China on Monday launched the latest in a long list of attempts to rein in industrial overcapacity to keep its fast-growing economy on an even keel and prevent investment from going to waste.
The success of the new initiative is far from assured because local officials, who are still largely judged on their record in promoting growth and jobs, regularly ignore orders from Beijing. "In the near term, monitoring and supervision will be very tight," said Ken Peng, an economist with Citigroup in Beijing.
"Policymakers are concerned about over-investment. But it is not a uniform opinion. Implementation depends on local authorities, and it will not be easy," he added. The government hopes to curb the expansion of six sectors by withholding approval for new investment and by starving them of financing. The industries are steel, cement, flat glass, coal chemicals, polysilicon and wind power equipment.