Research On The Policy Of China’s Iron And Steel Industry Based On The Efficiency

Iron and steel industry is a basic and pillar industry for a national economy, and its development plays a important role in promoting economic growth. In 2014, China’s crude steel production reached to 822.7 million tons, accounting for 49.5% of the world. However, the steel trade competitivenes index (STCI) is -0.641, far below the the average level of the world. The outbreak of the fog and haze gathers people’s attention once again to the development of the iron and steel industry. Weak demand, high inventories and production capacity problems may erupt at any time. Our government has promulgated a series of policies to solve the problems. From the angle of efficiency, we try to analyze the impact of the implementation of the policy on the iron and steel industry.Firstly, to provide a practical basis for the research of policy effect, we have a general description of the iron and steel industry and the policy. In the past ten years, China’s iron and steel industry has obtained substantial development in terms of output, the level of technology and product structure.But there are still the problems of steel overcapacity, unreasonable structure, low concentration degree, high energy consumption, dependence on iron ore import, low resource utilization rate and environmental pollution. In view of the problems occurred in the process of the development of iron and steel industry, the government has taken a series of administrative, economic, policy and regulations means. Overall, these macroeconomic control policies did not achieve the desired results.Secondly, this paper use the Fare-Primont index to measure the TFP of iron and steel ndustry between 1999 and 2012. Results reveal that TFP grow at an average rate of 5.5%. TFP growth is largely powered by technological progress estimated at 2.7%. Decline in technical efficiency is 1.3%. Scale and mix efficiency increased by 2.9%. The further decomposition of the scale and mix efficiency shows the scale efficiency increased by 0.6%, but the decline in mix efficiency is high at 0.6%. The growth of TFP comes from scale expansion partly, but the low level of the scope of the economy inhibit it. By calculating TFP of 28 provinces in main years, we believe there is a significant difference in the level of iron and steel TFP of China’s seven major economic zones. Among them, the Yangtze River Delta Economic Zone performance best, followed by the Bohai Sea, the Pearl River and the Northeast Economic Zone. TFP level has a certain location effect. By comparing with other studies, we further illustrate that using Fare-Primont index to measure the iron and steel industry TFP is consistent with the reality of our country.In the end, based on the calculation of total factor productivity, this paper regards policy as one of the influence factors of steel industry TFP, and controls the level of human capital and other factors, establishing a panel data model to analysis the impact of policy on iron and steel industry TFP. Regression results indicates that the the implementation of limiting production and investment regulation policy has a significant positive effect on TFP, while the environmental regulation policy has a negative effect on TFP. In addition, the level of human capital, external market demand and R&D investment rate also has a significant positive effect on iron and steel TFP. However, the improvement of the level of industrial automation has no significant positive effect on China’s iron and steel industry TFP.