Ｃａｐｉｔａｌ Ｓｔｅｅｌ Ｈａｍｍｅｒｓ Ｏｕｔ Ｆｕｔｕｒｅ Ｐｌａｎｓ

Since February 2005， when Bei-jing's Shougang (Capital Iron andSteel) Group announced plans todecrease steel and iron productionand finally relocate all the relevant opera-tions out. of the original base in the Shijing-shan District， the public has kept a closewatch on the process. Particularly the focusof attention was the expected shutdown ofthe No. Five Blast Furnace. A local TV newsteam thought it a historic event and rushedto the site， but the Shougang representativesreceiving the joumalists informed them that，in fact， Shougang would not totally relocatefrom Beijing. Quite the contrary.

In compliance with a directive， issuedby the State Council， to meet the require-ments of city development plans and to re-structure China's steel industry， ShougangGroup will scale back output in Beijing instages， while developing a Beijing head-quarters economy. That is expected to in-clude research and development systems，non-steel industries and environmentally-friendly production during the 1 lth Five-Year Plan period (2006-2010). Meanwhile，with the aim of establishing a large and ad-vanced steel production enterprise in Cao-feidian， Tangshan City， Hebei Province，Shougang will cooperate in a joint venturewith Tangshan Steel Group.

In early June， this writer visited thenew site of Shougang in Caofeidian andthe group's headquarters in the ShijingshanDistrict of Beijing. According to ZhangWenzhe， Shougang's secretary of commu-nications， the move does not mean that allthe production machinery will be disassem-bled， relocated and then reinstalled. Rather，the aim of the process is to gradually reduceoutput in Beijing while constructing a newfactory in Caofeidian. Among the 82，000employees of the group， 7，000 will be suf-ficient to meet production demands at thenew factory. Most will live in Beijing andwork in Caofeidian during production days.

In the course of its 88-year history， theShougang Group evolved into a cross-re-gional， transnational large-scale enterprisegroup mainly dealing in iron and steelmaking， but also in mining， machinery，electronics， construction， real estate， ser-vice and overseas business. The enterpriseowns four listed companies in Hong Kong，as well as overseas concerns like ShougangHierro Peru S.A.A. in South America. In2006， Shougang realized sales revenuesof 87.4 billion yuan. Besides a primaryfocus on steel production， mining and themanufacturing of machinery， the group isinvolved in non-steel industries， includingthe production of high-tech goods. Notablythrough its Shougang NEC Electronics Co.，Ltd.， varied high-tech products have beeninstalled at the Great Hall of the People andin some 2008 Olympic venues.

When Shougang was founded in 1919，the location， in Shijingshan， was regardedas a far-western suburb of Beijing. Howev-er， in the course of Beijing's urbanization，the area has become part of the city proper.And the upcoming 2008 Olympic Gameshas generated greater demand for better en-vironmental protection.

This strategic move also meets require-ments for developing the steel industry. Ac-cording to the latest statistics released bythe China Iron Steel Association， China'ssteel and iron output surpassed 400 milliontons by mid-December 2006. However， gen-erally speaking， China is not realizing an op-timal level of steel and iron production. Asa result， the govemment has directed moreeffort to optimizing overall production op-erations and eliminating laggard enterpris-es. In August 2005， Anben Steel and IronGroup was established on the basis of thereorganized Angang Steel Company Limit-ed and Benxi Steel Company Limited， bothin Liaoning Province. In February 2006， theTangshan Steel Group， Xuanhua Steel andChengde Steel in Hebei Province jointly re-formed into the New Tanggang Group. InJune 2007， the Baosteel Group in Shanghaisuccessfully assumed a controlling inter-est in the Xinjiang Bayi Iron and Steel Co.，Ltd. According to the nation's stated steeland iron policies， by 2010 the number ofiron and steel enterprises will be greatly re-duced. The output of the top 10 largest com-panies should account for 50 percent of thenational overall production， and the numbershould surpass 70 percent by 2020.

Shougang Group， once leading its coun-terparts， was constrained in scale of produc-tion due to its location. In October 2004，a two-million-ton project of the ShougangQian'an Steel was completed and put intoproduction in the city of Qian'an of HebeiProvince. This September a cold rollingproduction line with an annual capacity of1.5 million tons will go into production inShunyi in the suburb of Beijing. In Octo-ber 2008， with a total investment of 60 bil-lion yuan， Shougang Jingtang IntegratedSteelworks Ltd， will officially commenceproduction in Caofeidian， its first-phasethroughput being 8-million-ton high-gradesteel. The new steel company， expected tolocate in Caofeidian， was jointly establishedby Shougang Group and Tangshan SteelGroup. Taking advantage of the nationalpolicy of developing Caofeidian into an in-ternational distribution hub for energy andraw materials， a 21-square-kilometer high-grade steel base will be established adjacentBohai Sea.

It is expected that pollution-causing op-erations， entailing steel production， coking，sintering and steel rolling， will be relocatedto Hebei Province in phases. The 8-million-ton annual production capacity of the for-mer factory in Shijingshan in Beijing willbe drawn down in stages. About 4 milliontons of production will be eliminated bythe end of this year. The melting processwill be ceased in 2008， and hot roll pro-cesses should be terminated by the end of2010. Remaining at the former site will bethe headquarters of Shougang Group， withits RD programs， as well as environmen-tally-friendly operations， such as sales anddistribution.

At the eight-square-kilometer former site，the group will mainly develop a headquarterseconomy and cultural industries. The goal isto create a new center for conventions， exhi-bitions， entertainment， travel and real estatedevelopment. According to Zhang Wenzhe，the area enjoys unique advantages for devel-oping cultural and entertainment industries，such as the Shijingshan Amusement Park，which is the largest of its kind in Beijing，Shijingshan Scenic Spot， and the 88-year oldsmelting industrial relic site. Also expectedto flourish here are burgeoning high-tech en-terprises.