In a move designed to combat overcapacity in the steel sector, China will relocate some factories and encourage more companies to invest in overseas projects, said an official with the country's top planning agency.

Li Zhongjuan, an inspector of industrial planning for the National Development and Reform Commission, said the country will continue to optimize the steel sector through industrial transfers and directing capacity to areas with comparative advantages.

In the meantime, the NDRC will ratchet back new projects and take on existing outdated production through legal and market-oriented means, Li said at a recent conference of the China Iron and Steel Association.