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China steel giant to sack 50,000 staff

One of China's largest steelmakers plans to shed up to 50,000 jobs, its chairman said, as the country struggles to reduce overcapacity while growth in the world's second-largest economy slows.

The comments by Ma Guoqiang, the head of state-owned group Wuhan Iron and Steel, are a stark illustration of the challenges facing Beijing as it seeks to retool the economy while avoiding social unrest -- anathema to the leadership.

The firm's steel division currently has 80,000 employees but might retain only 30,000 of them, Ma said on the sidelines of the National People's Congress, the country's rubber-stamp parliament.

"Probably 40,000-50,000 people will have to find other ways forward," he told people.com.cn, a news portal run by the Communist Party's mouthpiece the People's Daily, according to a transcript on the website. China's economy grew at its slowest pace in a quarter of a century last year and its outlook remains bleak, with the government last week lowering its 2016 growth target to 6.5-7 per cent, down from "about seven percent" previously.

Authorities have prioritised reducing borrowing, overcapacity and inventory as they seek to maintain growth and make it more sustainable. The government has announced a goal of cutting steel capacity by up to 150 million tonnes within five years.

But much production is already inactive. Wuhan Iron and Steel is only running at 70 to 75 per cent capacity, Ma said. Global steel prices have plunged in the face of a worldwide glut and both the United States and European Union, whose own steel industries are deeply troubled, accuse China of selling underpriced steel in their markets. 
Agencies

Agencies

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