The Study On The Impact Of Macro Economic Fluctuation On Excess Capacity Of China’s Cement Industry

With the establishment of the socialist market economy, China has gradually gotten rid of the economy era of shortage. Because of the crazy growth of Chinese investment, excess capacity has become a frequently occurring economic phenomenon. The problem of overcapacity in the cement industry which has attracted attention of the parties has been quite serious. The government authorities have taken a series of measures to rectify the excess capacity problem, but the measures did not work. Therefore, researching the formation mechanism of the cement industry overcapacity should have a very important significance.This paper analyzes the formation mechanism of excess capacity in cement industry respectively from the perspective of supply and demand. According to the above theoretical analysis, this paper suggests the hypothesis that overcapacity of China’s cement industry has positive relationship with the macroeconomic volatility.Generally, the warning line of overcapacity in cement industry is15%. If the degree of excess capacity is more than15%, there is a serious overcapacity problem in the cement industry. This paper selects the data envelopment analysis (DEA) method to measure cement overcapacity of16listed companies under the2001-2010. The degree of excess capacity is equal to1minus the capacity utilization rate, which can be used to calculate the degree of excess capacity. The results shows that overcapacity in China’s cement industry was significantly lower than the normal.The problem of overcapacity in Sichuan Shuangma、Bowin Technology Industry、Jinding cement、Qilianshan cement Group、Qinling cement、 Chaodong cement and Shitou cement was more serious. The average degree of overcapacity in the above companies was higher than0.5.This paper aims to explore the relationship between the China’s cement industry overcapacity and macroeconomic fluctuation by collecting economic data of16listed companies from2002to2010. According to F-test and Hausman test, the paper uses a random effects model to empirically analyze the above hypothesis. It is worth mentioning that the HP filter method is used to decompose the cycle trend of GDP as the measure of macroeconomic fluctuation. The empirical results show that there was a significant positive relation between the excess capacity in China’s cement industry and macroeconomic fluctuation.According to the above theoretical analysis and empirical study, this paper gives some policy recommendations to solve overcapacity in China’s cement industry.