In recent years, China's steel output has accounted for about 50% of the world's total, far higher than its 20% share of population and 13% share of GDP, making it the world's largest steel producer. However, it is large but not strong, and one prominent manifestation is that the entire industry is still in a loss-making predicament. On October 29, the Fifth Plenary Session of the 18th CPC Central Committee adopted the "Recommendations of the Central Committee of the Communist Party of China on Formulating the Thirteenth Five-Year Plan for National Economic and Social Development," which clearly set the goal of building a moderately prosperous society in all respects by 2020. The five major development concepts of innovation, coordination, green, openness, and sharing pointed out the direction for the steel industry to grow from large to strong. To this end, in the process of studying the "13th Five-Year Plan" recommendations, the author, combined with Japan's experience in strengthening its steel industry, has put forward some specific improvement suggestions.

　　The steel industry is under great pressure, but opportunities to grow from large to strong have emerged

　　The specific goals for building a moderately prosperous society in all respects in the "13th Five-Year Plan" recommendations are defined as: by 2020, GDP and per capita urban and rural income will double those of 2010, and all 70 million poor people will be lifted out of poverty. The five basic concepts are as follows: First, adhere to innovative development and focus on improving development quality and efficiency; second, adhere to coordinated development and focus on forming a balanced development structure; third, adhere to green development and focus on improving the ecological environment; fourth, adhere to open development and focus on achieving win-win cooperation; fifth, adhere to shared development and focus on enhancing people's welfare.

　　In recent years, due to oversupply and falling prices, corporate profits in China's steel industry have also declined significantly or even turned into losses. Although China's steel industry will face greater pressure in terms of market prospects and the ecological environment in the future, it also contains opportunities to grow from large to strong.

　　At present, ecological civilization construction is the weak link in the steel industry. With the deepening of green development concepts in the "13th Five-Year Plan," steel enterprises will face even more severe situations, but opportunities for transformation are also embedded within. On the one hand, while environmental protection laws and regulations are gradually being improved and strictly enforced, China has strengthened environmental protection supervision and inspection, so that excessive emissions from small and medium-sized backward enterprises will be severely punished; on the other hand, energy conservation and emission reduction of CO2 to curb global warming has become a global consensus. The Chinese government has repeatedly stated that total CO2 emissions will peak by 2030, after which China's CO2 emissions will shift from intensity reduction to total amount reduction. To this end, in addition to making CO2 emission indicators binding, China has launched carbon emission trading market pilots in seven provinces (cities) including Beijing, and will promote them nationwide in 2017. As a major CO2 emitter, the steel industry should prepare as early as possible.

　　China's steel industry has also made significant progress in adhering to open development and focusing on win-win cooperation, which is another connotation of growing from large to strong. For example, in the joint production of high-grade steel products, Baosteel and Nippon Steel & Sumitomo Metal and Nisshin Steel, Guangzhou Iron and Steel and JFE Steel, and Ansteel and ThyssenKrupp have all achieved many successful cases; Hebei's steel industry, in addition to cooperating with and holding a controlling stake in the European distribution company Duferco International Trading Holding, has also acquired South Africa's PMC Mining Company and plans to invest in building a steel plant with 5 million tons of high-quality capacity in South Africa; Maanshan Iron and Steel, in order to meet the needs of China's high-speed rail train set exports, acquired the well-known French vehicle component manufacturer Valdunes. The above are representative cases in this regard and are worth vigorously promoting.

　　Accelerating the transition from large to strong: learning from Japan's steel industry

　　Japan's steel output is only about 15% of China's, and its raw materials and energy such as iron ore and coking coal are basically entirely dependent on imports. However, Japan's steel industry has strong market competitiveness, with exports accounting for as high as 40%, and corporate profits are also higher than China's, making it worth referencing and learning from. The author has long been engaged in information work on Japan's steel industry and summarizes its main experiences as follows:

　　First, adhere to technological innovation and seek development. After World War II, during its recovery, Japan introduced a large amount of advanced technology and equipment from Europe and the United States, first digesting and absorbing them and then innovating, and focused on developing in coastal areas to facilitate raw material imports and product exports. Due to rapid development, by 1972 Japan's steel capacity reached 130 million tons, surpassing the United States to become the world's largest steel producer and a steel power.

