All provinces, autonomous regions, municipalities directly under the Central Government and cities specifically designated in the state plan, Xinjiang production and construction corps development and reform committee, economic and trade committee (economic committee), territorial resource department (territorial resource bureau), construction department (construction committee), branches of People's Bank of China, Quality Supervision Bureau, Environment Protection Bureau:  
　　
Currently the general development of China's Flat Glass industry is healthy, but there are problems and conflicts that are in urgent need to be resolved, such as potential surplus productivity and irrational structure etc. According to Interim Regulation on Promoting Industrial Structure Adjustment (Guo Fa [2005] No. 40 and State Council's Notice on Speed Up Structural Adjustment for Industries with Surplus Productivity (Guo Fa [2006] No. 11) issued by the State Council, we promulgated Suggestions on Promoting Flat Glass Industrial Structure Adjustment (hereinafter referred to as Suggestions), now we are sending this document to you.
　　
Adjustment of Flat Glass industrial structure is difficult in that it heavily involves policy and technology in a wide range. All regions and relevant departments should seriously implement the Suggestions and take effective measures in combination with specific situations in the region and the responsibilities of the department, cooperate and work in an earnest manner for substantial results.
　　
Attachment: Suggestions on Promoting Flat Glass Industrial Structure Adjustment

　　State Development and Reform Commission
　　
　　Territorial Resource Department
　　
　　Ministry of Construction
　　
　　People's Bank of China
　　
　　State Bureau of Quality and Technical Supervision
　　
　　State Environmental Protection Administration
　　
　　November 30, 2006

Key words: glass, industry, adjustment, notice
　　
 Appendix:
　　

Suggestions on Promoting Flat Glass Industrial Structure Adjustment

 
Flat Glass is an important basic raw material, widely used in construction, transportation, renovation, e-information and other newly emerging industries. In order to promote structural adjustment in the "11^th Five-year Plan" of China's Flat Glass industry, we hereby make the following suggestions:
　　
I. Fully acknowledge the necessity and urgency of speeding up glass industry structural adjustment
　　
During the "Tenth Five-year Plan", with accelerated industrialization and urbanization, relevant industries like real estate and automobile etc. also developed rapidly, which greatly boosted the demand for Flat Glass and promoted the development of glass industry. In 2005, Flat Glass output hit 387 million weight boxes, and has been ranking the first in the world for 17 consecutive years. Float glass accounted for 85% of Flat Glass production, its average single line scale increased from a daily melting volume of 390 tons in 2001 to the current 460 tons, types of glass also expanded from common glass to super thin, extra thick and new products like online coated glass, self-cleaning glass and super white glass etc. Structure of Flat Glass is constantly optimizing, regional distribution is more rational, and industrial concentration is enhanced. With a series of laws and regulations, policies and standards on safety building glass and building energy conservation and the strict implementation, processed glass like safety glass and hollow glass developed quickly, hollow glass increased 7 times, low-E glass increased almost 4 times, and processing rate increased from 15% in 2001 to 25% in 2005.

