• Tuesday, October 06, 2015

Wisdom of Beijing's approval of steel plants questioned

Staff Reporter 2012-05-30 15:19 (GMT+8)
Zhanjiang mayor Wang Zhongbing kisses the document approving a steel mill in his city. (Photo courtesy of CCTV)

Zhanjiang mayor Wang Zhongbing kisses the document approving a steel mill in his city. (Photo courtesy of CCTV)

The National Development and Reform Commission, China's economic planner, on May 25 approved a request from the state-run steel company Baosteel to build a 69.68-billion-yuan (US$11-billion) steel plant in Zhanjiang, a city in Guangdong province. Many are unsure, however, whether the decision will have its intended consequences.

When completed, the plant will have an annual capacity of 10 million tons. Zhanjiang mayor Wang Zhongbing was so excited about the approval that he kissed the document he received from the commission.

"I'm so excited at this moment," the city's Communist Party secretary said. "I believe that the 7.7 million citizens in the city are as excited as I am. The commission has approved the plan, meaning that a dream we have pursued for 34 years has finally come true."

Wang and other officials in Zhanjiang believe the project can stimulate give the city's economic development a healthy boost. The commission had delayed approval because China is struggling with overcapacity in its steel industry. But as the country's economy has been sluggish, the government reconsidered the project and eventually approved it.

The commission has also approved a plan by Wuhan Iron & Steel Group to build a steel mill in Fangchenggang, located in south China's Guangxi Zhuang autonomous region, with annual capacity of 9.2 million tons. The project will require an investment of 64 billion yuan (US$10 billion), according to a separate statement.

While most residents in Zhanjiang appear to be happy with the approval, some worry that the decision could draw China back to an old development path - reliance on the steel industry.

Xie Yong, a commentator with Guangdong-based magazine Time Weekly, says the project harkens back to the planned economy strategy of China before its opening up in the 1980s. Financial columnist Yu Fenghui is also pessimistic about the project — she says that the steel industry faced an overall deficit in the first quarter of 2012, an unprecedented situation. The industry is also a heavy polluter, she said, which could lead to other problems.

"Mayor Wang kissed the approval today, but the next mayor might cry over it," said Yu.




National Development and Reform Commission  國家發展和改革委員會

Baosteel Group Corp  寶鋼集團

Wang Zhongbing  王中丙

Wuhan Iron and Steel Group  武漢鋼鐵集團

Fangchenggang  防城港

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Xu Lirong (許立榮)

Xu Lirong has been chairman of China Shipping Group (COSCO) since November 2013. Xu holds an MBA degree from Shanghai Maritime University and is a certified sailor and senior engineer. He has ...