BEIJING, March 21 (Reuters) - China's Hebei province produced 32.636 million tonnes of crude steel in the first two months of 2014, down 5.7 percent compared to the previous year, reflecting a funding crisis that has left at least 16 local producers on the brink of closure.
The bloated steel sector in northern Hebei is the main focus of a nationwide government campaign to tackle industrial overcapacity, cut sources of air pollution and ease the Chinese economy's dependence on resource-intensive sectors.
Data issued by China's statistics bureau show Hebei's production over the first two months still amounted to 24.9 percent of the national total, down from 26.9 percent in the first two months of 2013 but recovering from November and December, when its share fell to less than 20 percent.
Overall steel production in the first two months rose by 1.7 percent on the year to 130.8 million tonnes, which amounted to a record daily high of 2.22 million tonnes a day.
The January-February output decline in Hebei, traditionally China's dominant steel producer, was offset by double-digit increases in the provinces of Jiangsu, Fujian, Henan and Hunan.
Last year, Hebei produced 188.5 million tonnes of crude steel, amounting to 24.2 percent of the country's total and more than the whole of the European Union combined.
But its governor Zhang Qingwei said earlier this month that total annual production capacity actually stands at 286 million tonnes.
Zhang revealed at a Hebei delegation meeting on the sidelines of the national parliament that 16 out of 148 steel enterprises in the province had stopped production as a result of "operating problems" brought about by a credit crunch as well as a decline in demand.
To tackle the debilitating overcapacity problems in the sector, which have sapped steel product prices and left many mills in heavy debt, Hebei plans to close 60 million tonnes of low-quality crude steel production by the end of 2017, with 15 million tonnes set to be shuttered this year. (Reporting by David Stanway; Editing by Muralikumar Anantharaman)