Chinese government weighs up costs of cutting steel production: KPMG

An expert from KPMG has said the Chinese government was
committed to shut some of the company’s less productive steel mills.

Peter Fung, chair of KPMG’s Global China Practice, has said
that the social consequences were under consideration, but the question was
when not if.

“I believe there will be a process but when that process starts
is difficult to guess,’’ Fung told The Australian.

“Some of these plants are big plants. We all agree they need to
be closed but how to deal with the social issues when that happens is something
that needs a lot of discussion and negotiation at both the central and local
government levels.

Earlier
this year the country’s Banking Regulatory Commission said that it would starve the less efficient mills of credit.

And
earlier this month, the Wall Street Journal reported that China’s Ministry of
Industry and Information Technology announced plans to cut the country’s current
steelmaking capacity (of about 900 million tons) by 28.7 metric tons, the
biggest cut in four years.

Image: Reuters

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