As China's economy is gradually moving out of the shadow of the financial crisis， solving the in-depth structural contradiction for China's economy has been given unprecedented inportance.Economic structural adjustment is aimed to improve the quality of the economic growth，requiring it shifting from extensive to intensive growth based on the country's actual conditions.Eliminating outdated production capacity will be the starting point in the adjusting the industrial structure.

Recently， China's State Council， or the cabinet，approved the Circular on Further Strengthening Elimination of Outdated Production Capacity at its 98th executive meeting，saying that the country would take three stern measures to step up efforts to eliminated outdated production capacity.The country's 14 governmental departments will launch“joint operation”to take harsh measures in the work.

According to the circular， the State Council discussed specific targets and requirements to eliminate outdated capacity in the 2010－2011 period in fields such as electricity， coal， coke， inor and steel，cement， nonferrous metals， paper making， leather making and printing and dyeing，and decided to do the work from three aspects of external restriction，economic means and strictlow enforcementand punishment to go all out to force the overcapacity parts out of the market.

It is reported that currently financial departments are the first to issue policies to halt extending new loans to projects of overcapacity sectors with no approval from theNationalDevelopmentand Reform Commission(NDRC）， the country's top planner.The China Banking Regulatory Commission and related departments have required banks and financial institutions to continue control of loans to energy guzzling，pollution making and overcapacity industries.New loans are not allowed to issue to any new projects in the six major overcapacity sectors and the shipbuilding industry before the publishing of the new verified catalog of fixed asset construction projects，except new projects ratified and approved by NDRC.

At the same time， the industrial structure adjustment may speed up exposing of credit risks broughtaboutby the previous fastincreases of investment in various localities.The country asked banks to organize people to carry out examination and inspection one by one of the follow-up projects in the six major overcapacity sectors and the shipbuilding industry，and for those failed to meet the requirements and standards，the banks shall take immediate assurance measures for the issued loans via appropriate method.

The circular said that the country would tighten control over land use for construction projects，call for improvement of the annual land use plan management，and ban supply of land to construction projects in the sectors with outdated capacity and overcapacity.Furthermore，for enterprises which refuse to eliminate the outdated capacity in the fixed period of time，they would get approval for new land use application in principle.The country will also take measures to raise costs on land use for outdated capacity.

The circular also required to take comprehensive regulating measures to check the market demand for energy-guzzling and high emission products，and restrict their exports.China will establish and improve the price formation mechanism，step up price reform of resource products， reflect the resources， environment and ecological costs，and bring into full play the price mechanism in the elimination of outdated production capacity.

Related departments will adopt various economic means such as differential electricity prices for sectors in overcapacity，and extending implementation scope of the differential prices.They will also carry out studies on measures of adopting differential prices on water and natural gas，levy environment tax to restrict development of industries in outdated capacity which make serious pollution.They will adopt necessary taxation policy to promote withdrawal of outdated capacity.

The circular said， import， transfer， production，sales and use of production equipment and products banned by the state are not allowed.

The circular required related competent departments not to give approval and verification of new investment projects launched by enterprises which failed to fulfill the task of eliminating outdated capacity，and suspend environment assessment，verfication and examination and approval for regions which failed to complete the tasks of eliminating the outdated capacity and control strictly the investment projects required by the country， to adopt the“regional restricted approval”measure.Related competent deparments shall not issue product production permits to enterprises not eliminating the outdated capacity within the fixed period of time，and cancel their production permits and safety production permit licenses in accordance with law.For enterprises failed to eliminate the outdated capacity within the fixed period of time，they shall have the pollutant discharge permit revoked.For enterprises which do not eliminate the outdated production capacity according to regulations，and are ordered to be shut down and canceled by local governments，the administration departments shall require them to cancel registration in a fixed time，and furthermore the business license in accordance with the law.Electric power supply enterprises shall suspend supplies to enterprises which are asked to eliminaate the outdated capacity by related governamental departments.

China is now hardly to maintain the past mode of mainly depending on investment and export to stimulate economic growth，and it is urgent for the contry to carry out the structural adjustment.China is studying on establishment of a system and mechanism for promoting adjustment of structure and transfer of development form.