China Energy Outlook 2020 - Flipbook - Page 79
Under President Xi’s “Supply Side Structural Reform,” mandatory reduction of overcapacity in
heavy industries became a key emphasis in the 13th Five-Year Plan (FYP). Table 2-10 provides
the 2020 goals and the realized reduced capacity during the 2016-2018 period. By the end of
2018, China’s steel and coal sectors achieved their 13th FYP overcapacity reduction goals two
years ahead of time (NDRC, 2019d). A total of 140 Mt of substandard steel production capacity
was eliminated, equivalent of the combined output of the U.S and Germany (MIIT, 2018b). The
cement sector, however, has experienced difficulty meeting its target, achieving only 25% of its
five-year target by 2018. For the coal-powered sector, while China has already achieved its
goals of phasing out small coal-fired power plants during the 13th FYP, it is still adding new
capacity of coal-fired power plants. In 2018, China added 33 GW of coal-fired plants (from 2017
to 2018), and added another 33 GW as of November 2019 (from 2018 to November 2019).
In 2019, NDRC announced that it will conduct random inspection on local provinces to ensure
no illegal production occurs (NDRC, 2019d). Measures such as satellite remote sensing and
electricity use monitoring will be used to check unwanted production, according to the Ministry
of Industry and Information Technology (Xinhua Net, 2019b).
Table 2-10. Overcapacity Reduction Targets and Results
Steel
Coal
Coal-fired power
Cement clinker
Source: NDRC, 2019d.
2020 Capacity Reduction
Target
100 Mt
550 Mt
20 GW
400 Mt
2016-2018 Reduced
Capacity
150 Mt
810 Mt
20 GW
100 Mt
One unintended effect of this policy was that China’s crude steel production increased 6.6%
from 2017 to 2018 to 928 Mt largely due to the increased market price of steel products driving
up the production after the capacity cuts. In 2018, China’s steel industry reported a 39.3% yearon-year profits growth to 470 billion yuan (Xinhua Net, 2019b). Reducing overcapacity in
industry faces significant challenges, especially regarding appropriately addressing the issue of
laying-off hundreds of thousands of workers and supporting the transition of local economies.
Energy Management and Professional Training Program
Two municipal cities and three provinces are piloting energy management and professional
training programs to build capacity in these areas for positions in industrial enterprises.
Energy management systems have been established to play a key role in improving energy use
in the 13th Five-Year Plan. Two municipal cities and three provinces - Beijing, Tianjin, Hebei
Province, Shandong Province, and Shaanxi Province - have been selected by NDRC as pilots for
energy management professional training. For example, Shandong Province has created an
Energy Manager Professional Program, which has helped created market demand for energy
management specialists (Yu, 2019). The program is now self-sustaining with training, exams,
and certification. The Beijing Government requires all industrial enterprises that have an annual
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