In what appeared to be the first "guiding quotas" made public this year, the State Economic and Trade Commission (SETC) said China aimed to achieve coal production of 1.05 billion tons, with steel output of 125 million tons and a cement turnout of 590 million tons.

None of the quotas are mandatory unlike those usually set by the commission during the planned-economy period. Instead, the quotas are government projections meant to help enterprises better understand market demands and increase their chances of making a profit, said Zhang Min, a division director of the commission's Economic Operations Bureau.

"All the proposed quotas were based on the commission's analysis of the domestic and international markets and take into account problems that emerged after China joined the World Trade Organization (WTO)," he said.

If enterprises produce coal, steel and cement and other products beyond the proposed limits, it could upset the market supply and demand and they may risk losing money, Zhang said.

Considering the impact of the country's WTO entry on the metallurgical sector, Zhang's commission has fine-tuned a steel output of 125 million tons for this year, which is 24 million tons less than in 2001.

Analysts said more steel is bound to come to China this year since WTO rules call for cancelled quota limits on imports and slashed tariffs.

The commission also expects a slightly lower coal output for 2002, but it apparently has hopes of exporting more this year. Last year's coal production was 1.089 billion tons, and 85.9 million tons were exported.

Details of the production priorities and goals of industries including textiles, petrochemicals, building materials, machinery, electronics and medicine can be found on the commission's official website www.setc.gov.cn/.

The arrangement to control the production capacity of the industries will be in parallel with efforts to eliminate outdated production methods and shut down small enterprises that waste resources and damage the environment, said Zhu Hongren, another commission official.

In the last three years, China has closed 58,000 illegal coal mines, a move that reduced production by 300 million tons a year. It also has shut 3,894 environmentally unsound cement plants, according to statistics from the commission.

This year, the commission will see to it that none of the small coal mines, oil refineries and other ecologically unsound businesses that have been closed will restart production, Zhu said.

Zhu blamed those firms for causing a production surplus and having poor safety records.

(China Daily February 26, 2002)