Efficiency, not involution: China curbs metals sector to fight extreme competition

China has announced production curbs in its strategic non-ferrous metals sector, the latest step in Beijing’s drive to rein in cutthroat competition and boost industrial efficiency.

In a new action plan the Ministry of Industry and Information Technology (MIIT) has projected output growth of 1.5 per cent for primary non-ferrous metals this year, down from 4.3 per cent last year.

The initiative expands Beijing’s campaign against “involution”, or neijuan in Chinese – a self-defeating cycle of intensifying competition that erodes profits and stifles innovation across industries, including photovoltaics, wind power, petrochemicals, steel and metal smelting.

Instead of setting a target to produce more of the metals, the ministry stressed optimising the industrial structure to achieve an average annual growth rate of about 5 per cent in value-added output.

The plan also calls for advances in the exploration of copper, aluminium, lithium, nickel, cobalt and tin, as well as the development of ultra-pure metals and advanced rare earth materials alongside enhanced recycling of used batteries and solar panels.

Dominated by state-owned players, the non-ferrous metals sector is a vital supplier of copper, aluminium, lithium and other resources to China’s manufacturing and hi-tech industries. But processing fees, especially for copper concentrate, have remained depressed this year, squeezing smelter margins.

South China Morning Post