Overcapacity is rampant. We now see the effects in steel and cement production, crashing commodity prices, capital flight, and a plunging stock market.

China Announces SOE Shakeup

As a proposed remedy to this mess, China Plans Shake-Up of State-Owned Enterprises to Boost Growth.

China has unveiled the much-awaited guidelines for reform of its bloated state-owned enterprise sector as the latest official data show its economy continuing to slow.

The guidance from the State Council, China's cabinet, calls for a shake-up of SOEs with share sales and management changes planned to reduce losses and improve efficiency, reported Xinhua, the official news agency, on Sunday.

"The guidelines suggest that by 2020, the goals in all the main reform areas should be accomplished, constituting a system that is more suitable to the nation's socialist-market economy," said Xinhua. "The SOE system should be more modernised and market-oriented. It should make for higher economic vitality, higher control, greater influence and SOEs will be more risk-resistant."