Beijing, Oct 15 (IANS): China's State Council, the country's cabinet, is tackling production overcapacity, Xinhua reported Tuesday citing the government's website.

The 'Guideline to Tackle Serious Production Overcapacity' lists five prime sectors with serious overcapacity: cement, electrolytic aluminium, sheet glass, shipping and steel.

The move is key to achieving stable growth and upgrading the Chinese economy.

The guideline lists tasks to deal with overcapacity in each sector: new projects expanding capacity are forbidden, projects under construction should be reappraised, illegal capacity should be cleared up, outmoded capacity should be eliminated in an orderly way, and efforts should be made on standards and admittance.

Core technology and enterprise management must make breakthroughs to deliver growth through innovation.

Mergers are encouraged and domestic and global demand should be explored, consolidated and expanded.

The government management should foster a fair market mechanism and environment, the statement said.