The State Council approved a stimulus package yesterday to help the steel industry weather the international financial crisis.

The salient features of the package are:

The government will strictly control the increase in the country's steel-making capacity and continue closing down low-tech mills.

It will adopt a flexible tax policy on steel exports to stabilize the country's share in the global market.

It will encourage restructuring of steel-makers and cultivate competitive large-scale steel groups.

Other support measures include allocating a special fund for technology upgrades, research and innovation, restoring order in the iron-ore imports sector and increasing steel consumption in the domestic market.

China is the world's largest steel producer, far ahead of Japan, the second largest, with an estimated output of 500 million tons last year. But the global financial crisis has dealt the worst blow to the domestic steel industry, by forcing demand to drop sharply both at home and abroad.

The stimulus package is aimed at helping domestic steel-makers overcome the most difficult time, and handle some of their long-term problems, said Chu Xueliang, an analyst with China Jianyin Investment Securities.

(China Daily January 15, 2009)