Despite concerns for China’s
growth in 2016, GDP in the country increased 6.7% year-on-year
(y-o-y) between Q1 and Q3, the China State Council Information
Office said during a press conference on 10 January.
Shaoshi Xu, director of the National
Development and Reform Commission, compared the growth to the
previous year, when GDP in 2015 grew between 6.8% and 7% per
The State Council expects figures to
indicate similar growth for the fourth quarter of 2016, with
full GDP exceeding Chinese renminbi (Rmb) 70 trillion, an
increase of Rmb 5 trillion on the previous year.
A recent report from the IMF outlined that
China contributed 1.2% to global economic growth, while the US
and EU pushed growth up by 0.3% and 0.2% respectively.
Supplier side reform
Xu discussed supplier side reform at the
press conference, which had started in 2016, describing China's
strategy as "three part deletion, one reduction and one remedy"
as the country looked to cut capacity, inventory and leverage,
in addition to cutting costs and remedying defects.
Capacity cut targets for steel were 45m
tonnes affecting 180,000 employees, while capacity cuts for the
coal sector in China were targeting at 250m tonnes, affecting
620,000 employees. Both targets were completed ahead of
scheduled and helped to push the price of both steel and coal
Capacity cuts were also carried out in
industrial mineral production such as soda ash, titanium
dioxide (TiO2), graphite and rare earths.
In terms of cost reduction, large
companies saw a drop of Rmb 0.14 in production costs per Rmb
100 turnover, with profit increases of 0.26 percentage points.
Total cost reduction for all above scale companies in 2016
reached around Rmb 1 trillion.
Prices in both soda ash and
TiO2 in China saw increases as a result of capacity
reductions throughout 2015, while other minerals like graphite
and magnesia did not see price improvements owing to a lack of
The China State Council noted however that
recent price increases were generally the result of short-term
factors rather than fundamental changes in supply and
The council outlined the cyclical nature
of commodities like steel, coal and other industrial minerals,
driven more by a slowdown in economic growth and lower prices,
followed by capacity cuts and a subsequent strengthening of
According to Xu, targets for capacity
reductions will be higher in 2017 and will be more stringently
A detailed target for steel and coal was
expected in late January while plans for other minerals are
likely to be announced later by their respective
Previously, the China State Council
Information Office held a press conference on 6 January
announcing new measure for foreign investment in 2017.
Although detailed plans were not
disclosed, three main areas will be targeted: measures to
expand foreign investment; measures to promote fair competition
between domestic and foreign investment; and efforts to draw
new foreign investment.
According to the newly revised guidelines,
entry requirements for foreign investors will be expanded
drastically for the mining, manufacturing and service
industries. China also plans to additionally encourage high-end
investment in intelligent and green manufacturing, modification
and upgrade of traditional industries, and in the construction
The State Council also outlined plans to
treat domestic and foreign company products equally as long as
products are made in China to the country’s
standards. This follows previous complaints by foreign
companies that their products were not treated equally and that
foreign firms struggled to win government purchasing bids.
Under existing Chinese regulations,
foreign investment is not permitted in the mining and
exploration of fluorspar, and into the mining, processing and
separation of rare earths. However, the updated guidelines may
loosen limitations on these two minerals.
Despite the encouraging policies, foreign
companies are hesitant to invest in Chinese industrial minerals
such as graphite, fluorspar and magnesite.
"Even though we can buy a graphite mining
right, the government still might take it back without any
reason," one graphite company – which has a Chinese
office but owns graphite mines outside of China – told
IM, particularly in light of graphite recently
being added onto China’s list of strategically