Copper’s just one of a number basic industries, from cement to steel and solar, that are laden with too much capacity relative to demand for firms to consistently turn a profit. It’s a feature of the Chinese economy that has baleful implications for domestic growth and international trade.
The Chinese government is getting serious about constraining the blind expansion of copper smelters, although its new policy is likely to pause rather than stop development.
Eleven ministries signed an order last week to limit capacity in the world’s biggest copper industry, by tying expansions to whether companies also control enough ore supply to feed their smelters. As China imports most of its feedstock, and ore has gotten scarcer anyway, it’s a condition that’s unlikely to be met by the vast majority of firms. But there could be wiggle room in how the policy is implemented.
