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China’s steel capacity mounts despite pledges to cut


  • China accused of undermining drive to cut steel capacity / Financial Times (paywall)
    A study commissioned by Greenpeace shows that despite China’s stated determination to cut excess capacity in its steel industry, the country actually increased its net operating steelmaking capacity by 36.5 million tonnes last year, as the closure program primarily targeted mills that were already idle. Last October, the National Development and Reform Council announced that it had already exceeded the 2016 national target of steel cuts with 85 million tonnes of capacity being shut, but “the closures in operating capacity were outpaced by new plants or mills that restarted as price rose.” The study also found that around 80 percent of the net increase in capacity took place in the heavily polluted regions surrounding Beijing, such as Hebei Province.  
  • China’s monetary policy is looking like alphabet soup / Bloomberg
    Since China liberalized interest rates in 2015, the People’s Bank of China has been seeking to upgrade its monetary tool kit while dealing with a slow economic growth, weak currency, and mounting debt. In recent years, apart from adjusting the benchmark rate and reserve-requirement ratio (RRR), the central bank has developed at least seven tools with which it has managed liquidity, such as daily Open-Market Operations for short-term money supply, Medium-Term Lending Facility for longer tenors, and Pledged Supplementary Lending for certain sectors. Compared with conventional adjustments to the RRR and benchmark rate, these money-market instruments are likely to cause greater market volatility and uncertainty when they expire. So far this year, the central bank has increased rates on three different liquidity facilities, created a new tool to provide temporary funding support to some major commercial banks, and ordered banks to curb new loans. According to an analyst at Bank of Tokyo-Mitsubishi UFJ Ltd. in Hong Kong, “They’re trying to juggle way too many balls.”

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Jiayun Feng

Jiayun was born in Shanghai, where she spent her first 20 years and earned a bachelor’s degree in journalism at Fudan University. Interested in writing for a global audience, she attended the NYU Graduate School of Journalism for its Global & Joint Program Studies, which allowed her to pursue a journalism career along with her interest in international relations. She has previously interned for Sixth Tone and Shanghai Daily.