Research On Overcapacity In China's Steel Industry

The overcapacity,a problem of the economic in our country,has been increasingly prominent in recent years.The iron and steel industry,as the most outstanding,the most typical and the most focused overcapacity in the industry,has produced 3.8 billion tons of steel from 2011 to 2015,which meet the huge demand for steel that supported 65%of China's GDP growth and 128%of fixed assets investment growth1,but cause serious overcapacity in iron and steel industry at the same time.n the face of increasingly serious overcapacity,the effects of government policy is questionable.And on the theoretical research,there are different concepts of overcapacity and a variety of capacity utilization measures.The cause of overcapacity is also debated.In this context,Therefore defining the concept of overcapacity correctly and adopting appropriate methods to measure the utilization rate of overcapacity of iron and steel industry and discussing the cause of overcapacity of iron and steel industry systematically has important theoretical and practical significance.Grounded by collecting and analyzing the relative researches of scholars at home and abroad,the article draws the model of production function approach to estimate and then analyze the CU of the iron and steel industry in China and also analyses the mechanism of overcapacity in iron and steel industry systematically and deeply.And it carries on quantitative analysis about the relationship between factor market distortions and the iron and steel industry capacity utilization.We can draw the conclusion:(1)If refering to the international standard,China's steel industry capacity utilization rate is below 75%at the most time,which indicates that China's steel industry capacity has been exceed for a long time;(2)China's iron and steel industry capacity utilization fluctuation generally conforms to the profit rate,percentage of loss-incurring enterprises,steel price index of the iron and steel industry and be affected by China's economic cycle and policy factors;(3)Chinese overcapacity problem lies in the distorted allocation of resources caused by the distorted system,which differs the cyclical overcapacity in the western developed countries.