The cement “off-peak production” policies enacted by the government are frequently broken by enterprises in the provinces concerned, and these enterprises are now playing the game of cat-and-mouse. What is “off-peak production”? In October 2016, the Ministry of Industry and Information Technology and the Ministry of Environmental Protection issued the Notice on Further Implementing Cement Off-peak Production announcing that the cement production lines in 15 provinces in northern China shall be subject to off-peak production from 2016 to 2020. That is to say, cement enterprises should stop production during the heating season, and should not start production until the heating season ends. “Off-peak production” helps reduce cement production capacity and pollutant emissions and prevent the double pollution of heating and cement production in winter. It is a measure beneficial to both our country and people. High-ranking executives of cement enterprises said that, “off-peak production” has been quite popular among enterprises in the industry in the past few years due to cement overcapacity and low prices in northern China. However, the cement price has been on the rise since the winter of 2018 due to increased market demand. As a result, many enterprises were reluctant to follow the “off-peak production” order. According to the relevant documents issued by Liaoning provincial government, the cement industry should suspend production within five months from December 1, 2018 to March 31, 2019, but in fact 15 enterprises failed to stop production on time. The Provincial Department of Industry and Information Technology issued the Emergency Notice on November 8 and then held price talks with and publicly criticized the violating enterprises. It was not until the end of November that all enterprises suspended production in a reluctant manner. But, unfortunately, some enterprises succumbed to the temptation profit and started production shortly afterAs we know, the cement enterprises in Liaoning Province are divided on “off-peak production”. The first group advocates strict compliance with the government orders and resolutely suspends production. In contrast, the second group believes that the “off-production” policy is not legally binding, and even if it is implemented, not all enterprises need to stop production (differentiated off-peak production); as long as the total shutdown period is 5 months, the enterprises can decide on their own when to stop production. As a result, local governments feel rather troubled. Differentiated off-peak production is not stipulated in relevant superior documents and would not be agreed to by the first group. Other than holding price talks and circulating notices of criticism, the governments have few enforcement means. On the one hand, they have received many complaints about their inaction and poor implementation of the superior documents; on the other hand, they have been questioned for inflexible implementation of relevant policies and using the “One Size Fits All” approach. Why are some enterprises reluctant to stop production? The reason lies in the high price of cement in southern China especially in the Jiangsu and Zhejiang. As Liaoning abuts against the port and the cement is easy to transport by sea, relevant enterprises can still gain profits after long-distance transportation to Jiangsu and Zhejiang for sale. This is why many enterprises resume production in winter. Moreover, according to competitors, the advocates of production suspension are mainly Liaoning branches of China’s large cement groups, who have set up branches in many other areas of China, while the violators are local private cement enterprises in Liaoning, whose entire business scale is within the province. The advocates support “off-peak production” because they have set up branches in southern China. Even though their branches in Liaoning stop production, their branches in southern China will not be affected, which will continue production and make money in winter. Shutting down the entire production line of enterprises in Liaoning Province will create a more favorable circumstance for their southern branches to raise the price and make more money. The acts of those violators are just fighting for the market share in the south. How should the government tackle such a complex problem? Professor Liu Zhibiao, Dean of Yangtze IDEI, held in-depth discussions with relevant experts and scholars on the dilemma of “off-peak production” of the cement industry in Liaoning Province.
