China lifts the ban on foreign majority control in the steel sector

China will lift restrictions on foreign control of the steel sector and other industries from April 10. A representative of the Economic Planning Agency declared on Friday (March 13).

The ban on foreign control in the steel industry has been in force since 2005. In November, the National Development and Reform Commission requested public discussions on a project on foreign investment in China, including in industries suffering from overcapacity, such as the steel industry and the of ethylene production.

The decision came last week when Prime Minister Li Keqiang set the economic growth objective for this year at 7%. The lowest growth since 1990. As China struggles with falling property prices, excess industrial capacity and disinflation. The country’s steel production will reach a supply peak this year as a result of low demand, according to Morgan Stanley. China is responsible for approximately half of the world’s steel production. And it is the largest buyer of iron ore in the world, from abroad.

This move could come too late, said Hu Yanping, a Beijing-based analyst for Custeel.com. „I don’t think that this policy change will prove very attractive to foreign investors because the Chinese steel industry has passed its golden years and has many problems to solve,” said the analyst. „Chinese steel companies are also quite expensive to buy.”

The revised guidelines reduce the number of industries that are subject to restrictions in the steel sector to 38 from 79. These include paper manufacturing and transmission equipment.

Article source: http://www.bloomberg.com/news/articles/2015-03-13/china-lifts-decade-old-ban-on-foreign-control-over-steelmakers