China Wants To Stop Making So Much Stuff

petrochina oil dollars china

Scared of a monster boom and bust brought on by stimulus spending, China is imposing new rules to limit its expansion, the AP reports.

Under Wednesday’s order, new aluminium production projects are banned for three years and regulators will limit spending on factories to make steel, cement, glass, polysilicon used in solar panels and wind power equipment.

Without controls, “it will be hard to prevent vicious market competition and increase economic benefits, and this could result in facility closures, layoffs and increases in banks’ bad assets,” the Cabinet said on its Web site.

Beijing appeared to be trying to fine-tune measures to keep China’s recovery going by ensuring adequate supplies of industrial goods while preventing a glut that could set off price wars, hurting financially weak producers.

According to Renewable Energy Magazine, China wants to reduce the amount of wind companies in operation from 100 to just 12. That’s a 90% reduction in wind companies. There are too many companies building turbines, leading to an excess in supply.

This is happening in all the industries China wants to reign in. For instance it produces 660 million tons of steel, while it only needs 500 million tons annually.

Interestingly, the new companies it will support are going to be cleaner says the AP:

New steel mills must be approved by Beijing instead of local authorities to ensure they meet environmental standards, the statement said. Smaller blast furnaces are to be shut down by 2011, though it was unclear how many might be affected.

Coal and petrochemical projects must meet higher energy efficiency standards and regulators will “speed up the elimination of backward projects,” the statement said. It said no experimental projects will be approved for three years.

Proposed cement factories will be reviewed and developers will be forced to redesign any that do not meet standards, it said. Proposed glass factories will be reviewed and must meet higher energy efficiency standards while “backward glass production” will be shut down.

New polysilicon factories must be able to capture and recycle up to 99 per cent of waste gases, the government said. Facilities also will face minimum size requirements to promote efficiency and limits on how much land they can use.

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