“Macro Adjustment & Control (MAC: 宏观调控)”

---Aggregate Demand Management with the

Chinese Style (2000-2010)

Feng Lu

Outline of a research

Workshop for ADB/CCER research project

May 31–June 1, 2010

The views expressed in this paper are the views of the author(s) and do not necessarily reflect the views
or policies of the Asian Development Bank (ADB), or its Board of Directors or the governments they
represent. ADB does not guarantee the source, originality, accuracy, completeness or reliability of any
statement, information, data, finding, interpretation, advice, opinion, or view presented, nor does it make
any representation concerning the same.
 Subject Questions
• Given the recent economic boom,

• 1) How does China manage her aggregate

demand to assure macro-stability?

• 2) What are the characteristics with China’s

macro-economic policy instruments?

• 3) Strength and problems of China’s MAC

policies

• 4) Reform agenda for China’s macro-policy!

2
 Facts & preliminary findings (1)
• 1) How to manage excessive demand with
inflation pressure, and how to deal with
periodic asset prices hikes, are the major
macro-economy challenges in China in recent
years.

• 2) In addressing the challenges, China has

utilized all sorts of “MAC (macro adjustment
and control: 宏观调控)” measures, from interest
rate, OMO, to land supply, price control etc. It
highlights diversity of MAC tools in China.

3
Facts & preliminary findings (2)
• 3) While diversifying MAC tools reflect merits
of pragmatism in a transitional environment, it
signals dilemma of China’s macro economic
policy regime constrained by inflexible
exchange rate and interest rate instruments.

• 4) To better serve the need of “a large open

economy’s rising-up”, China should
restructure her macro-policy regime through
reforms in exchange rate and interest rate
policies.

4
 Preliminary structure
• 1) Background for new economic boom

• 2) A short history of the MAC policies

• 3) Diversity of MAC instruments

• 4) Assessing MAC and reform agenda

– Case study: Investment control and excess capacity

5
 Driving forces of the recent boom
• Productivity catch-up in tradable sector

Labor productivity growth in China's 中国相对OECD制造业劳动生产率

manufacture sector （1978=100，%；1978-2008）
450 25
1400 （1978=100, %；1978-2009） 25 400 20
accumulative
1200 Cumulative growth 20 350
annual growth annual
15
1000 15 300
250 10
800 10
200 5
600 5 150
0
400 0 100
50 -5
200 -5
0 -10
0 -10
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008

6
 Driving forces of the recent boom
• Strong growth of capital return

China's profitability in industrial sector

China's profitability in industrial sector 30 (1978-2009,%)
( 1993-2009，%）
22 25
20 pre-tax profitability
pre-tax profit over capital
18 HP trend
20
16 pre-tax profit over asset
14
15
12
10 10
8
6 5
4
2 0
0
1978

1981

1984

1987

1990

1993

1996

1999

2002

2005

2008
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010

7
 Growth of China’s steel output
in the global context

Steel output in China and other "Big-5" Steel output in China and other "Big-5"
600
（million tons 1900-2009） 568 mt 1400 （million tons 1900-2009） 1330 mt
500 1200
USA Japan 1000 World
400
German UK Big-5
800
300 Russia China China
600 423 mt
200
400
100 200

0
0 1900
1905
1910
1915
1920
1925
1930
1935
1940
1945
1950
1955
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
1900
1905
1910
1915
1920
1925
1930
1935
1940
1945
1950
1955
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010

8
 Incremental contribution in
consumption of selected commodities
China's share of global copper China share of global alumnium consumption
consumption growth（HP, %，1960-2007） growth（HP, %，1960-2007）
6 60 12 70
global consumption growth
5 50 global consumption growth 60
China consumption growth 10
ratio of contribution China consumption growth
4 40 50
8 ratio of contribution
3 30 40
6
2 20 30
4
1 10 20
2
10
0 0
0 0
-1 -10
1960 1970 1980 1990 2000 2010 -2 -10
1960 1970 1980 1990 2000 2010

