An escalating debate on industrial policy between two of China’s most prominent economists is causing a rethink of the country’s industrial development model and government intervention in market forces. Justin Lin, a Taiwan-born Economist who served for many years as an economic adviser to the Chinese leadership and worked as the World Bank Chief Economist, believes China should continue with government direction on which industries should be encouraged and subsidized, to better leverage the country’s competitive advantages. Opposing that view is Zhang Weiying, a liberal Economist who teaches at Peking University, who countered that industrial policies led to nothing but distortion and overcapacity so China should let the market decide which industries would thrive.

China’s top steelmakers Baoshan Iron and Steel Co and Wuhan Iron and Steel Group will merge to create the world’s second-largest steel entity. Baoshan is ranked fifth in terms of world production capacity, while Wuhan is 11th. After the take-over, Wuhan Steel will delist from the A-share market on the Shanghai Stock Exchange. The two companies have a joint annual production capacity of more than 60 million tons, making it the second-biggest producer behind ArcelorMittal. The new entity will be called China Baowu Iron and Steel Group. The Chinese government also gave its final approval for the merger. The market value of the new group will surpass CNY108.5 billion, and its total assets will be worth CNY700 billion. The merger is in line with the Chinese government’s efforts to overhaul the steel sector, upgrade quality and cut overcapacity. Chi Jingdong, Deputy Director of the China Iron and Steel Association (CISA), said the central government wants to consolidate 60% to 70% of the nation’s steel output into 10 giant groups to enhance their competitiveness. Shanghai-based Baosteel’s net profit plummeted 83% to CNY1 billion last year, while Wuhan Steel lost CNY7.5 billion, compared with a CNY1.3 billion net profit in 2014. Restructuring of another two Chinese steel giants, both based in Liaoning province, Ansteel and Benxi Steel Group, is next on the agenda. Ansteel is the world’s seventh biggest mill, and Benxi steel ranks 21st. The listed arms of the two groups suspended trading in Shenzhen pending statements on the restructuring, the Shanghai Daily reports.

The transaction volume of apartments in Hangzhou jumped more than 180% week-on-week between September 12 and 18 as investors flocked to the city to buy second homes before the launch of home purchase limits on non-resident buyers, who would no longer be allowed to buy a second home in the city’s central districts, in a bid to curb rapidly rising house prices, curb speculative buying and prevent risks. Hangzhou became the fourth tier-two city to curb property purchases in 2016, following Xiamen, Hefei and Suzhou. The curbs are an indication that home prices in Hangzhou are expected to rise further. Property agents in the city said that home prices are rising so fast because supply is failing to keep pace with demand. Almost 39% of new flats in Hangzhou have been bought by non-local residents so far this year.

Michelin released its first Shanghai dining guide, awarding from one to three stars to 26 restaurants in the city, with T’ang Court in The Langham Shanghai the only one to get the top three-star rating. Six restaurants have been awarded two Michelin stars. They include Canton 8 – the world’s cheapest restaurant with two stars – Hong Kong-based 8 ½ Otto e Mezzo Bombana, known for its fine-dining Italian cuisine, and Ultra Violet. Of the Shanghai restaurants awarded one star, Hong Kong Cantonese chain Lei Garden’s two locations, in the city’s IFC and iapm malls, were listed along with Seventh Son and Da Dong, among others. The 224-page guide, priced at CNY168, was released in both Chinese and English. The Shanghai Daily reported that one day after receiving a Michelin star, Tai’an Table, a Western restaurant in Changning district, has been forced to shut down for operating without licenses. The restaurant had applied for a business and a catering license when it opened in April, but authorities denied to issue the licenses as regulations do not allow catering venues in a residential building. The restaurant plans to relocate to a new venue, chef Stan Stiller confirmed.

Beer consumption in China contracted in the first half by 6% from a year earlier as rainy weather dampened consumption. China’s biggest beer maker China Resources Beer (CRB) reported first half sales of CNY15.21 billion, compared to CNY15.50 billion last year. Industry wide beer sales declined 3% in the first quarter on year, and 10% in the second quarter on year. Anheuser-Busch InBev China saw sales decline in the second quarter compared with the first, but the pace of the decline was less than the industry average. China’s No 2 brewery Tsingtao saw its sales plummet further than the industry as a whole. Regional brewer Yanjing, which has operations in Beijing, Guangxi and Inner Mongolia, also underperformed. “We believe Yanjing, as a regional player, will feel more pressure amid continuing market consolidation as national market leaders are expanding their presence into Yanjing’s strong markets,” JP Morgan Analysts led by Ebru Sener Kurumlu said in a research report. “We believe Tsingtao continues to remain under pressure given that it is losing market share to international brands in the premium segment and domestic brands are giving it a hard time in the mid-market.” CRB’s efforts over the last 10 years to bolster its market share could lead to better bargaining power with distributors and retailers, and increased margins, Kurumlu said. China’s beer prices, along with the profit margins of brewers, are well below the global average, the South China Morning Post reports.