Overcapacity troubles China economy, reform needed
Updated: 2013-04-15 15:31
(Xinhua)
|
|||||||||
Local governments are deeply involved in managing production, which can affect market operation.
"Government power causes similar choices to be made in different places," Feng said. "Vastly profitable sectors like land and mineral resources have led local governments to steer corporate investment."
Local governments are also in charge of approving projects, leading investors to prefer government-targeted sectors so as to ensure approval, Feng said.
Despite central government urges to curb excess capacity, local governments have not taken all the factors involved in industrial layout into consideration. Boosting the local GDP and employment are still prioritized, leading to repeated input for the same projects.
Regional protectionism and lagging systematic reform have sheltered many incompetent companies, hampering the market's function, analysts said.
Structural reform
The overcapacity problem may be solved through structural reform that boosts innovation and quality-oriented economic growth.
Li said the way local government performance is evaluated should be changed to fit the market and facilitate fair competition, as well as reduce administrative meddling.
Local governments should be banned from using direct stimulative measures to encourage investment, he said.
He also called for more transparent and stricter approval for land projects, leaving decision and risk for enterprisess to cope with.
Financial and taxation reform needs further implementation, in order to act as an efficient tool to restrain local investment while reducing pressure on the expenditures of local governments.
Necessary taxes for resources are expected to cover more products and sectors with high energy consumption, Li said.
Governments at all levels should create a healthy environment that allows the market to maintain itself and weed out unsustainable capacity, he said.
Li said less-controlled market operation and stricter approval for key projects can contribute to realizing greater market competition.
"More open market access, a stricter bankruptcy system and a smoother market pricing mechanism can help give full play to market competition," Feng added.
China takes on steel overcapacity
China needs to address industrial overcapacity
Steel companies pin hopes on autos
CISA: Steel industry hit by overcapacity
Photovoltaics overcapacity 'to be solved'
- Li Na on Time cover, makes influential 100 list
- FBI releases photos of 2 Boston bombings suspects
- World's wackiest hairstyles
- Sandstorms strike Northwest China
- Never-seen photos of Madonna on display
- H7N9 outbreak linked to waterfowl migration
- Dozens feared dead in Texas plant blast
- Venezuelan court rules out manual votes counting
Most Viewed
Editor's Picks
American abroad |
Industry savior: Big boys' toys |
New commissioner
|
Liaoning: China's oceangoing giant |
TCM - Keeping healthy in Chinese way |
Poultry industry under pressure |
Today's Top News
Boston bombing suspect reported cornered on boat
7.0-magnitude quake hits Sichuan
Cross-talk artist helps to spread the word
'Green' awareness levels drop in Beijing
Palace Museum spruces up
First couple on Time's list of most influential
H7N9 flu transmission studied
Trading channels 'need to broaden'
US Weekly
Beyond Yao
|
Money power |