About 500,000 may see their jobs gone because of China’s effort to reduce steel overcapacity.
On January 22, the State Council announced that China will cut its crude steel production capacity by 100 million to 150 million tons. To accomplish this goal, Chi Jingdong, deputy secretary-general of the China Iron and Steel Association (CISA), said that, based on the per worker output of 300 metric tons at China’s steel mills, it means that 500,000 steel workers will face job changes.
To deal with the 500,000 job changes, the State Council has reviewed and approved the “Guidance on the Steel Industry Turnaround,” which is expected to be released officially after the Chinese New Year which is on February 8. According to the Guidance, the reduction in crude steel production will be accomplished within a three year period (2016 – 2018). Two approaches will be used: mandatory and guided closedowns. Those companies that do not meet the legal requirements of the environmental law and regulations must be completely shut down permanently. Government policies will guide the elimination process for those that have already exited the market, that need to be relocated, or that are involved in mergers and acquisitions.
Source: The Economic Observer reprinted by Huanqiu, January 30, 2016