China's share of global iron ore consumption

China's share of global oil consumption
growth（HP, %，1960-2007）
14 100 growth（HP, %，1960-2007）
12 80 10 global consumption growth 100
10 60
global consumption growth
8 40 8 China consumption growth 80
6 China consumption growth
20 ratio of contribution
4 ratio of contribution 6 60
0
2
0
-20 4 40
-2 -40
2 20
-4 -60
-6 -80 0 0
-8 -100
-2 -20
1960 1970 1980 1990 2000 2010
1960 1970 1980 1990 2000 2010
9
 Incremental contribution to global
investment and aggregated demand

Incremental growth of fixed asset investment Incremental growth of aggregate demand

25
8 （1971-2009 $1000 billion） （1971-2009 $1000 billion）
USA 20
7
6 Japan 15
5 EU 15 10
4 China 5
3 Other emerging nation
0
2
-5
1
0 -10 UAA Japan EU 15
-1 -15
-2 China Other ECs
-20
-3 -25
1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007

1971
1974
1977
1980
1983

1986
1989

1992
1995
1998
2001
2004

2007
10
 Structural inflation
• Asset prices grew relatively fast & commodity prices
relatively slow; Agricultural good fast & manufacture
goods slow; Capital goods fast & consumer goods slow.

Mean and SD of growht rate for prices of selected

good s and as sets in China（2000M1-2010M2）
10 1.0
9 0.9
8 0.8
7 Average growth rate (left) 0.7
6 SD (right) 0.6
5 0.5
4 0.4
3 0.3
2 0.2
1 0.1
0 0.0
Consumer PPI

Non-food CPI

CPI

Capital goods PPI

Materials & energy

GDP deflator

A-share index

Food CPI

Pork price

Grain price

Housing price

11
A short history of MAC policies
• 1) Relative slow growth (2000-1H 2003)
– Pro-active MAC against deflation.
• 2) Boom phase I (2H 2003 -1H 2005)
– Tightening MAC against overheating and inflation.
• 3) Boom phase I (2H 2005 -1H 2008)
– Tightening MAC against overheating and inflation.
• 4) Downturn and recovery (2H 2008 to now)
– A package of stimulus, followed by dealing with
inflation pressure.

