Xie Qihua: Made of Steel
(Beijing Review)
Updated: 2006-01-07 09:56 Developing Under New Rules
On July 20, the New Rules for the Steel Sector was promulgated by the State
Council, giving a clear direction to development of the iron and steel industry
in China. Under the new ruling, the Baosteel Group needs to find a different
method of new development.
Xie has her own opinions. She said that although China's steel industry
output has led the world for nine years in succession, reaching a peak of 273
million tons in 2004, the product structure of China's steel industry still
needs attention. Of this volume, about 60 percent was ordinary steel, but
high-leveled special steel, which is required in the auto industry, shipbuilding
industry and household appliances industry, still needs to be imported from
other countries. The problems facing investment in China's steel industry also
influences healthy development of the industry as a whole.
Xie thinks the Chinese Government should come up with a steel industry
standard to ensure strict limits to scale, equipment and products' structure of
all steel companies.
The New Rules for the Steel Sector provide support for Xie's ideas, clearly
indicating the boundaries for various steel companies, including state-owned
companies, private companies and foreign-funded companies. This process allows
companies like Baosteel, producing high-leveled steel, to flourish.
The New Rules for the Steel Sector also allow the construction of two super
steel group corporations with an expected 30-million-ton yearly output in China.
This has given Xie much confidence and she said as the current output of
Baosteel has reached 21 million tons, it is possible to reach the goal of 30
million tons during the "11th Five-Year Plan" period.
Taking Action
Recently, multinational steel corporations have speeded up their steps to
annex Chinese steel companies. In dealing with this situation Xie said that
Chinese steel companies should try to streamline and optimize their own
operations instead of waiting for purchase by foreign corporations. She said
during the reconstruction and mergers that created Baosteel the number of staff
was reduced from 176, 000 to 90,000 and 10 billion yuan ($1.23 billion) was
spent on technological alterations over a seven-year period. It is only because
of their effective reorganization that Baosteel has power to make acquisitions
elsewhere, Xie said.
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