Research On The Steel Overcapacity And Structural Reform Of Supply-side In Hebei Province

With the economic development into the new normal, coupled with the expansion of steel production capacity and shrinking demand, overcapacity in the steel industry has become increasingly prominent. Hebei province is one of the largest province in producing iron and steel and it has the most production of crude steel in China. Facing such a serious overcapacity situation, researching on the steel overcapacity and structural reform of supply-side in Hebei Province is particularly significant.In this paper, the authors analyze the basic problems of overcapacity and structural reform of supply-side firstly, and then describe the current status of the development and the situation of overcapacity in iron and steel industry of Hebei Province. In order to reach a comprehensive understanding of the steel overcapacity and structural reform of supply-side of Hebei Province, the authors also analyze the reasons and types of overcapacity, and the effects of structural reform of supply-side, to lay a solid foundation for proposing recommendations to deepen the structural reform of supply-side in iron and steel industry of Hebei Province.Then the authors analyze the effect of structural reform of supply-side of steel in Hebei Province from two aspects of the impact of “cut excessive industrial capacity” on steel capacity utilization and on the economy of Hebei Province. First of all, by assuming two cases to analyze the changes of steel capacity utilization ratio if reducing crude steel production in Hebei Province, the author found that no matter how the steel capacity utilization ratio changes, the utilization ratio will improve in the end. Secondly, the authors analyze the effect of reducing iron and steel production capacity to the economy of Hebei Province by using the eviews software of Econometrics. Based on the analysis of the relevant indicators and time series, VAR model was built. On the basis of testing the stability of the model, the authors use the Grange causality test, Impulse response function and Variance decomposition analysis, pointing out that Hebei province's crude steel year-on-year growth rate and the GDP year-on-year growth rate there is a dynamic relationship, showed that crude steel year-on-year growth rate has an effect on GDP year-on-year growth rate. In other words, cutting excessive capacity has a pull down effect on Hebei province's economic growth. But as time goes on, the effect will weaken until it disappears.Finally, according to comprehensively analysis the shortage of structural reform of supply-side of Hebei Province and the effect on economy from cutting excessive capacity, some recommendations are put forward to deepen the structural reform of supply-side in the steel industry of Hebei Province.