Second, the support plan will offer an opportunity to speed up the industry's consolidation. Zhang Xiaogang, President of the CISA, believes that when the financial crisis hits Chinese iron and steel companies full force, it will bring opportunities for the industry to consolidate. At present, market demand for iron and steel is decreasing, and many small and medium-sized companies have stopped operating. But this presents an opportunity for the state to strengthen the industry. The state must consolidate the industry to complete the sector's structural adjustment and upgrading, Zhang said.

There are now about 1,200 iron and steel companies of different sizes in China. About 70 are large and medium-sized ones. The large number of companies is disadvantageous to the sector's long-term development, according to the supporting plan. This is why it proposes that the country's top 10 steel companies should account for more than 50 percent of China's total iron and steel output by 2010, while the current rate is just below 40 percent. To reach this goal, the plan proposes that large iron and steel groups lead the sector and promote the restructuring of the companies. The plan also advocates the formation of internationally competitive large and mega-iron and steel groups, while making efforts to optimize the industry's layout and intensify its consolidation.

Currently, among the country's large iron and steel groups, Baosteel Group Corp. is the largest. In northeast China, Anben Iron and Steel Group Co. is the leading company, while in north China, Shougang Jingtang Iron and Steel United Co. Ltd. and Hebei Iron and Steel Group Co. Ltd. are the leaders. In central and southwest China, Wuhan Iron and Steel (Group) Corp. is the leading steelmaker.

Third, the support plan says iron and steel companies must improve their technical innovations. It proposes strengthening efforts in technical innovation and research and development, as well as importing technologies. The Central Government will allocate special budgetary funds to promote technical innovations in iron and steel companies, readjust their product structures and improve their product quality. In early February, the Ministry of Industry and Information Technology said it would offer 15 billion yuan ($2.19 billion) in loans with low interest rates to the iron and steel industry for technical innovations. It also said the sector would be the major industry it would support.

Measures to Revitalize the Iron and Steel Industry

1. Readjust tariff rates for the import and export of some iron and steel products.

2. Adopt fair trade policies.

3. Increase input in technological progress and technical innovation.

4. Perfect the mechanism for eliminating backward production capacity.

5. Perfect support policies for corporate restructuring.

6. Revise the iron and steel industry's policies at the proper time.

7. Raise the standard of steel products used in buildings.

8. Coordinate the development of the iron and steel industry and related industries.

9. Continue the present financing policies.

10. Encourage iron and steel companies to "go global."

11. Establish an industrial information disclosure mechanism.

12. Bring in the initiatives of industrial associations.