China is facing a high profile test of its commitment to curbing industrial pollution after steel output surged in the first half of the year to well beyond its target of capping production at 2020's peak, sending emissions to new highs.
The country pledged to limit crude steel output this year at no higher than the 1.065 billion tonnes it made in 2020.
To meet that goal, steel producers would have to cut output by roughly 10 per cent for the rest of 2021 from their record first-half pace, according to Reuters calculations based on National Bureau of Statistics data.
Yet with steel prices already near record highs amid a stimulus-led building and manufacturing boom, any forced supply cuts could fuel further raw material inflation which has sent Chinese producer prices to multi-year highs and forced a slowdown in factory activity.
Analysts say it won't be easy for China to balance emission goals and economic targets, but it will try to ease supply shortfalls and price rises with export tariffs and higher imports.
As the world's largest polluter contributing nearly 31 cent of global CO2 emissions, according to BP, China plays a critical role in determining if worldwide emissions reduction goals can be met.
A landmark UN climate report published last week that said climate change is worsening due to heavy fossil fuel use has put the country under more scrutiny.
