China's steel output in 2006 rose 18.5 percent from the previous year, despite curbs imposed to slow surging investment and reduce pollution, a news report cited the government as saying.
China is already the world's biggest steel producer and has seen a wave of new mills rushed into operation to supply its fast-growing construction and manufacturing industries.
Total output of steel and pig iron reached 418.8 million tons last year, the official Xinhua News Agency reported Monday, citing the country's top planning agency, the National Development and Reform Commission.
Regulators are trying to slow investment in steel mills for fear it might lead to overcapacity and a debt crisis. They also want to curb pollution from their heavy use of coal.
"In spite of macroeconomic policies, the nation's steel sector in China still expanded fast due to huge market demand boosted by the booming economy," Xinhua said. "A large number of illegal and backward steel firms have been established across the country since 2003 to cash in on the huge business opportunities."
The government will try to close small, polluting steel mills over the next three years, the report said.