12
 Pro-active MAC with deflationary
pressures (2000-1H 2003)
• 1) Fiscal policy:
– Special treasury bills for infrastructure investments
• 2) Monetary policy:
– Low interest rate and RRR, abolishing credit quantity
control.
• 3) Industrial policy:
– Demolishing backward capacity and restricting
investment to deal with excess capacity.
• 4) Exchange rate:
– Nominal pegged to USD, but depreciated in weighted
average and real terms.
13
 Tightening MAC in boom phase I
(2H 2003 -1H 2005)
• 1) Monetary policy:
– Active OMO issuing central bank bills, raising RRR
twice from 6% to 7.5%. Raising interest rate once in
Oct. 2004 to the level of 1999.
• 2) Fiscal policy:
– Deficit & debt ratios declined (2.6% to 1.6%, 4.9% to
3.8%) but pro-active stance not change until 2005.
• 3) Exchange rate:
– Nominal pegged to USD, further depreciated in
weighted average and real terms.
• 4) Financial regulation:
– Tightening credit through window guidance,
14
Tightening MAC in boom phase I
(2H 2003 -1H 2005)
• 5) Industrial policy:
– Control investment in 3 sectors of steel, alumnium,
cements that were regarded have caused macro-
overheating and will cause excess capacity.
• 6) Land policy:
– Supply of construction land (建设用地) was
suspended for 6 months. Regulation of land supply
has been more strengthened.
• 7) Dealing with major legal case
– A large steel investment project by a private company
Tieben in Changzhou, Southern Jiangsu was
investigated and handled by the State Council,
signaling resolution of MAC policy.
15
 Tightening MAC in boom phase II:
(2H 2005 -1H 2008)
• 1) Monetary policy:
– Active OMO and outstanding central bank bills totaled
more than 4 trillion yuan in early 2008. Raising RRR to
17.5% in Aug. 2008. Several hikes in interest rates.
• 2) Exchange rate:
– Exit from pegging USD in July 2005: Appreciated by
2.7% in 2005, 3.2% in 2006, 5.4% in 2007, 6.8% in the
first 9 months 2008.
• 3) Fiscal policy:
– Deficit and debt ratios further declined. Reducing
export VAT rebates to cool down export.
• 4) Financial regulation:
– Tightening credit through window guidance. Imposing
quantitative credit control in 2007-08.
16
Tightening MAC in boom phase II
(2H 2005 -1H 2008)
• 5) Industrial policy:
– Control investment in ten sectors (steel, alumnium,
cements, auto, coal, coke, electricity etc) for the sack
of dealing with problems of excess capacity.
• 6) Land policy:
– Strengthening regulation of land supply vigorously.
• 7) Real estates policy
– Dual-70% requirement for housing project (areas
below 90 square meters, share of low ends houses).
Tax on the second hand property sales. Raising initial
down-payments ratio, and higher interests rate
charge on mortgage for second and more purchase.
17
Tightening MAC in boom phase II
(2H 2005 -1H 2008)
• 8) Stock market policy:
– Shanghai A-share index increased from 1200 in early
2005 to 6200 in Oct 2007. Stamp tax increased from
0.1% to 0.3% on May 29, 2007.
• 9) Pork policy:
– Hike of port price in the summer 2007 was regarded
as driving force of inflation, 7 measures were adopted
to boost live pig production, including providing
insurance subsidy for productive sows.
• 10) Direct price intervention
– Introducing temporary price intervention in early 2008:
firms and shops have to submit application to
government for examination and approval before
raise commodity prices .
18
Coping with economic downturn
(2H 2008 – 1H 2009)
• Facing economic downturn in 2H 2008, package
of stimulus policy adopted late 2008.
• 1) Fiscal policy:
– The famous “4 trillion yuan plan”.
• 2) Monetary & exchange rate policies:
– OMO, RRR, interest rate, return to de-facto peg.
• 3) Financial regulation and other policies:
– Encourage expansion of credits. Stop IPOs in stock
market. Undoing differentiated mortgage rates and
reducing own capital requirements for real estate
developers.
19
Facing inflation pressure again
(2H 2009 up to now)
• Unprecedented credit and money supply
growth (about 30%) in first half 2009 reversed
the macro-economic downturn quickly, also
introduced inflation expectation and pressures.

• Though MAC stance still sticks to “pro-active

fiscal policy and appropriate relaxed”, conduct
of policy has been modified or even reversed
from the second half 2009 up to now.

20
Dealing with inflation pressure again
(the recent months)
• 1) PBoC, CBRC, CSRC policy adjustments
from summer 2009:
– OMO, RRR. Tighten credit expansion, reducing ratio
of junior debenture in bank’s capital. Resumption
and speed-up of IPOs.
• 2) Industrial policy:
– New campaign dealing with sectoral excess capacity
from autumn 2009.
• 3) Housing policy:
– Three rounds of policies were launched from the end
2009 fighting against surging housing price.
21
1 Tightening MAC instruments
Name of instruments
Raising interest rate
Government agency
PBoC
2 Raising Legal reserve ratio PBoC
3 Issuing central bank bills in open market operation PBoC
4 Issuing central bank bills targeting specific banks PBoC
5 Reduce government debts MoF
6 Reduce value-added tax rebates for exports MoF
7 RMB appreciation PBoC
8 Raising bank capital ratio CBRC
9 Reducing subordinated debts in bank capital CBRC
10 Quota control on bank’s credit PBoC\ CBRC
11 Window guidance on banks CBRC、PBOC
12 Raising down-payments in housing loans PBOC、CBRC
13 Differentiated interest charge for housing loans PBOC、CBRC
14 Restrict non-resident’s buying flats in a city CBRC、city governments
15 Resuming and increasing IPO CSRC
16 Strengthening investment examining/approving NDRC、MoL、MoE
17 Prohibiting sectoral investment for 3 years NDRC、MoL、MoE
18 Raising own capital ratio for investment projects NDRC、CBRC
19 Subsidy provision for productive sow MoF、MoA
20 Direct price regulation NDRC
21 Strengthening environmental regulation NDRC、MoE
22 Tightening supply of land for construction NDRC、MoL
23 Temporarily freezing construction land supply NDRC、MoL
22
24 Handling major case with personal punishment NDRC etc
 Three categories of MAC tools

