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5 White Paper on the Business Environment in China
2.5 Products Classi ed by Materials
CHINA’S RAPID, CONTINUING growth has intensive” plants) was reported to lower overall production by
indisputably fueled domestic demand for both raw and some 107 million tons; nevertheless, research cited by China
processed materials. While relative domestic scarcity of some Daily suggested that overall volume would reach 1.85 billion*
materials has led to import-driven markets, China continues tons by 2011.9
to be self-su cient in many categories. For example, in
2007 China produced an estimated 1.3 billion tons of is projection appears to have been met a year early, with
cement domestically1—approximately half of the world’s the China Cement Association reporting total production
total production—and has been the world’s largest producer of 1.88 billion in 2010—more than half the world’s total
of cement since 1985. In contrast, China has been a net- output.10 e government’s increased investment in xed
importer of rubber products, with the total consumption of assets is cited as the major reason for the industry’s growth
5.5 million tons in 2006 outstripping domestic production despite slowing export demands and the rising costs of both
of only 2.3 million tons, with ailand ranking as the top labor and materials.11
exporter to China.2
Overcapacity in cement production, however, remains
rough the global economic slowdown, domestic a serious concern. Despite the fact that only two-thirds of
consumption (and production) of cement remained mostly China’s cement production capacity was utilized in 2008,
insulated from global trends due to continuing demand for investment in the sector grew by a staggering 67 percent in
construction in China. the rst half of 2009, following a 60 percent year-on-year
increase to 105 billion yuan in 2008.12 is reportedly led the
In the coming years, the best use of resources for cement Ministry of Industry and Information Technology to release
production will likely be achieved by continuing e ciency- a “draft regulation on the access threshold for the cement
related reforms; it is estimated that in 2006 cement production industry” in August last year stipulating that the Ministry
accounted for total energy consumption equaling 131 million “will not approve new cement production lines in provinces
tons of coal3—approximately 6.6 percent of an estimated where clinker output capacity exceeds 1,000 kg per capita
2.1 billion tons consumed in total4. Historically, ine cient during 2011 to 2015” and that “it will lift requirements [for]
operations, small-scale production and procedural issues have cement producer[s’] equity capital in new projects and raise
led to low energy e ciency in domestic production, although the bottom line for daily production capacity.”12 All this took
new guidelines and regulations such as those promulgated in place after the NDRC had set out to eliminate 50 million tons
20073 detailing new, higher standards for technology- and of outdated capacity each year between 2007 and 2010; a new
process-related energy e ciency will improve the yield of announcement in 2009 indicated that another such program
cement produced per energy unit. ese adjustments, detailed would be implemented to eliminate an additional 600 million
as far back as 2002, indicate that the replacement of plants tons of small vertical kiln capacity over three years between
producing #325 cement with more e cient varieties would 2010 and 2012.13 It was not immediately clear how much of
alone save approximately 15 million tons of coal per year.5 this additional capacity was genuinely additional overcapacity
and how much was the same targeted by the previous
Despite cement exports from China declining by nearly program but unsuccessfully eliminated. Figures reported by
13 percent in 20086, actual output reportedly grew by 5.2 Xinhua indicated that 74.16 million and 91.55 million tons
percent to top 1.38 billion tons in 2008 and consumption of ine cient production capacity were eliminated in 2009
was forecasted to grow by 6.3 percent in 2009.7 Later reports and the rst three quarters of 2010, respectively.14 In 2011
indicated that production had surpassed 1.65 billion tons that further cuts to ine cient production capacity ordered by the
year the largest volume of any nation in the world.8 Ministry of Industry and Information Technology amounted
to 133 million tons.15
In 2010, the PRC government’s “[accelerated] phasing
out of energy-wasting and outdated production capacity” In 2010 an additional 300 million tons of obsolete
(including the mandated closure of “700 polluting and energy-
* We suspect there to have been a conversion error in the original China Daily article; although the original sentence reads the sentence reads “ e country’s
cement production was 163 million tons in 2009 and will stand at 185 million tons this year with China’s xed assets investment and property market
cooling down, according to the research,” these gures are strikingly small compared to other sources reports of PRC cement production (another source, for
example, reported 1.38 billion tons produced in 2008). is, combined with the fact that this sort of conversion error from the 10,000-based “万” used when
articulating large numbers in Chinese to the English format of counting by thousands is not uncommon, has led us to choose the value of 1.85 billion as most
likely to be correct.]