　　Second, after the 1973 oil crisis, Japan vigorously pursued energy conservation. In addition to promoting the world's advanced energy-saving technologies, it also vigorously eliminated backward production capacity, making its energy consumption and energy-saving technologies among the world's leading levels. It is worth mentioning that when Yawata Iron & Steel and Fuji Iron & Steel merged into Nippon Steel, the two sides eliminated backward production capacity on an equal basis, with obvious energy-saving effects. A prominent example is the oldest Kamaishi Steel Works, where blast furnaces, converters, and some rolling mills were eliminated, leaving only one wire rod mill, with billets supplied by the Kimitsu Works to ensure employee employment. In addition, after the Hirohata Steel Works' blast furnace was eliminated due to its small volume, pig iron was supplied by a nearby large blast furnace, and steelmaking by a combined blowing converter supplied the rolling mill, achieving good energy-saving effects.

　　Third, the Kyoto Protocol formulated in 1997 stipulated that the CO2 emission reduction tasks for 2010 compared with 1990 were: Europe 8%, the United States 7%, and Japan 6%. To ensure the completion of these targets, the Japan Iron and Steel Federation organized the steel industry to formulate a voluntary energy-saving and environmental protection plan centered on reducing CO2 emissions, to accept social supervision. The main indicator was to save 10% energy while maintaining production volume. In addition, to save 6.5% energy for society: first, expand the production of high-strength steel and low-loss electrical steel to save 4% energy for users; second, use 1 million tons of waste plastics to save 1.5% energy; third, use low-temperature waste heat below 200°C from factories to heat community residents, saving 1% energy. While meeting environmental standards, Japan's steel industry has also pushed energy conservation to a higher level: first, further expand energy savings in production through technological innovation. For example, Nippon Steel's Kimitsu Works made pellets from high-zinc iron-containing dust accounting for 3% of steel output, heated and de-zincified in a converter, and then made into direct reduced iron pellets to replace sinter for blast furnace use. Zinc can also be reused, with good energy-saving and economic effects. After promotion at the Hirohata Steel Works, adding it in a hot state to a combined blowing converter to replace pig iron had even better effects; promoted at special steel plants such as the Hikari Works, alloy components can also be recovered, and it has now been promoted throughout the industry; second, producing high-strength steel not only relies on adding alloying elements but mainly on process innovation, such as rapid cooling after rolling (TMCP) and other technological innovations, which not only help users save steel and energy but also reduce the energy consumption per unit of industrial added value of steel enterprises; third, in terms of using waste plastics for energy saving, in addition to JFE Steel learning German technology to use them for blast furnace injection fuel to replace coal, Nippon Steel successfully developed technology to blend 2% waste plastics into coking coal for coking, which can increase the utilization rate from 70% for blast furnace injection to 94%, expanding energy-saving and economic effects; the Hirohata Steel Works even used waste tires instead of coal injected into converters and produced gas instead of heavy oil as fuel for rolling heating furnaces, and also used the radial steel wire in tires to replace iron, with good effects; fourth, Kobe Steel successfully developed a special insulation liquid that transfers low-temperature waste heat below 200°C to 80°C, which can be transported by truck to communities and reused for heating. After promotion, it ensured the completion of the original energy-saving tasks.

　　Fourth, continue mergers and reorganization. While improving enterprise concentration, increase efforts to eliminate backward capacity and enhance enterprise innovation capabilities, so as to help improve enterprise efficiency and market competitiveness. First, in 2002, Japan's second-largest steel enterprise NKK and third-largest steel enterprise Kawasaki Steel merged into JFE Holdings. In terms of eliminating backward capacity, the method changed from Nippon Steel's equal-basis approach to an overall comparison approach, with better results. After completing the energy-saving and emission-reduction tasks in 2010, in March 2011, the Great East Japan Earthquake caused a leakage accident at Tokyo Electric Power's Fukushima Nuclear Power Plant. The Japanese government shut down all nuclear power plants, which accounted for 36% of the country's power generation, leading to tight power supply and rising electricity prices. JFE Steel's subsidiary JFE Bars & Shapes merged and reorganized its four ordinary steel electric furnace plants. In addition to shutting down one plant and converting it into a warehouse, it adopted product concentration and rational division of labor for the remaining three plants, achieving efficiency improvement and cost reduction. In addition, in order to accelerate recovery after the financial crisis, Nippon Steel and Sumitomo Metal merged in 2012, and Nisshin Steel, which also produces stainless steel, merged with the stainless steel specialist Nippon Kinzoku, similarly implementing the elimination of backward products, intensification, and rational division of labor, increasing industry concentration while further improving enterprise equipment scale and innovation capabilities. Taking blast furnace volume as an example, the average volume is about 4,000 cubic meters, and the minimum volume is also above 2,000 cubic meters, far higher than China's 1,500 cubic meters and 500 cubic meters. In contrast, the concentration of China's top 10 large steel enterprises is only 36.6%, which is the fundamental reason for the huge gap in development quality and efficiency.

