China Orders 2000 Firms to Shut Overcapacity by End-Sept

SHANGHAI, Aug. 9 -- China has ordered more than 2,000 companies in 18 industries including cement, coking, iron, paper and dyeing to shut outdated manufacturing capacity by the end of September, state media said on Monday.

The factories targeted for closure were either highly polluting, highly energy-wasting, or did not meet safety requirements, the Ministry of Industry and Information Technology announced in an order on Sunday, the Shanghai Securities News and other official newspapers reported on Monday.

Firms that fail to comply with the orders could face penalties including having their sewage treatment licenses revoked, lending curbs, or even having their business licenses withdrawn, it said.

The companies affected include the parent company of Guangxi-based Liuzhou Iron and Steel (601003.SS: Quote) and a cement-making unit of Jilin Yatai (Group) Co (600881.SS: Quote), which is based in the northeast of the country.

China, faced with serious environmental problems and pressure on resources, has been seeking to upgrade its manufacturing sector, implementing stricter energy efficiency and pollution targets and forcing the closure of wasteful capacity.

In a parallel initiative, the industry ministry is working to consolidate the steel sector by closing small mills and raising production standards, focusing on shutting mills that produce less than 1 million tonnes of crude steel or 300,000 tonnes of higher-end steel a year.