BEIJING — China’s cement industry, the largest on earth, needs to rapidly dismantle large numbers of factories as part of a newly urgent effort to cut overcapacity, the country’s top administrative authority says.
China should slash 500 million tonnes of cement-making capacity in three years, an amount equivalent to more than four times total U.S. production, the State Council said in a policy document on boosting efficiency in the building materials sector.
Cement production is the third major industry to face the threat of major change in China, which began high-profile efforts earlier this year to cut back overcapacity in coal and steel. Dislocations in those industries threaten to displace millions of workers, and are among the most visible of the wrenching problems facing China as it struggles to move beyond the industrial-heavy growth that it relied upon for decades.
By the standards of any other country, 500 million tonnes of cement capacity is a staggering amount – in 2012, Canadian companies made 13 million tonnes.
But China’s cement industry boasts 3.2 billion tonnes of capacity, and a utilization rate of 67 per cent. That leaves 850 million tonnes of slack already in the system.
It’s a gap that’s been growing. Last year, production fell 5.7 per cent in the fourth quarter alone, while the construction of 31 new cement plants meant capacity actually rose slightly, according to the National Bureau of Statistics of China and the China Cement Association.
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