This newspaper reports. The recent State Council executive meeting further specified measures to resolve overcapacity in the steel and coal industries, thereby helping enterprises overcome difficulties and promoting industrial upgrading.

The meeting held that persisting in using rule-of-law and market-oriented approaches to resolve overcapacity in the steel and coal industries is an important measure for advancing supply-side structural reform, and it plays a significant role in promoting industry restructuring, overcoming difficulties, and achieving upgrading.

The meeting decided that, guided by the principles of market-driven pressure, enterprise autonomy, local organization, and central support, we will: First, enforce stricter standards—covering safety, environmental protection, quality, and energy consumption—in accordance with laws and regulations, and urge backward production capacities to phase out within specified deadlines. We will also encourage enterprises to proactively reduce capacity through mergers and reorganizations, transformation and product conversion, and relocation and upgrading. Building on the elimination of over 90 million tons of outdated steel capacity in recent years, we will further cut crude steel capacity by 100 million to 150 million tons and significantly reduce coal production capacity. Second, strictly control the addition of new capacity. We will rigorously supervise and ensure implementation of the state’s 2013 decision to halt the filing of new steel projects aimed at expanding capacity. In principle, we will stop approving new coal mines as well as technical upgrades and capacity expansion projects that add new capacity. Third, improve supporting policies. We will establish a special fund for rewarding and subsidizing industrial enterprises’ structural adjustments, providing incentives and subsidies—as prescribed—to local governments for the orderly reallocation and resettlement of workers during efforts to address excess capacity. We will support financial institutions in writing off bad debts and disposing of assets used as collateral, and refine policies for the bulk transfer of non-performing assets. We will also encourage social capital, including insurance funds, to participate in corporate mergers and acquisitions and restructuring, and foster the development of related property rights trading markets.

The meeting emphasized the need to fully recognize the arduousness and importance of resolving excess capacity. The key is to adopt a multi-pronged approach to properly resettle workers. Enterprises should be encouraged to take the initiative, “tap into their internal strengths,” and leverage flexible working hours, retraining programs, and job transfers to unlock their internal potential for worker placement. If enterprises genuinely need to terminate labor relations with employees, they must pay economic compensation in accordance with the law, settle any outstanding wages, make up for unpaid social insurance contributions, and ensure smooth transfer and continuation of social insurance relationships. We will support the development of entrepreneurship platforms and encourage workers to start their own businesses independently. The scope of the national pilot program for rural entrepreneurship will be expanded to include mining areas, and workers will be encouraged to start businesses and find employment locally or nearby. Unemployed individuals will receive unemployment insurance benefits as stipulated by regulations; those facing difficulties in finding employment will receive re-employment assistance through government procurement of public-interest jobs and other measures. Those who meet the eligibility criteria for social assistance will be promptly included in the social assistance system, ensuring that their basic living needs are adequately met.

Regarding the “establishment of a special subsidy fund for the restructuring of industrial enterprises” proposed at the meeting, the Ministry of Finance has issued a relevant notice clarifying that a special fund for the restructuring of industrial enterprises will be levied starting January 1, 2016. The establishment of this special fund is aimed at supporting local governments in re-employing laid-off and unemployed workers during the elimination of outdated production capacity in the coal and steel industries.