However, in the course of Flat Glass industrial development, there are problems that are in an urgent need to be addressed: first, productivity is unbalanced, as it developed too fast recently and there is a distinct fluctuation periodically. During 2004 to 2005, there were 47 float glass production lines put into operation, with a newly increased productivity of 140 million weight boxes. In 2006, there were still 20 production lines put into operation and under construction, with a productivity of up to 70 million weight boxes, which brought about new pressure to the market recently. With enhanced productivity and fiercer competition, as well as high prices of heavy oil, calcined soda, electric power and transportation, profitability for enterprises is squeezed, economic returns of the Flat Glass industry dropped dramatically. Ever since the latter half of last year, it has been in a new cycle of declining period, the whole industry has been in a net loss in the first 9 months this year. Second, overall technology, equipment and management still lag far behind developed countries. Average single line production scale of float glass is 200 tons less than foreign countries, power consumption is 32% higher than advanced level in foreign countries, and backward production technique still has a productivity of more than 50 million weight boxes. Third, product structure is irrational, and processing rate is still low. Currently supply of common float glass exceeds demand, but some glass for high-level purposes and special types still depend on import. Processing rate is only 25%, lower than the world's average 55% and 65-85% in developed countries; rate of added processing value is only 2.5 times, while in developed countries, the number is 5. Forth, there are a huge number of enterprises and low concentration. China's glass making enterprises are widely scattered, there are 52 float glass producing enterprises, but the average scale is only 6.83 million weight boxes, whereas the top 4 glass producing multinational companies account for 41% of the world's Flat Glass and over 50% of glass processing production. There is still a wide gap between China's glass enterprises and the developed countries in terms of scale and competitiveness. Fifth, low utilization of energy efficient glass. Utilization of energy efficient glass like hollow glass, low-E (low radiation) hollow glass etc. in buildings is less than 10%, much lower than that in Europe and America, which is over 50%. Sixth, quality standard for Flat Glass is not strictly implemented, and market competition is not in good order. In addition, impact of "small glass" and "low-end float glass" resulted in deliberately lowered prices on the part of some glass manufacturing enterprises, or even selling products "lower than the average cost of the industry", leading to a chaos of prices and disorderly competition on the glass market. 
　　
To solve problems currently existing in the glass industry, we must give judicious guidance according to circumstances to speed up structural adjustment of the glass industry, change economic growth pattern, and implement state macro control policies, to promote scientific and sustained development for the glass industry.
　　
II. Further clarify guideline and target of structural adjustment of glass industry
　　
The guiding principle of structural adjustment of the glass industry in the "11^th Five-year Plan" is: guided by scientific development concept, speed up structural adjustment, change economic growth mode in a realistic way, try to develop new types of glass, develop energy efficient and functional glass, and improve glass industry technology and equipment level in an all-round way.  
　　
In accordance with the above guideline, strive to achieve the goal of structural adjustment of glass industry in the "11^th Five-year Plan": overall productivity of Flat Glass shall be controlled within 550 million weight boxes, in which float glass shall account for more than 90%; high quality float glass and special types shall account for 40%; glass processing rate shall be more than 40%; quality of all types can basically meet the demand for high-level buildings, transportation and information industry; overall energy consumption shall decrease by 20%; waste gas discharged from glass melting furnaces reach the level II requirement in the state issued Standard of Pollutant Discharge for Industrial Furnaces, when Standard of Pollutant Discharge for Flat Glass Industry is implemented, all pollutants discharge of Flat Glass industry should meet the new standard; the top 10 glass enterprise concentration shall be improved to 70% (individual enterprise scale shall be more than 30 million weight boxes per year and more; independent innovation and R&D shall be improved significantly; further improve resource utilization to reduce pollution and protect the environment.

III. Seriously implement relevant policies on structural adjustment of the glass industry
　　
(I) Adopt classification guidance, exert strict control on new projects
　　
China sticks to the principle of total volume control for the development of glass industry, promulgate and issue Market Access Condition for Flat Glass Industry. For large-scale enterprises with high technology, good market potential, high economic return and a major role in industrial upgrade, support them in growing larger and stronger by means of technical reform and restructure etc; for new projects, exert strict control, new float projects should not be implemented before they are evaluated to conform to the industrial policies and market access conditions by relevant departments such as the State Development and Reform Commission and China Construction Glass and Industrial Glass Association etc. For those that fail to meet the requirements, local investment management departments may not prove or keep in file, financing organizations may not provide authorized support in any form, land management, urban planning and construction, environment protection and quality examination departments may not handle relevant processes. Relevant units and persons shall be investigated for projects against the regulations. For unauthorized projects against the regulations, they should be ordered to stop or dismantled in accordance with law.
　　
Fully utilize and assimilate the existing productivity, further optimize industrial structure; promote rational layout and coordinated development of the west, middle and east regions. For east coastal regions that have a concentrated productivity, strict control new productivity, in the"11^th Five-year Plan", in principle there will be no more production lines permitted, the focus shall be placed on quality, type, technical development and enterprise restructure etc; the west and middle regions should make full use of their advantage in resource and labor, develop in a rational way to achieve a industrial pattern of distinct feature and advantages in comparison.

