China's Steel Output Up 18.5 Percent Despite Curbs

Despite government curbs to slow investment and reduce pollution, new steel mills are popping up all over China to meet increased demand

BEIJING (AP) – China's steel output increased 18.5 percent in 2006 from the previous year, despite curbs imposed to slow rising investment and reduce pollution, a news report cited the government as saying.

China, the world's largest steel producer, has had a surge of new mills rushed into operation to supply its fast-growing construction and manufacturing industries.

Total output of steel and pig iron reached 418.8 million tons in 2006, the official Xinhua News Agency reported Monday, citing the country's top planning agency, the National Development and Reform Commission.

Regulators are trying to curb steel mill investment to prevent overcapacity and a debt crisis. They also want to curb pollution from the mills' heavy use of coal.

Despite macroeconomic policies, China's steel industry continues to expand due to increased market demand fueled by a booming economy, Xinhua said.

Since 2003, many illegal and backward steel mills have been set-up in China to cash in on the the growing business opportunities, the agency reported.

The government will try to shut down these small, polluting steel mills over the next three years, the report said.