China Coal Protests Highlight Overcapacity Tensions

Thousands of Chinese coal miners have taken to the streets in a city near the Siberian border to protest against unpaid wages, in the first direct challenge to Beijing’s plan for orderly downsizing and job cuts in the state-owned coal sector.

Beijing has said it would lay aside Rmb100bn ($15.4bn) to “resettle” coal and steel workers as part of a plan to cut unproductive capacity in both sectors, but local governments and the companies themselves are supposed to bear a portion of the costs.

Slowing Chinese growth and the end of the commodities supercycle have turned overcapacity into a pressing economic issue for Beijing. Data published this weekend showed that in the first two months of this year, Chinese production of thermal coal and steel both fell 6 per cent while output of metallurgical, or coking, coal — the steel ingredient produced by the protesting miners — dropped 10 per cent.

CNBC

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Craig Erlam

Craig Erlam

Senior Market Analyst - UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a Market Analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam