How to view China's overcapacity problem

AbstractThe core of supply-side structural reform is to resolve structural contradictions in China's economic development through institutional mechanism reform. Resolving excess capacity is an urgent task in the process of China's economic reform and development, this paper starts from understanding the spirit of supply-side structural reform, discusses the current situation and causes of China's excess capacity, proposes that excess capacity mainly stems from structural and institutional contradictions, and further analyzes the special situation faced in resolving the excess capacity, and puts forward relevant policy recommendations.

Keywords overcapacity, heavy chemical industry, economic structure

I, the grim reality of China's overcapacity problem

In recent years, overcapacity has become a prominent thorny issue in China's economic development. Internationally, an important indicator of overcapacity is the capacity utilization rate. Generally speaking, the capacity utilization rate of less than 80% is the cut-off point for measuring whether the industrial capacity is excessive. Some public data show that the capacity utilization rate of traditional industries such as iron and steel, cement, electrolytic aluminum, flat glass, coke, etc. is only 70%-75%, while the capacity utilization rate of the emerging photovoltaic industry is even lower than 60%. The problem of overcapacity directly triggered the debt risk problem, bank non-performing assets and bond defaults in the overcapacity industry is very prominent, and lead to a decline in economic growth, the real economy, profit decline, fiscal revenue growth decline, the probability of economic risks, which reflects China's industrial restructuring and transformation of the mode of development of the arduous challenges faced by China's economy is increasingly becoming the operation of China's economic operation of prominent contradictions and the root cause of many problems. It is also increasingly becoming the root cause of prominent contradictions and many problems in China's economic operation.

Second, the main causes of overcapacity

(a) External cyclical factors

From the national economy

The main causes of overcapacity are as follows