Research On Supervisory Mechanism Of Obsoleting Outdated Capacity

The iron and steel industry is the backbone of China's economy, and it is also the pillar of realizing the industrialization of our country. At the beginning of the founding of new China, China's crude steel output is less than 160000 tons, and in 1989 it broke through 60 million tons, to 2013, China's crude steel output reached 779 million tons which is the world's total output of 50% and located in the world. The prosperity and development of the iron and steel industry has made an important contribution for our country's construction. But at the same time, the resulting excess capacity, resource depletion, energy shortage and environmental degradation and other issues are also increasingly highlighted. In order to solve these problems, in 1999, state economic and trade commission promulgated the catalogue of outdated capacity, process and product which should be obsoleted. This catalogue involves more than 30 outdated steel equipment, processes and products. And since 2010, the ministry announced the list of facilities which should obsolete the outdated capacity every year. In the list, the iron and steel enterprises accounted for most. In addition, the central government and the local governments have issued corresponding policies, clear rewards and punishments measures to ensure to complete the task of obsoleting the outdated capacity. Under these measures, the iron and steel industry has obtained great achievement in obsoleting the outdated capacity. However, in the same time, the problem of "water injection list", "resurgence", "the eliminate of the surplus" and other issues had arisen. An important reason of these problems lies in the lack of effective supervision in the implementation of policy. Therefore, this article research the supervisory mechanism of obsoleting outdated capacity in three aspects which is the vertical supervision, peer monitoring, and media supervision. And then, we obtain the feasible and effective supervision mechanism, and put forward relevant targeted and operational policy recommendations.First of all, this article constructs a dynamic game model of vertical supervision on the basis of game theory, and studies the optimal vertical supervision mechanism. Secondly, based on the experimental study, we inspection the peer monitoring's effect on the outdated capacity elimination efficiency. Again, we build the regression equation and collect the relevant data to inspect whether media supervision can promote the elimination of outdated production capacity. Note, in the regression equation, the independent variable is the media's negative reports and the dependent variable is the enterprises' situation of obsoleting outdated capacity. Finally, based on the research of the vertical supervision, peer monitoring, and media supervision, we build a practical and effective supervision mechanism, and put forward the corresponding policy recommendations.