The Chinese government has ordered more than 2,000 cement, steel and dyeing factories to close down outdated manufacturing units in a large-scale effort to reduce the country’s energy inefficiencies, officials said on Monday.

The government has listed 2,087 factories across 18 different industries as having to close down their units by September 30, according to an order issued by the Ministry of Industry and Information Technology. The factories that will have to close down manufacturing units were deemed either highly energy-inefficient or lacking safety standards, the ministry said in the order. Companies that failed to close down their factories could face fines and punishments, including having their business licenses withdrawn.

The Chinese government is facing a challenge to meet its target of reducing its energy intensity, or energy consumption per unit of GDP, by 20 per cent this year.

The energy intensity increased by 0.09 per cent in the first six months of 2010. This marked a change from a trend of falling energy intensity between 2006 and 2009, when the intensity fell by 14.38 per cent.

This followed a four-year plan of shutting down outdated factories, and replacing inefficient plants with more efficient, high tech units.

In this time, the government closed down iron production plants with a net capacity of 82 million tonnes, and cement production plants with capacities of 214 million tonnes, according to a recent report issued by the National Development and Reform Commission (NDRC).

Spiralling energy needs

But since China’s $ 586 billion stimulus plan, unveiled in November 2008, has begun kicking into gear, with a focus on large-scale infrastructure projects, the country’s energy requirements have spiralled.

Xie Zhenhua, the NDRC’s Vice Chairman, said earlier this year that while the government was on track to meet its targets, reducing intensity would become progressively more difficult, as the earlier reductions were largely achieved by closing down hundreds of outdated units. Further improvements in energy efficiency would require more fundamental transformations of China’s economy and energy usage patterns.

Companies listed for closure in Sunday’s order included a number of State-run steel mills and cement factories. The order listed 762 cement factories, 279 paper mills, 175 steel mills and 192 coking plants.

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