• 1) “Aggregate and parameter type tools”:

• 2) “Sectoral and quantitative type tools”:

• 3) “Administrative intervention type tools”:

23
Merits and strength of diversified tools

• 1) It reflects the spirit of pragmatic

attitude not too much constrained by
textbook doctrine.
• 2) Try and error approach helps select
most effective tools in all of “the 18
weapons”.
• 3) Albeit with problems, China has
managed to maintain a relatively stable
macro-economic environment.

24
 Problems of diversified MAC tools
• Two categories of problems.
– 1) Given the pegged or heavily managed
exchange rate regime, the interest rate tool
has been rigid. Use of “aggregate and
parameter type” tools has been artificially
constrained.
– 2) Too much “sectoral and administrative type”
tools have been used in MAC. This produces
detrimental impacts on function of an open
market economy.

25
 “Aggregate & parameter type”
tools yet to be fully utilized!
• Rapid productivity catch-up in tradable
sector, PBoC’s heavy intervention in FX
market, surging trade surplus and FX
reserve, together indicates that RMB is
somewhat undervalued.

• Of multiple consequences from defending

an undervalued currency, three affect the
conduct of MAC.

26
 “Aggregate & parameter type”
tools yet to be fully utilized!
• 1) Ability to adjust external demand has been
cornered. Reducing export tax rebates, other
exports restraint measure were used as poor
alternatives.
• 2) To address overheated aggregate demand,
the main emphasis of MAC has been shifted
towards domestic demand, especially
investment.
• 3) It is not handy to use interest rate policy to
adjust demand. Though MAC is hectic, the
interest rate tool has been largely idled.
27
 Sluggish response of interest rate
• Sluggish response of interest rate to macro
shocks indicates partial surrounding of
interest rate policy as a result of defending
undervalued exchange rate.

• During 2000-2010 China’s CPI has changed

by 10.2 percentage points (8.5%-1.7%)，but
the regulated deposit interest rate only
changed by 2.16 pps (4.14% to 1.98%). In
comparison, US benchmark rate changed by
6.4 pps while CPI changes 6.33 pps.

28
 Problems with frequent use of
“Sectoral & administrative” tools
• 1) It is widely known that blunt measures such
price control, freezing land supply, direct dealing
with major case are of side-effects.

• 2) Land regulation and environment protection

have their own objectives. They are not
appropriate to be used in cyclical adjustments.

• 3) Control investment for the sack of preventing

“excess capacity” is also questionable.

29
Investment control, excess capacity,
and MAC dilemma!
• 1) Simple definition and discussion

• 2) 4 waves of campaign dealing with the

excess capacity problems

• 3) Sectoral excess capacity and accuracy of

targeting policy

• 4) Measures dealing with excess capacity

and the MAC dilemma

30
 Dilemma of current MAC regime
• While being difficult to adjust external demand
facing inflation pressure, the government has
to control domestic demand.

• While domestic consumption should be

encouraged, the government has to control
investment.

• While it’s not handy to use interest rate too

flexibly in controlling investment, excess
capacity has to be picked up to justify
interventions.

31
 Future reform agenda
• Reforms are needed to get rid of the dilemma:

• China needs a flexible exchange rate regime to

adjust the external demand and imbalance.

• China needs a deregulated interest rate regime

to adjust domestic demand so as to preserving
macro-economic equilibrium and price stability.

• To create an aggregate demand management

system consistent with open macro-economic
environment is an urgent task for China.

