In the first quarter of this year, the brighter economic data led some people to be blindly optimistic, and to the production capacity of the tiger eyes.Need to recognize that the situation in the industry have improved the capacity, more need to embrace global and long-term perspective, and more test policy practitioners, trade-off of concentration and courage, to be more active exploration market, legal means, improving policies and quality standards, resolutely let excess capacity and orderly exit the market

As the central enterprises set up more dissolve excess capacity target and concrete scheme, around the steel, coal industry, this year is expected to complete dissolve excess steel production capacity of 5.95 million tons, coal excess capacity of 24.73 million tons.At the same time, in the industries of non-ferrous metals, shipbuilding, refining, building materials and electricity, the production capacity is also continuing.

Is the year of supply side of the deepening of structural reform, also is a crucial year, dissolve the backward production capacity, backward production capacity, the determination of strength can abate, depth breadth shall have the breakthrough, in this regard, state action.But in real terms, the brighter economic data in the first quarter of this year have also led some to blind optimism.They feel the price rises, the enterprise benefit also has improved, some backwardness capacity secretly opens up to say not to have the benefit, to go to the production capacity also dozen to raise a tiger eye.Judging from the overall situation of economic development and the long-term development of the industry, this mindset is not allowed.Indeed, in the first quarter of this year, China's economy steadily improved, with industrial production up 6.8 percent year on year, a record high for nearly three years.Compared with the lows of the previous two years, overcapacity in steel, coal and other industries is much better than the previous two years. Prices have risen and the benefits of enterprises have gradually improved.But should not be ignored, the fundamentals have not changed in industries with excess capacity, the current has not been fundamentally out of the woods, a bit like achievement has stalled, may fall short, the loss of the adjustment of the precious opportunity.

It should be noted that the current economic recovery and excess industry change, demand factors, is largely caused by the reform of our country increase supply side structural policy dividends, is precisely the strict control capacity has played a certain effect.But this kind of change, is caused by short-term market supply and demand do not match, does not change the reality of some industry long-term excess supply, such as the market get better conclusions according to this, even the blind expansion of production, may make the industry development in trouble again.In the case of the steel industry, the industry has turned a profit, but in 2016 it lost 20% of its profit margin and sold a profit margin of only 1.08%.In the first quarter of this year, steel industry profits of 23.284 billion yuan, 2.77% return on sales, is still at a lower level in the industry, moreover, there are 19% of the enterprise losses, although loss reduction, but is a large percentage of loss-incurring enterprises.

April 25, held a meeting of the political bureau of the CPC central committee pointed out that the current economy has a cyclical factors, economic structure adjustment, is still facing many challenges, must insist on a big new normal logic to the economic situation, unswervingly promote the strategic adjustment of economic structure.

So, although some industries with excess capacity efficiency improved, but the profit level is not high, still benefit recovery foundation is not solid, must continue to unswervingly to capacity - ting, coagulation hearts meet transformation.Need to recognize that the situation in the industry have improved the capacity, more need to embrace global and long-term perspective, and more test policy practitioners, trade-off of concentration and courage, to be more active exploration market, legal means, improving policies and quality standards, resolutely let excess capacity and orderly exit the market.At the same time, we should pay more attention to the balance between supply and demand, avoid price fluctuations and create a more stable market environment for production capacity.

Excerpt from this article: economic daily