1 March 2016

The Chinese government established a fund to help metallurgists

The PRC government reported on the establishment of a fund whose purpose is to help metallurgists. We are talking about employees who lost their jobs due to the reduction in steelmaking capacity. The facilities are closed in accordance with the state five-year program. According to preliminary estimates, the size of the fund will be 15.3 billion USD. At the national rate, it is 100 billion yuan. Representatives of the PRC government talk about the allocation of funds. Among other things, they will be sent for retraining of workers and payment of unemployment benefits. It is also planned to pay new work for those affected by the changes in the metallurgical national sector. To increase the amount of funds, the government suggests that local authorities implement land sales. These are the areas where the enterprises are located for closure. The government believes that reducing excess capacity is a priority. This is one of the five main directions of China's anti-crisis policy. Among the priorities is a reduction in inventories, a decrease in the share of borrowed finance. It also reduces costs and extends the value-added transformation.

Analysts after the assessment of the situation reported on the consequences of reforms in the metallurgical sector. Reduction of capacity will lead to the formation of over 2 million. Unemployed. If we take into account related production and services, the figure threatens to grow to 4 million. human. The PRC government is very concerned about the outbreak of mass protests. This is especially true for zones in which the metallurgical sector is considered a city-forming sector.

Meanwhile, it will take five years to stop excess capacity. At the same time, the annual volume will be 100-150 million tons. The process will last until 2020. First of all, small production will be closed. These are blast furnaces with a volume not exceeding 400 m 3 . Converters should not exceed 30 tons. It is also planned to stimulate the processes of mergers and acquisitions of industries. The main goal is to optimize management and reduce costs.

However, the representatives of CISA are not sure of the effectiveness of the program. In total, the Chinese production capacity of the sector is annually 1.2 billion tons of steel. In 2015, 803.8 million tons of products were produced. It is unlikely that five years will be enough to solve the problem of overproduction. However, output in China will indeed decline to 95 million tons per year.

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