Premier Li urges steadfast efforts to cut overcapacity

Chinese Premier Li Keqiang has called for steadfast efforts to push overcapacity cuts after government inspections found that a number of steel mills were trying to resume production of inferior-quality steel bars.

"We must stand firm in capacity-cutting efforts to prevent shutdowns in production from flaring up again," Li said in an instruction note on the findings of an inspection by the State Council.

Those breaking government rules will be strictly punished, and authorities with weak supervision will be held accountable, the premier said.

China's State Council requires all facilities producing inferior-quality steel bars to be dismantled across the country by the end of June, but the inspection found two mills in Tianjin were still in business while one company shutdown in Hunan Province was seeking to restart production.

As excess capacity has weighed on China's overall economic performance, cutting overcapacity is high on the reform agenda. In 2016, China completed both its annual targets for coal and steel capacity reduction ahead of schedule.

The government work report this year stated that China would continue to cut overcapacity in bloated sectors, with targets to slash steel production capacity by around 50 million tonnes and coal by at least 150 million tonnes this year.