The government has set up funds to help coal miners and steelmakers more easily cut workers and dispose of bad assets. These funds will be dependent on companies cutting production capacity.

Johnson Hu, an analyst at UOB-Kay Hian said that: “Li’s remarks open the door for companies to lay off workers as a tool to cut capacity and improve efficiency,” further adding that Li had provided “good news for coal mines and steel mills as the policy may help them solve their biggest headache, which is how to handle some of the redundant workforces.”

The country will also stop approving new coal mines for the next three years, while continuing to trim its production capacity. This measure follows plans made by Hebei to cut its steel and iron production by 18 million tonnes.