China commits to curbing steel capacity: U.S. Treasury's Lew

A labourer marks steel bars at a steel and iron factory in Huai'an, Jiangsu province, February 18, 2008. REUTERS/Patty Chen

BEIJING (Reuters) - China has committed to curbing its steel capacity and winding down weak state enterprises, U.S. Treasury Secretary Jack Lew said on Tuesday at the end of high-level talks between U.S. and Chinese officials in Beijing.

“China has committed to ensure that its central government policies and support do not target the net expansion of steel capacity; and to actively and appropriately wind down ‘zombie enterprises’ through a range of efforts, including restructuring and bankruptcy,” Lew said.

The commitment includes some new actions, including letting market forces determine which plants are excess, and to work with the Organization for Economic Co-operation and Development on the issue, he said.

Global coordination is required to deal with problems arising from steel overcapacity, China’s vice finance minister Zhu Guangyao said late on Tuesday.

Officials from the two countries failed to reach an agreement on how to address excess global aluminum capacity, Lew said, but added they would continue to hold discussions on excess capacity in the sector.

While China’s aluminum smelters have pledged to shut down more production and not add capacity in 2016, market participants have expressed skepticism about the extent to which this will help reduce overcapacity.

Reporting by David Lawder and Beijing newsroom; Writing by Sue-Lin Wong; Editing by Mark Potter and Will Waterman