China’s legislature began its annual meeting today with the delivery of the Premier’s Government Work Report, which set an economic growth target of “around 6.5 percent” for the year. The National People’s Congress (NPC) is slated to discuss a variety of policy changes over the course of the next two weeks. Premier Li rehashed a series of previously promised market entry liberalizations.
China’s moves, including environmental shutdowns, to cut production capacity have reduced supply, raised prices, and in some cases disrupted supply chains. China has been working to cut capacity in industries beyond coal and steel, and efforts will be extended to address overcapacity in ship construction, nonferrous metals production, the refining and chemical industries, and the building material industries.
Overcapacity, or a glut of production capabilities, is a growing concern for US-China Business Council (USCBC) member companies in their China operations, according to USCBC’s 2014 business environment survey. For the first time since 2009, overcapacity made the top 10 list of challenges, with almost 50 percent of respondents saying that in recent years the issue has gotten progressively worse.