The Exit Mechanism For The Excess Production Capacity In China

Overcapacity means that the effectual demand is overwhelmed by actual productivity.In common,overcapacity appears in traditional industries such as light,new emerging and heavy industries,mainly the manufacturing sectors.By now,the phenomenon of overcapacity in investment area has put the whole market in stake.theoretically,social average rate of return(SAROR)advances the survival the fittest in the process of market&resource optimization.However,with various problems and contradiction derived from domestic overcapacity,which includes cycles,absolute,structural,systematical pattern,has stagnated the stabilization and healthy development of domestic market.After the entering into new century,the regulation and adjusting in industrial structure by State Council and relating ministries have been consistent in precaution and dissolving of overcapacity,which is not quite effective,in the new era of economic reforming,our market is in key phase of transformation and upgrading,which means that the consequences of overcapacity could be quite extensive,with new characteristic of long-term,obstinate and full scale.From the view of necessity in term of overcapacity quit,it is quite essential and emergent to research on the mechanism of overcapacity quit.The paper indicates that,under the market circumstances nowadays,free competition should undoubtedly lead to overcapacity.The recognition of the content of overcapacity has been enriched after longtime research both abroad and domestically,e.g.the concepts of over-competition,construction duplication,overcapacity and overinvestment.This paper studied the mechanism and relating measures in overcapacity quitting in several developed countries.By choosing aluminum industry as the target,unveiled the real truth of overcapacity generation.Finally,the paper empirically studied the utility of aluminum market in vertical integration,theoretically supported the effect of structural adjustment of domestic industry policy,found out a fitting mechanism of overcapacity quitting for domestic enterprises,government and financial entities.