China's cement sector plagued by overcapacity

Byzhangli

Updated Tue, 10 Dec 2013 00:00:00 GMT

Despite China’s State Council issuing a cement industry restructure guidance a decade ago, the sector has been plagued by overcapacity. And new projects are still getting regulatory approvals constantly today. Experts say the government’s inadequate planning and its intense focus on growth figures are to blame.

"Usually a cement plant with annual capacity of two million ton costs seven hundred million yuan, which is much cheaper compared to a steel or chemical plant. The construction work would complete within one year, which is also shorter than that of a steel plant. So for a regular county, the investment in such a cement mill would generate the gross domestic product of nearly seven hundred million yuan in the second year, finishing both investment and economic growth tasks. This is very lucrative for local government." Kong Xiangzhong, Secretary-General of China Cement Association said.