32
 Definition of excess capacity
and its role in China’s MAC
• Excess capacity refers to a situation in
which the production utilization ratio in a
given sector, or the average ratio for
various sectors fall below some desirable
level, say 80 per cent.

• It usually goes together with persistent

price fall and the profitability deterioration.

33
 Definition of excess capacity
and its role in China’s MAC
• Typically the concept is not used in macro-
economic analysis since the macro-
disequilibrium characterized by “aggregate
supply being larger than aggregate demand”
is conventionally, and with good reason,
attributed to “deficient demand”.

• It is therefore interesting to observe that the

concept of excess capacity has played a
prominent role in China’s MAC.

34
 4 wave campaigns against EC
• 1) 1998-2001:
– Slow growth and deflation
• 2) 2003-2004:
– Overheated demand and inflation phase I.
• 3) Around 2006:
– Overheated demand and inflation phase II.
• 4) Autumn 2009:
– V-shaped recovery and inflation expectation.

35
 Measures adopted in the first
campaign: 1998-2001
• 1) Reducing pressure of excessive inventory
through imposing the limit of output

• 2) Reducing capacity in certain sectors such

as closing up of small coal mine pits,
demolishing spindles in textile industry.

• 3) Restrict investment to prevent future

excess capacity.

36
 Measures adopted in the second
campaign: 2003-2004
• Steel, aluminum, cements became 3 targeted
sectors. In light of estimated future demand,
rapid investment growth has been identified
“blind” behavior. Measures are adopted to stop
the fast investment growth.

• “Stopping repeated construction catalogue”:

Sectors of excess capacity are categorized as
the restricted sectors over which investment
should not be approved, existing investment
projects should be suspended for being
“checked up and consolidated (清理整顿).
37
 Measures adopted in the third
campaign: 2006
• Ten sectors are targeted with serious
excess capacity: Steel, aluminum,
calcium carbide (电石)，coke, auto,
coal, cements, electricity, textile etc.

• More strict measures to be implemented

to further control the new investment
projects in these sectors.

38
 The most recent campaign: 2009
• Most recent campaign was launched in
autumn 2009 when the inflation expectation
grew as a result of credit surge earlier.
• About a dozen sectors including new ones
such as ship-building, chemical, solar energy,
wind energy, poly-crystalline silicon were
targeted with excess capacity.
• Official examination and approval on new
investments in the areas will be temporarily
suspended.

39
 Some facts about excess capacity
& related policies in China
• 1) Facts about capacity utilization in
China’s industrial sectors?
– Average level & variation of utilization ratio?
– Sectoral distribution of utilization ratio?
• 2) Accuracy of policy targeting for
sectors of excess capacity?
– Assessment in terms of utilization ratios
– Case study on steel sector

40
 Data availability for observing
utilization ratio for industrial sectors
Sectors No. of obs. Sectors No. of obs.
Coal 13 Glass board 17
Oil 15 Aluminum 7
Natural gas 11 Steel 30
Raw salt 13 Iron pigs 16
Timber 8 Zinc ferrum Alloy (铁合金) 13
Sugar 7 Metal cutting machine 11
Beer 14 Mid-large tractors 11
Tobacco 11 Small tractors 14
Chemical fiber 30 Rail cars 3
Dying and printing for cotton clo25 Rail tracks 3
Paper 14 Automobile 16
Sulphuric acid 14 Tracks 8
Nitric Acid 9 Cars 11
Cuastic soda (烧碱) 15 Motorcycles 2
Soda (纯碱) 13 Bycicles 2
Synthetic ammonia (合成氨) 15 Washing machine 21
Chemical fertilizer 14 Frigirator 19
Pesticide 9 Air conditioner 13
Ethylene (乙稀) 15 TV 13
Plastics 14 Colar TV 16
Washing powder 2 Mobile phones 8
Synthetic rubber 11 Telephone exchange 11
Cements 17 Micro-computors 16
Total 587 41
 Some facts about excess capacity
& related policies in China
• Average level and variation are all higher than USA & EU.

