"Capacity reduction" in the coal industry is a major problem, and it is also an urgent matter to be solved in the transformation and upgrading of traditional capacity. As the Prime Minister said, these two industries are currently seriously overcapacity, and they are basic industries, and state-owned enterprises dominate, so it is necessary to resolve the overcapacity.
Focusing on strengthening supply-side structural reform is the work of this year. One of the five major tasks is to "reduce production capacity". The executive meeting of the State Council proposed three major measures: first, to promote the withdrawal of backward production capacity within a time limit in accordance with laws and regulations with more stringent standards of safety, environmental protection, quality, energy consumption, and guide enterprises to actively withdraw from production capacity through mergers and reorganization, transformation, relocation and transformation. The second is to strictly control the new capacity. Strictly supervise the implementation of the State's decision to stop the filing of new capacity steel projects. In principle, the examination and approval of new coal mines, new capacity technological transformation and capacity nuclear increase projects will be stopped. Third, improve the support policy. Set up a special award and subsidy fund for industrial enterprise structure adjustment, and grant awards and subsidies to the local personnel in the process of resolving overcapacity.
The modern coal chemical industry has been hot in the past few years, but its development direction of refinement and high-end is far less than expected, so that since 2015, it has been completely unable to withstand the impact of the environmental impact assessment constraints of the Ministry of Environmental Protection and economic fluctuations.
In a general sense, steel and coal are typical strong cyclical industries, which are bound to adjust significantly with economic fluctuations. However, from the international perspective, although Europe and the United States and other countries have had similar crises, the reason why China's coal industry is currently facing difficult situations is also related to some of our own reasons.
Although steel and coal are traditional industries, they also need technological innovation and industrial upgrading, but China has not done enough in this regard. Taking the coal industry as an example, the modern coal chemical industry based on it has been hot in the past few years, but its development direction of refinement and high-end is far from expected, so that since 2015, it has been completely unable to withstand the impact of the environmental impact assessment constraints of the Ministry of Environmental Protection and economic fluctuations.
It is self-evident that the market competitiveness of coal production is stronger than that of basic chemical products or fine and high-end coal chemical products. At present, to resolve the overcapacity of the coal industry, the closure of enterprises has a great negative impact. According to media reports, in the next three years, China will close 4300 coal mines (with a total capacity of about 700 million tons per year) and divert 1 million people. The Chinese government will spend 4.57 billion US dollars (about 30 billion yuan) for this purpose. Such a large price is also a must. For the long-term development of the entire coal industry, high-end product upgrading is the right way.
The Analysis Report on the Development Prospects and Investment Strategic Planning of China's Coal Industry by the Prospective Industry Research Institute pointed out that in the past few years, state-owned assets have strengthened their shareholding in the coal industry, and the phenomenon of state-owned assets holding coal enterprises is particularly serious, which has also led to the weakening of market sensitivity of the industry as a whole. It should be said that under the circumstances of frequent coal mine accidents, production safety and regulatory difficulties, the government has indeed changed the "small, scattered and disorderly" situation of enterprises through resource integration. However, the excessive involvement of state-owned assets has also led to the problem of rigid enterprise mechanism and lack of market thinking. It should be said that this problem has directly exacerbated the current situation of overcapacity.
It should be noted that one of the important emergency ways to resolve overcapacity at present is merger and reorganization. In the past, the government often played the role of "matchmaking", which is against the market law. Therefore, it needs to be emphasized that to resolve overcapacity, it is necessary to reduce improper administrative intervention as much as possible (it is unrealistic to completely avoid it). Only in this way can coal, steel and other industries with overcapacity return to marketization.
Just for the moment, the de-capacity of coal and steel industries directly involves the interests of banks (debt), local (finance) and enterprises (self-interest) and other departments. After these obstacles are overcome, the diversion of personnel will also cause a burden to the finance and society. These are the challenges that the policy needs to face. In the long run, the government should also recognize the root cause of overcapacity. After the emergency, it is more necessary to let the market's hands integrate the survival of the fittest in the industry.
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