　　Suggestions for measures for China's steel industry to grow from large to strong

　　China's steel industry should learn from the experience of Japan's steel industry, transform and upgrade as soon as possible to overcome difficulties and grow from large to strong. Specific suggestions are as follows:

　　First, according to the concepts of innovation-driven and coordinated development, and improving development quality and efficiency, accelerate the elimination of backward capacity by increasing industry concentration, and enhance technological innovation to boost transformation and upgrading.

　　First, major steel provinces such as Hebei, Shandong, and Liaoning should increase the intensity of comprehensive merger and reorganization within their provinces. Baosteel, Wuhan Iron and Steel, Shougang, CITIC Pacific Special Steel, etc. should increase cross-border merger and reorganization, and mixed ownership can be implemented to balance the interests of all parties and reduce resistance to mergers.

　　Second, improve the exit system to facilitate the exit of long-term loss-making enterprises.

　　Third, the energy consumption per ton of steel for electric furnace steel is only one-third that of blast furnace and converter steel, and it has strong market adaptability and a large proportion of high-grade products. In view of the fact that China's electric furnace steel accounts for only 10%, far lower than Japan's 25% and Europe and America's 40%-50%, consideration should be given to increasing the electric furnace steel ratio to 18%-20% by 2020 on the premise of increasing social scrap steel accumulation.

　　Fourth, large steel enterprises after mergers should strengthen technological innovation and expand the proportion of high-grade markets to meet the requirements of domestic manufacturing upgrading and rational expansion of exports, and strengthen research and development of green development technologies.

　　Second, green development is an important condition for ensuring sustainable development and building a moderately prosperous society in all respects. As a high-energy-consumption and heavily polluting industry, the steel industry must attach great importance to and do the following work well.

　　First, with increasingly strict environmental protection laws and improved supervision, emissions should be strictly ensured to meet standards in accordance with the law. In view of China's water shortage, the rational use of water resources should be strengthened. Steel enterprises with conditions should learn from Shougang's experience and implement seawater desalination nearby to achieve significant water savings.

　　Second, given the huge environmental pressure on the steel industry and the importance of energy conservation and CO2 emission reduction for curbing global warming, it is recommended to set 2020 as the target year to achieve energy-saving and CO2 emission-reduction targets per unit of industrial added value. In addition to adopting energy-saving and emission-reduction measures, steel plants can also install photovoltaic power generation on the roofs of dormitories and office buildings, which can be used for their own consumption and reduce emissions.

　　Third, under the reasonable mechanism of improving the "Circular Economy Promotion Law," promote the recycling and reuse of bulk wastes such as industrial slag, iron-containing dust, and tailings, and basically recover and utilize self-generated scrap steel. At the same time, the steel industry also needs to further promote the utilization of bulk social wastes such as waste plastics. In this regard, the target for 2020 can be set as achieving the recycling and reuse of 1.5 million to 2 million tons of waste plastics.

　　Finally, in adhering to open development and implementing win-win cooperation, the following work should be done well on the existing basis:

　　First, continue to do a good job in introducing, digesting, absorbing, and reusing capital, advanced equipment, and technology, and shift the focus to inland areas.

　　Second, shift the focus to outward development. Based on the advanced experience of Hebei Iron and Steel and Maanshan Iron and Steel, increase the intensity and scope of outward development. By increasing overseas mining investment, obtain equity mines to ensure stable resource supply; by expanding overseas investment in distribution, expand exports; and by expanding overseas investment in building steel plants, expand international market share and influence.