(Yicai) Sept. 22 -- China will restrict the expansion of its steel industry over the next two years in an effort to curb excess capacity and promote higher-quality development.

The Ministry of Industry and Information Technology, together with four other ministries, released a plan today capping the annual growth of the steel sector’s added value at around 4 percent in 2026 and 2027. The plan also prohibits steelmakers from adding new capacity.

China, the world’s largest steel producer, has struggled with overcapacity for more than a decade, a challenge worsened by the property market downturn and international anti-dumping measures. Steel is used extensively in construction and the automotive sector.

The government plan requires companies to accelerate the elimination of outdated facilities, particularly old blast furnaces and converters, while ensuring that more than 80 percent of production capacity completes ultra-low emission upgrades by the end of this year.

It also calls for increased investment to modernize production processes, digitalize operations, and promote low-carbon development. To stimulate demand, the government encourages greater cooperation between producers and steel-consuming industries such as shipbuilding, as well as expanding the use of steel in residential buildings, public facilities, and small and medium-span bridges.

The document stresses the importance of international cooperation and better management of exports, including maintaining fair competition, optimizing product mix, and complying with trade regulations.

Regulators will strengthen industry oversight by implementing precise production and capacity controls, classifying firms by performance, and promoting a balance between supply and demand. Financial support will be offered through special reloans for innovation, long-term treasury bonds, and tailored financing services from banks.

The plan also includes enhanced monitoring measures, with regulators holding regular meetings to address industry challenges and issuing timely warnings to sectors at risk of overcapacity to guide market expectations.

Editor: Emmi Laine