Drive to close obsolete capacity will intensify

China will step up efforts to shutter obsolete industrial capacity as it strives to increase energy efficiency and accelerate its economic transition, said Minister of Industry and Information Technology Miao Wei on Tuesday.

A revised list of closures will be released soon, Miao said. MIIT will urge the companies involved to dismantle obsolete equipment so that excess capacity can be eliminated by 2014, a year ahead of schedule.

"The closures will result in issues such as settlements for laid-off workers, loss of assets and dealing with debts. Thus, the move will affect local governments' revenue and employment rates in the short term," Miao told the Xinhua News Agency.

However, the closure program will also free up resources, energy, land and market for advanced capacity, he added.

The ministry announced the first batch of closures on July 25, involving 1,294 companies (including 19 listed companies).

The closures involve 19 industries such as copper and alumina smelting. Enterprises on the list were told to close the capacity by Sept 30 and demolish the facilities by Dec 31.

Relocation of capacity elsewhere in the country was strictly prohibited.

The list was regarded as a vital step for the central government in taking practical steps to solve the overcapacity issue, which has become a major challenge for the world's second-largest economy.

According to the China Nonferrous Metal Industry Association, the capacity utilization rate of alumina facilities was only 72.5 percent in 2012. Rates for steel, cement and plate glass were also lower than 75 percent.