In the past three months, China's steel price that has experienced continuous slowdown is experiencing rebound. Currently, Hebei Provincial Government has introduced strict measures to control new steel mill productions and the resumption of the production of mills that have been suspended. Anbound’s research team suggests that this action of Hebei Provincial Government shows that there is high difficulty of decreasing the capacity of steel production, as the situation is in critical condition. For short term, the Chinese government should expand the market clearing capacity, and for long term, insolvency should be adopted as the core of marketization clearing method, and allow private economy to exhibit greater potential to absorb employments and to create tax income, solving the problem of employment and taxation.