160
2.5 Products Classi ed by Materials
CHINA’S RAPID, CONTINUING growth has intensive” plants) was reported to lower overall production by
indisputably fueled domestic demand for both raw and some 107 million tons; nevertheless, research cited by China
processed materials. While relative domestic scarcity of some Daily suggested that overall volume would reach 1.85 billion*
materials has led to import-driven markets, China continues tons by 2011.9
to be self-su cient in many categories. For example, in
2007 China produced an estimated 1.3 billion tons of is projection appears to have been met a year early, with
cement domestically1—approximately half of the world’s the China Cement Association reporting total production
total production—and has been the world’s largest producer of 1.88 billion in 2010—more than half the world’s total
of cement since 1985. In contrast, China has been a net- output.10 e government’s increased investment in xed
importer of rubber products, with the total consumption of assets is cited as the major reason for the industry’s growth
5.5 million tons in 2006 outstripping domestic production despite slowing export demands and the rising costs of both
of only 2.3 million tons, with ailand ranking as the top labor and materials.11
exporter to China.2
Overcapacity in cement production, however, remains
rough the global economic slowdown, domestic a serious concern. Despite the fact that only two-thirds of
consumption (and production) of cement remained mostly China’s cement production capacity was utilized in 2008,
insulated from global trends due to continuing demand for investment in the sector grew by a staggering 67 percent in
construction in China. the rst half of 2009, following a 60 percent year-on-year
increase to 105 billion yuan in 2008.12 is reportedly led the
In the coming years, the best use of resources for cement Ministry of Industry and Information Technology to release
production will likely be achieved by continuing e ciency- a “draft regulation on the access threshold for the cement
related reforms; it is estimated that in 2006 cement production industry” in August last year stipulating that the Ministry
accounted for total energy consumption equaling 131 million “will not approve new cement production lines in provinces
tons of coal3—approximately 6.6 percent of an estimated where clinker output capacity exceeds 1,000 kg per capita
2.1 billion tons consumed in total4. Historically, ine cient during 2011 to 2015” and that “it will lift requirements [for]
operations, small-scale production and procedural issues have cement producer[s’] equity capital in new projects and raise
led to low energy e ciency in domestic production, although the bottom line for daily production capacity.”12 All this took
new guidelines and regulations such as those promulgated in place after the NDRC had set out to eliminate 50 million tons
20073 detailing new, higher standards for technology- and of outdated capacity each year between 2007 and 2010; a new
process-related energy e ciency will improve the yield of announcement in 2009 indicated that another such program
cement produced per energy unit. ese adjustments, detailed would be implemented to eliminate an additional 600 million
as far back as 2002, indicate that the replacement of plants tons of small vertical kiln capacity over three years between
producing #325 cement with more e cient varieties would 2010 and 2012.13 It was not immediately clear how much of
alone save approximately 15 million tons of coal per year.5 this additional capacity was genuinely additional overcapacity
and how much was the same targeted by the previous
Despite cement exports from China declining by nearly program but unsuccessfully eliminated. Figures reported by
13 percent in 20086, actual output reportedly grew by 5.2 Xinhua indicated that 74.16 million and 91.55 million tons
percent to top 1.38 billion tons in 2008 and consumption of ine cient production capacity were eliminated in 2009
was forecasted to grow by 6.3 percent in 2009.7 Later reports and the rst three quarters of 2010, respectively.14 In 2011
indicated that production had surpassed 1.65 billion tons that further cuts to ine cient production capacity ordered by the
year the largest volume of any nation in the world.8 Ministry of Industry and Information Technology amounted
to 133 million tons.15
In 2010, the PRC government’s “[accelerated] phasing
out of energy-wasting and outdated production capacity” In 2010 an additional 300 million tons of obsolete
(including the mandated closure of “700 polluting and energy-
* We suspect there to have been a conversion error in the original China Daily article; although the original sentence reads the sentence reads “ e country’s
cement production was 163 million tons in 2009 and will stand at 185 million tons this year with China’s xed assets investment and property market
cooling down, according to the research,” these gures are strikingly small compared to other sources reports of PRC cement production (another source, for
example, reported 1.38 billion tons produced in 2008). is, combined with the fact that this sort of conversion error from the 10,000-based “万” used when
articulating large numbers in Chinese to the English format of counting by thousands is not uncommon, has led us to choose the value of 1.85 billion as most
likely to be correct.]
160