China's industrial capacity utilization

China's industrial capacity utilization
120 70 (since 1998)
（1979-2009）
60
100
50
80
40
60
30
40
20
20 10
0 0
0
10
20
30
40
50
60
70
80
90
100
110
120
130
140
150
160
170
180

0
10
20
30
40
50
60
70
80
90
100
110
120
130
140
150
160
170
180
190
200
210
220
230
42
 Some facts about excess capacity
& related policies in China
• Fluctuate but above 80% in most years.

China's industrial capacity utilization

(1979-2007) US manufacture capacity utilization
110
105 100 1948.01-2009.10
100
95
95
90 90
85 85
80 80
75
70 75
65 70
60 65
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007

60 Jan-48
Jan-51
Jan-54
Jan-57
Jan-60
Jan-63
Jan-66
Jan-69
Jan-72
Jan-75
Jan-78
Jan-81
Jan-84
Jan-87
Jan-90
Jan-93
Jan-96
Jan-99
Jan-02
Jan-05
Jan-08
43
 Bycycle
Railtrack
Tractors
targeted sectors are not very low

Comtutor
Capacity utilization ratio for the

TV
Capacity utilization for targeted sectors (1990-2007, %)

Railcar
Colar TV
合成洗涤剂
载货汽车
空调
家用洗衣机
农药
汽车
小型拖拉机
啤酒
塑料
化肥
移动通信手机
卷烟
原盐
机制糖
cements
合成氨

44
烧碱
浓硝酸
Chemical
硫酸
家用电冰箱
棉布印染
Steel
Glass
合成橡胶
机制纸及纸板
纯碱
铁合金
程控交换机
Iron
乙稀
原油
Auto
金属切削机床
摩托车
Coal
天然气
木材

200
180
160
140
120
100
80
60
40
20
0
 Steel has been picked up in official documents
as the sector with serious excess capacity
Year 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 总计
steel steel steel steel steel steel (2) steel (2) 9
（2）
electricity electricityelectricity 4
cement cement cement cement cement 5
anumniumanumniumanumnium
anumnium anumnium anumnium anumnium 7
glass glass 2
coal coal coal-chemical 3
zin 1
copper copper 2
calcium carbide 1
sector
FeZnAlloy 1
auto 1
coke 1
textile 1
zin 1
poly-crystalline silicon
1
solar wind 1
ship-building 1
soybean squeezing 1
Total 4 1 2 1 3 3 5 13 1 10 43

45
 How excessive is steel capacity?
• SSB data:
• CUR was 86.4% in 1995-
Estimated capacity utilization ratio for
China steel sector（ 1995-2008，%）
2008，85.7% in 1999-
105
2008，83.2% in 2003-
100
2007，75.9% in 2008.
95
90 • CSA data:
85 • CUR was 93% during
80 SSB data 2001-2007.
75 CSA data

70
• Low CUR occasionally, but
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008

without persistent over-

capacity in steel sector.

46
 How excessive is steel capacity?
Data on various steel prices
• Steel prices witnesses large swings, but the there are
upward trends that is inconsistent with the persistent
excess capacity hypothesis.

Various steel prices （1995M1-2009M8, yuan/ton)

Various steel prices （1995M1-2009M8, yuan/ton)
7500 线材、螺纹钢、中厚板价格
8000 热轧无缝管、热轧薄板、热轧卷板价格
线材Φ6.5
6500 热轧无缝管159*6
螺纹钢Φ12 7000 热轧薄板1mm
中厚板6mm
5500 热轧卷板2.75
中厚板趋势 6000
热轧卷板趋势
4500 螺纹钢趋势
热轧无缝管趋势
5000
3500
4000
2500
3000
1500
2000
1995.01
1995.11
1996.09
1997.07
1998.05
1999.03
2000.01
2000.11
2001.09
2002.07
2003.05
2004.03
2005.01
2005.11
2006.09
2007.07
2008.05
2009.03

2009.07
1995.01
1995.07
1996.01
1996.07
1997.01
1997.07
1998.01
1998.07
1999.01
1999.07
2000.01
2000.07
2001.01
2001.07
2002.01
2002.07
2003.01
2003.07
2004.01
2004.07
2005.01
2005.07
2006.01
2006.07
2007.01
2007.07
2008.01
2008.07
2009.01
47
 How excessive is steel capacity?
Data on profitability in steel sector
• Capital return grew strongly in recent years, and unit
profit goes hand in hand with investment growth, probably
not “blind” behavior!

