One of China’s largest steelmakers plans to shed up to 50,000 jobs, its chairman said, as the country struggles to reduce overcapacity as growth in the world’s second-largest economy slows.
The comments by Ma Guoqiang (馬國強), the head of state-owned group Wuhan Iron and Steel Corp (武漢鋼鐵), are a stark illustration of the challenges facing Beijing as it seeks to retool the economy while avoiding social unrest — anathema to the leadership.
The firm’s steel division has 80,000 employees, but might retain only 30,000 of them, Ma said on the sidelines of the National People’s Congress, the country’s rubber-stamp parliament.
“Probably 40,000 to 50,000 people will have to find other ways forward,” he told people.com.cn, a news portal run by the Chinese Communist Party’s mouthpiece the People’s Daily, according to a transcript on the Web site.
China’s economy grew at its slowest pace in a quarter of a century last year and its outlook remains bleak, with the government last week lowering its this year’s growth target to between 6.5 and 7 percent, down from “about 7 percent” previously.
Authorities have prioritized reducing borrowing, overcapacity and inventory as they seek to maintain growth and make it more sustainable.
The government has announced a goal of cutting steel capacity by up to 150 million tonnes within five years, but much production is already inactive.
Wuhan Iron and Steel is only running at 70 to 75 percent capacity, Ma said.
Global steel prices have plunged in the face of a worldwide glut and both the US and EU, whose own steel industries are deeply troubled, accuse China of selling underpriced steel in their markets.
Chinese Minister of Human Resources and Social Security Yin Weimin (尹蔚民) last month estimated there would be 1.8 million layoffs due to restructuring in the coal and steel industries, without giving a timescale.
Wuhan Iron and Steel, which started operations in 1958, was the country’s fifth-largest steelmaker by output in 2014, according to the World Steel Association.
Ma did not specify the timeframe of the layoffs.
He said older workers will be allowed to retire early while some others will be offered positions at the firm’s non-steel affiliates, and the company will subsidize those who have to seek jobs elsewhere.
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