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[China Petroleum New Center] Associate Prof. Liao Hua Addresses Opportunities and Challenges of Tackling Overcapacity

  • Release date:2014-03-20 05:41:00

Liao Hua: From the energy point of view , the formation of production capacity itself takes a lot of energy , so a lot of excess capacity will cause a serious waste of energy resources , not mention energy conservation. Particularly in overcapacity in energy-intensive industries, the fierce market competition will drive down prices dramatically, not only lead to new waste, but also possiblly transfer the overcapacity to the industry downstream, creating a vicious cycle .
Overcapacity is not unique to China, and not a " Chinese characteristics" product. There is excess capacity in developed countries . However, due to the relatively mature market mechanisms in developed countries , they resolve the overcapacity mainly by the market ; government is doing as much as possible on labor issues caused by the production capacity ( including related import and export trade ) . As to the specific enterprise or industry profit or not, the government is not very concerned . These are the market actions and results, reflecting the nature of the market economy and the role of government should play in the market economy system.