Profitability for ferrous materials and

Profit and inve stment in China's steel sector
whole industril sectors (1993-2007 %) (1993-2007, 100 million yuan, yuan/ton)
20
2000 350
18
Industrial sector 1800
16 300
1600 investment (left)
14 Ferrous materials 1400 250
12 profit/ton (right)
1200 200
10
8 1000
800 150
6
4 600 100
2 400
50
0 200
0 0
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008

1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
48
 Incorrect demand estimations in the official
documents (sorry for yet being translated)
Sources of estimation Estimated figures Actual situation Test results
2002年4月计委、经贸委《关于 2005年电解铝年需求量550万吨相比， 2005年电解铝产量 对两年后需求预测值比
制止电解铝行业重复建设势头 过剩130万吨。 781万吨，消费量 实际值低估40%。
的意见》 774.85万吨。

2003年11月发改委等五部门 预计到2005年底将形成3.3亿吨钢铁生 2005年钢铁产量3.5 对两年后产能预测值比

《关于制止钢铁行业盲目投资 产能力，大大超过2005年市场预期需求。 亿吨，消费量为3.4 实际消费量低3%，对两
的若干意见》 亿吨，产能4.3亿吨。 年后需求预测“大大”
低估。
2003年11月发改委等七部门 按目前发展态势，2005年底电解铝产能 2005年消费量为775 对两年后消费预计值比
《关于制止电解铝行业违规建 将超过900万吨，远远超过2005年全国 万吨，产能1079万 实际消费量低29.2%。
设盲目投资的若干意见》 电解铝预计消费量600万吨水平。 吨。

2005年11月发改委等部门《关 目前在建、拟建铜冶炼项目总能力205 2007年消费量为399 消费量“远远超过”有

于制止铜冶炼行业盲目投资若 万吨，预计2007年底将形成370万吨铜 万吨。 关部门对两年后原料供
干意见的通知》 冶炼能力，远远超过全国铜精矿预计保 应能力预测值。
障能力和国际市场可能提供铜精矿量。

2009年3月《钢铁产业调整和振 2009年我国粗钢产量4.6亿吨，同比下 产量568万吨，产销 实际产量比两年后预测

兴规划》 降8%；表观消费量维持在4.3亿吨左右。 两旺。 产量超过30%左右。
到2011年，粗钢产量5亿吨左右，表观
消费量4.5亿吨左右。

2009年9月发改委等十部委行局 目前在建项目粗钢产能5800万吨，多数 尚无数据 由于文件没有说明发生

会《关于抑制部分行业产能过 为违规建设，如不及时加以控制，粗钢 产能过剩具体时点，因
剩和重复建设引导产业健康发 产能将超过7亿吨，产能过剩矛盾将进 而难检验。
展的若干意见》 一步加剧。
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Measures dealing with excess capacity

• 1) Provision of information with regard to

excess capacity for firms and society.

• 2) Strengthening environment and emission

regulation.

• 3) Demolishing the backward capacity with

outdated technology.

• 4) Restricting or prohibiting new investment

in the sectors with excess capacity.

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 Assessment of measures
• Some measures (information provision)
are obviously helpful.

• Some measures (environment

protection, emission regulation etc) are
legitimate for their own sack,
independent of excess capacity.

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 Assessment of measures
• The investment restriction is questionable:

• The investment decision satisfying the related

environmental or emission regulations is a
micro-economic decision and should be free
from direct interference by MAC policies.

• Investment control using the excess capacity

argument reflects dilemma of China’s MAC
regime shaped by defending undervalued
exchange rate.

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