In 2007, China’s State Council announced a Comprehensive Working Plan of Energy Conservation and Emission Reduction to accelerate the closing of small plants and phasing out outdated capacity in 14 high energy-consuming industries – including the cement industry. The Economic Commission in a county or municipality identifies enterprises that violate national and provincial guidelines on industrial equipment and production capacity standards. After receiving the approval of the mayor, the Commission publishes a list of small plants that are old and inefficient, and lists time frames for "voluntary" closure. Some closed enterprises or enterprises that shut down outdated production equipment receive compensation of around 20 to 30 percent of the closed enterprise or production line value, but the majority does not. In 2010, the coverage of the programme was expanded to include six additional sectors and the targets – in terms of the minimum capacity to be subject to closure – were increased.
In 2011, the first year of the 12th FYP, the phasing-out of outdated production capacity continued. Phase-out targets, covering a total 2255 enterprises from 18 industrial subsectors, have been allocated to local enterprises by local governments. The Ministry of Finance (MOF) provides certain fiscal incentives to local governments to support the phasing-out. The exact incentive amount is determined based on various factors, including the budget of the central government, phasing-out targets of local governments, progress of target completion in previous year, and the use of incentives by local governments.