Li Qunfeng, Deputy General Manager of Conch Group: The Time Is Ripe for Capacity Reduction, Suggesting the Establishment of a Special Fund for Capacity Reduction

Recently, the Second Session of the Ninth Council of China Cement Association was held. Li Qunfeng, deputy general manager of Conch Group, attended the meeting and delivered a speech on promoting the high-quality development of the industry. In his speech,

Li Qunfeng first reviewed the current situation of the industry. He pointed out that in recent years, the cement industry has been affected by multiple factors such as economic restructuring and deep regulation of real estate, and its benefits continue to be under pressure. Cement output will fall below 1.7 billion tons in 2025, down 32% from the historical peak in 2014; industry profit will fall 85% from the peak in 2019, and the overall loss of the whole industry will appear in the first quarter of 2026.

Li Qunfeng pointed out that the current predicament of the industry is not only the objective reason for the decline in demand, but also the subjective problem of the weakening of industry self-discipline and the intensification of involution competition. He made it clear that there is no winner in the internal competition, and that long-term low-quality and inefficient operation damages the interests of all parties and affects the confidence of enterprises in their independent transformation and development, which is harmful but not beneficial.

On the issue of production capacity, Li Qunfeng judged that although off-peak production can reduce production in the short term, it can not effectively reduce production capacity, and the long-term stability of the industry requires that the production capacity rate be maintained at about 80%. Citing the experience of Japan and South Korea, he pointed out that in the process of transformation and upgrading of the cement industry, the two countries have successfully got rid of the disputes of interests in the industry and entered a stable and benign development pattern through four major measures, namely, government legislation to reduce production capacity, enterprise integration to enhance concentration, leading enterprises to take the initiative to reduce production, and green transformation to open up new increments, which is a mature path.

With regard to the current domestic situation, he proposed two specific measures:

First, control production capacity from the source. He suggested that the competent policy authorities should ensure the landing of the capacity control policy of the Ministry of Industry and Information Technology in accordance with the law, establish a reward and punishment restraint mechanism for illegal production and overproduction, and ensure that the enterprises that abide by the rules benefit.

Second, set up a special fund for capacity removal. He pointed out that at present, some enterprises in the industry have the willingness to withdraw, and "the time is ripe and the conditions are available" to promote the capacity removal fund. This year, Conch Group has formally submitted the policy proposal of setting up a capacity removal fund to the National People's Congress, and suggested that pilot projects should be carried out in areas with high degree of market integration and strong willingness to integrate industries. At the same time,

he stressed that enterprises should change their development concepts, accelerate the transformation from scale expansion to quality improvement and value creation, plan scientifically and invest rationally. Especially in overseas development, we should establish the concept of "going out and bringing out", export capital, equipment, technology and management in an all-round way, not expand blindly, and not engage in antagonistic competition.

(The above contents are arranged by on-site shorthand and have not been confirmed by me)