The current main principle for resolving overcapacity is the 'Four Batches' proposed in the 'Guiding Opinions on Resolving Serious Overcapacity Contradictions,' namely 'digest a batch, transfer a batch, integrate a batch, and eliminate a batch.' Among them, 'digest a batch' requires adjusting the product structure to achieve product upgrades while continuing to expand domestic demand and catering to domestic and international market demand; 'eliminate a batch' has already shown some effect under the combined efforts of market mechanisms and administrative measures, and Jiangsu Province has also completed the National Twelfth Five-Year Plan elimination tasks ahead of schedule and in excess. For the 'transfer a batch' of external capacity output, Jiangsu Province needs to vigorously promote the 'going global' strategy and, based on 'international capacity cooperation,' carry out in-depth cooperation with countries and regions such as Latin America and Kazakhstan.
Plan One: It is necessary to make top-level design at the national level. Specifically, the state should take the lead and implement proportional production cuts among provinces in industries with severe overcapacity, such as steel and coal. At the beginning, a nationwide reduction of 10%-20% can be considered, with relevant national departments signing production reduction commitments or agreements with the provinces concerned. The second step is to allow the trading of production reduction quotas publicly. For example, if two provinces need to reduce production by 2 million tons each, and if one province is more competitive while the other is weaker, the more competitive province can purchase the 2 million-ton reduction quota from the other province, without having to cut its own capacity. The selling province can receive a sum of money to provide subsidies for closing or withdrawing enterprises. After dealing with the crisis-like, short-term, one-off capacity cleanup, it is more important to establish long-term mechanisms to prevent similar problems from occurring again.
Option Two: Promote corporate integration and restructuring between large economic regions. In the basic raw material industries based on resources as elements, the surplus problem cannot be solved simply through excessive competition or price wars; it should be addressed with more advanced market methods and market functions, that is, through joint restructuring and market integration. This is also the successful approach adopted worldwide after encountering surplus problems in the basic raw material industries. In regional integration, first, equity cooperation can be implemented: everyone in the region becomes a shareholder, packaging each company into one large company, and then uniformly planning, managing, and reducing capacity in an organized and scientific way to fully utilize the cement production line capacity within the region. Second, a method of mutual capacity swap among large enterprises can be adopted. Large Enterprise A has capacity in this region, and Large Enterprise B has capacity in that region; in this way, Enterprises A and B can use capacity swapping to concentrate the capacity of one region into one large enterprise, forming a situation where a single large enterprise holds the main market share in that region.
Plan Three: Promote structural adjustment and technological innovation to enhance effective supply. From a long-term perspective, improving the industrial structure, adjusting the product structure, and building a modern industrial system that matches demand is the fundamental way to reduce overcapacity. Taking the shipbuilding and repair industry in Jiangsu Province as an example, this industry is one of the sectors with overcapacity in Jiangsu, characterized by a serious surplus of ordinary dry bulk ships with low technological content. Optimizing the structure of the shipbuilding and repair industry along the Yangtze River and coastal areas in Jiangsu, encouraging the development of high value-added specialized shipbuilding, and restricting the capacity of low value-added ordinary dry bulk ship repair. This promotes the clustered, intensive, and differentiated development of the marine shipbuilding and repair industry, restoring the international competitiveness of Jiangsu Province's shipbuilding and repair sector.
Plan Four: Internationalization of Production Capacity. Implement the "going global" strategy and accelerate the international transfer of production capacity. Against the backdrop of global industrial restructuring and the deepening of industrial division of labor, we need to coordinate domestic and international "two markets" and "two resources." Encourage enterprises in Jiangsu to "go global," make full use of various international economic cooperation platforms, strengthen global industrial cooperation, actively guide industries to transfer outward in an orderly manner, promote strategic emerging industries and industries with core competitive advantages to actively participate in foreign competition, create new productivity, and release new supply in the global market. Make full use of the opportunity provided by the construction of the "Belt and Road" initiative to accelerate the output of production capacity. Focus on cultivating a number of large cross-border circulation enterprises and open up international circulation channels. Implement necessary policy incentives to guide the overseas transfer of industries.
Option Five: Liquidate bankruptcies according to law. The round in the late 1990s was policy-based bankruptcy; now we should consider restarting the corporate bankruptcy mechanism. Conditions should be created according to law to implement market-based bankruptcy procedures, and the trial of bankruptcy liquidation cases should be accelerated. Especially for those zombie enterprises that have completely lost any chance of revival, bankruptcy liquidation should be resolutely implemented. For enterprises undergoing bankruptcy liquidation, policies and measures such as fiscal and tax support, disposal of non-performing assets, reemployment and livelihood security for unemployed personnel, as well as special rewards and subsidies, should be introduced and implemented. The capital market should cooperate with enterprise mergers and reorganizations. Mergers and reorganizations should be maximized while liquidation should be minimized, and employee placement should be properly managed. Incremental growth must be strictly controlled to prevent new overcapacity.
