To address overcapacity in the steel sector, local governments in North China’s Hebei Province have shut down nearly 20 plants. The province is the world’s largest base for iron and steel production. The move is also aimed to fight against severe air pollution in the region.

Nineteen plants were closed in the latest operation initiated by local authorities. Officials say the closures could cut coal consumption by 400 tons and reduce sulfur dioxide emissions by nearly ten thousand tons.

"Compared with the air quality level in January of last year, the PM2.5 level has dropped 31 percent, but heavy industries in Tangshang are still responsible for discharging a significant amount of pollutant." Xu Xinmin, Deputy Director of Tangshan Environmental Protection Bureau said.

Hebei Province now is China’s top iron and steel production base, but it will cut one third of its capacity by 2017. Beishiti Iron & Steel is one of the plants closed last Sunday. The plant was built in the 1980s.

"40 million Yuan of equipment disappeared in a blink of eye. It would be easy to accept if we lose money, but we are in normal production, and we are kicked out." Wang Bingquan, Share Holder, Tangshan Beishiti Iron and Steel Co,. ltd said.

Wang’s company will lose one sixth of its assets and 400 employees will be shifted to other posts. Local authorities are working on ways to minimize the company’s economic losses.

"If we start trading capacity, companies could get a certain amount of income based on the capacity they give up. This income will be used in relocating employees or investing in new projects." Xin Zhichun, Special Consultant of Tangshan Government said.

In the meantime, subsidies are provided to factories to help them to transfer to deep processing, modern logistics or other industries.

“The effort to clean up the air is a double-edged sword. Shutting down the offending plants will reduce air pollution but will also damage the economy and leave many workers unemployed.