China tells 2,000 companies to end over-production by September end

China's drive to make its economic growth more orderly, now includes plans to shut outdated manufacturing capacity in more than 2,000 companies in 18 industries including cement, coking, iron, paper and dyeing by the end of September.

China has targeted the closure of those factories which are "highly polluting" or "energy-wasting", or those that do not meet safety requirements, the Chinese ministry of industry and information technology announced in an order on Sunday.

Companies that fail to act in accordance with the new directives could face penalties including having their sewage treatment licenses revoked, curbs on borrowings, or even having their business licenses withdrawn, the ministry directive said.

Among the companies that will be affected include the parent company of Guangxi-based Liuzhou Iron and Steel and a cement-making unit of Jilin Yatai (Group) Co, which are based in northeast China.

China, which has been facing serious environmental problems and pressures on resources, is now keen to upgrade its manufacturing sector by putting into action stricter energy efficiency and pollution targets and forcing the closure of wasteful capacity.

In a corresponding proposal, the industry ministry plans to consolidate the steel sector by shutting down small mills and upgrading production standards, concentrating on closing those that produce less than 1 million tons of crude steel or 300,000 tons of higher-end steel a year.