A coal mine in central China's Henan Province. [File Photo: voc.com.cn]

China has earmarked a special fund of 100 billion yuan, or about 15 billion U.S. dollars, to subsidize the reduction of steel and coal overcapacity.

The Ministry of Finance says that 80 percent of the funds will be distributed to local governments and centrally administered enterprises for this purpose.

The fund will be allocated based on their respective capacity reduction assignments, as well as the number of laid-off workers that must be resettled.

The ministry added that it will continue to implement tax refunds for steel exports and tax preferences for urban land use by coal mining enterprises.

Meanwhile, a statement issued from the State Council, China's cabinet, says major state-owned enterprises should streamline their corporate structures and raise efficiency to become more competitive.

The cabinet meeting has asked State Owned Enterprises, or SOEs, to cut redundant management by around 20 percent within three years. In two years, they should save on operational costs by at least 100 billion yuan.

The statement says SOEs should use market-based approaches in hiring and delivering payrolls.

The private sector has been encouraged to take stakes in State Owned Enterprises.