China’s government has ordered companies to close factories in 19 industries where overproduction has led to price-cutting wars,affirming its determination to push ahead with a painful economic restructuring despite slowing growth.
The industry ministry issued orders late Thursday to more than 1,400 companies to cut excess capacity that has led to financial trouble for manufacturers. The affected industries include steel,cement,copper and glass. It requires some companies to close outright.
Communist leaders are trying to reduce reliance on investment and trade. But a slowdown that pushed Chinas economic growth to a two-decade low of 7.5 per cent in the latest quarter prompted suggestions they might have to reverse course and stimulate the economy with more investment to reduce the threat of job losses and unrest.
This detailed list shows the government is serious in its efforts to restructure the economy and is prepared to tolerate the necessary pain, said Nomura economist Zhiwei Zhang in a report. This reinforces our view that aggressive policy stimulus is unlikely in 2012 and that growth should trend down.
Forecasters have repeatedly trimmed their growth outlook for China amid a drumbeat of data showing weakening growth in retail sales,factory output and other economic segments.