Currently all investment managing departments at provincial level should check up the new projects under construction in 2006 and those planning to be built, and report to the State Development and Reform Commission by categories.
　　
(II) Improve technical laws and standards, enhance implementation and supervision.
　　
Loose no time in promulgating relevant policy and technical standards to make series and standard processed glass, and include them in the building standard system and technical standards. Further improve technical standards related to Flat Glass quality, safety, environmental protection and inspection etc and strictly implement them, based on float glass technology, compile unified Flat Glass Standard, abolish Float Glass standard and Common Flat Glass standard, improve quality and performance of glass. Strictly implement engineering construction standard for Flat Glass plants, loose no time in compiling and implementing Flat Glass Factory Design Standard and technical standards related to energy efficient and environment protection design, to promote industrial technical progress radically. Speed up improving technical standard of Flat Glass, meet building energy efficient requirement, and promote wide application of hollow glass (including low-E glass). Promote energy performance index; establish certification system for energy efficient products like "hollow glass and low-E glass"; improve standards for market access in terms of technology, quality, environment protection, safety and energy efficiency; promulgate Industrial Pollutant Discharge Standard for Flat Glass Industry, further implement and supervise the issued technical policies and standards such as Building Safety Glass Management Regulations, Building Glass Application Technology Regulation, Standard of Pollutant Discharge for Industrial Furnaces and environment protection, and building energy efficiency.
　　
(III) Improve independent innovation; further improve "Luoyang Float Glass Technique".
　　
"Luoyang Float Glass Technique" is independently developed by China with independent IPR, and one of the world's three float glass technologies. In the "11^th Five-year Plan", centering on improving float glass quality, energy efficiency, environment protection and new types etc., research and develop techniques and complete set of equipment, continuously develop new technologies, new processes and develop energy efficient and multi-functional products. Strive to achieve progress in “float glass online surface modification”, “oxygen rich combustion technique”, "low-temperature afterheat power generation" etc, main production index for float glass should reach or close to world leading level.
　　
IV. Change growth pattern, develop glass processing, and serve "energy efficient buildings".
　　
Development focus for enterprises should be on variety and quality, changing the growth pattern with the one-sided pursuit of scale and quantity, so as to boost industrial development with quality and returns. Focus should be laid on high quality float glass and special types, produce more types with special features, more difficulties and high added values. Based on international successful experiences, china's float glass enterprise development should shift from single float glass "professionalized" strategy to a "vertically integrated strategy with value chain extending to the lower reaches", enhance percentage of processed glass for self use, promote application of energy efficient glass – hollow glass, low-E glass, glass for solar energy industrial glass etc to meet the requirement of "energy efficient buildings". In accordance with the state issued Suggestions on Ten Major Energy Efficient Project Construction in "11^th Five-year Plan", frigid cold and cold regions in the north and the four municipalities directly under the central government should meet the requirement of 65% energy efficiency. To this end, these regions should strive to promote application of low-E hollow glass that has a good energy efficient performance.
　　
(V) Promote large group development, actively participate in international competition
　　
Advantageous enterprises should make full use of the opportunity of greater pressure of surplus productivity and fierce competition in China's Flat Glass industry, to speed up low cost expansion by means of acquisition and restructure, relevant department will promulgate detailed policies to establish large groups and help them in development, to improve industrial concentration and optimize resource distribution. Strive to form some 10 large scaled enterprise groups in the "11^th Five-year Plan" to enhance its control and regulation capacity on their regional market.
　　
Make full use of domestic and foreign resources, adopt multiple market presence, win by quality and the "going global" strategy, participate international competition, further improve international market share. Encourage processed products with high added value, support project contracting and direct investment in plants in foreign countries, develop from product export to international business development including capital, equipment, technology, management and service etc.
　　
(VI) Strict control quality and implement environment protection laws, strengthen elimination of backward enterprises

Strengthen implementation of quality, environment protection laws, strengthen random check on quality and environment protection, establish long-term supervision system and strengthen daily supervision management.
　　
Currently the backward "horizontal sheet process" with small scale, high energy consumption, low quality and severe pollution still exist in a few regions, which should be absolutely eliminated in accordance with relevant laws, regulations and industrial policies. Those fail to be eliminated in the required period shall be ordered to cease production or close down by relevant departments in accordance with the law, and take appropriate measures to handle problems after closing down.
　　
(VII) Association should play its role to guide the sound development of the industry
　　
Industrial association should actively self-regulate the industry, strictly implement relevant laws and regulations, stop, resist and reduce fake products of inferior quality and low price dumping, to maintain orderly market competition. Strengthen economic supervision and analysis on the glass industry, pay close attention to industry development trend, release market supply and demand information in time, and guide enterprises in investment decisions. Be a good consultant to the government, assist government in industrial planning, promulgate and modify standards, pre-reasoning and follow-up of feasibility of projects, and supervision and implementation of policies and regulations, to promote structural adjustment in the glass industry and achieve sustained and sound development.