Even as discussion continues on whether the Chinese government will repeat its 2008 economic stimulus plan to revive the slowing economy (it had spent a massive 4 trillion yuan as stimulus), National Development and Reform Commission (NDRC), a government body, has approved the setting up of three new mega steel plants with some conditions.
The three are part of a larger plan that includes 20 more major infrastructure and industrial projects in seven so-called strategic industries like advanced equipment manufacturing and energy conservation. It is estimated that the projects are worth around 1 trillion yuan.
Two of the plants are to be located on China’s south-east coast, and involve expenditure of 130 billion yuan. They are part of the government-led strategy to upgrade and consolidate the country’s large, but also inefficient and fragmented, steel industry.
The 70 bn Zhanjiang project, for example has a planned capacity of 20 mtpa, but its construction is conditional on a reduction in the total steel produced in the province by smaller, less inefficient plants by about 16 mtpa.
The country’s official growth target is 7.5% this year, the first dip below 8% since 2009.
China’s leaders said that they would use a period of anticipated slower growth in 2012 to carry out structural shifts.