market-oriented, rules-based, systematic and structural measures.

In accordance with the WTO, new efforts have been made to consolidate the progress made and a constant process of relocation of workers has been carried out.

In the steel sector, China has continuously advanced supply-side structural reform, implemented capacity replacement, and improved the registration requirement for steel projects.

Likewise, in the coal sector, China has eliminated obsolete production capacity, improved the quality of the supply system, and optimized the distribution of production capacity.

In parallel, China has dealt with «zombie companies«. From 2018 to 2020, obsolete coal production capacity was reduced by more than 500 million tons. From 2016 to 2018, China cut crude steel production capacity by more than 150 million tons, meeting the 13th Five-Year Plan target two years ahead of schedule.