Miao Wei, minister of Industry and Information Technology of China, said recently that present administrative approval mechanism had contributed to overcapacity, standard policy should be implemented. Besides, local government should strengthen guidance and supervision, as well as promote market mechanism and reduce intervention.
Minister Miao lectured on the Second Lingnan Forum held in Guangzhou last Sunday. In the speech, he said that moderate overcapacity is conductive to competition mechanism in market economy system. However, present overcapacity in industries such as steel, electrolytic aluminum and ship building was already beyond normal market competition scale.
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He stressed that in some areas imperfect price mechanism distorted investment and postponed building the market environment of fair competition. The administrative form of centralized approval and control competition could not restrain overcapacity now, thus normal and abnormal overcapacity as a whole would be a serious problem if economy fluctuated sharply.
He argued it was imperative to rein in market access and promote co-work of industrial policy, fiscal policy, land policy and environmental policy. We could promote economic development and industry concentration by restraining capacity expansion, eliminating backward production capacity and compressing existing capacity. But in the long run, he added, to solve the problem, we must change the administrative form of approval, perfect market mechanism and reduce governmental intervention.