The State Council, China's cabinet, has punished two steelmakers for violated rules and regulations, reflecting the central government's determination to control the capacity glut, experts said on Monday.
Jiangsu Huada Steel Co Ltd and Hebei Anfeng Steel Co Ltd have violated the rules and regulations by launching new steel projects, according to a statement published on the central government's website on Monday. Huada, located in East China's Jiangsu Province, has illegally produced steel, which had a negative impact on the local industry, read the statement. Anfeng, located in North China's Hebei Province, was ordered to tear down its obsolete furnaces.
Two officials, Hebei's vice governor Zhang Jiehui and Jiangsu's vice governor Ma Qiulin, have been punished for the companies' violations.
This shows the government's determination to tackle the overcapacity issue, Wang Guoqing, research director at the Beijing Lange Steel Information Research Center, told the Global Times on Monday. "It's more like 'killing the chicken to warn the monkeys,' to warn the many by punishing a few," she said.
To phase out low-end products and implement policies against overcapacity, those who violate the rules and regulations should be severely punished, Li Xinchuang, president of the China Metallurgical Industry Planning and Research Institute, told the Global Times on Monday.
The authority has also publishedthe names of 111 and 27 people in Jiangsu and Hebei, respectively, the statement noted.
"It will also help ensure a fair market environment, as well as the further development of the domestic steel industry," Li noted.
The State Council announced a plan to tackle the steel industry problem in February. The plan called for cutting crude steel output by 100 million to 150 million tons from 2016 to 2020.
The country's steelmakers have hit their target of reducing steel output by 45 million tons, Xu Shaoshi, head of the National Development and Reform Commission, was quoted as saying by the media.
