On March 19, the China Council for International Cooperation on Environment and Development (CCICED), together with SEEC Research Institute (SRI), held a workshop on cost-benefit analysis on the main pathways towards overcapacity reduction.

Representatives from the Shenhua Group, the China Coal Economy Research Institute, and the China Metallurgical Industry Planning and Research Institute delivered keynote speeches on the current situations, causes of, and solutions to overcapacity in the coal and steel industries. Participants shared their views on what role the government plays, how to improve market mechanisms and social security and to guard against financial risks in the process of  overcapacity reduction.

Experts agreed that there is serious overcapacity in the two industries, which cannot be eliminated only through increased demand on domestic and international markets. The current complex economic situation requires China to reduce overcapacity in these industries. Past experience shows that it is not feasible to rely solely on administrative measures to cut industrial capacity. It is necessary to get a clear picture of the root cause of overcapacity, the role of government, investors, financial institutions, and employees, and  how each stakeholder will be affected. The experts also stressed the importance of conducting cost-benefit analysis on different approaches to overcapacity reduction and figure out the most cost-effective ones, so as to revitalize China’s economy and guard against financial and social risks. The Task Force is expected to draw experience from other countries, and put forward the optimal path in the steel and coal industries as a reference for decision making.