China laid out trial rules to undercut capacity in oversupplied industries from coal mining to toothpaste as the country seeks to overhaul its bloated state-run sector. Restrictions will be applied to industries spanning energy to pharmaceuticals and automobiles, according to a 135 page document released by the nation’s top economic planner on Tuesday. The so-called “negative list” specifies bans on a range of developments, including outdated railway projects as well as oil refineries and beer bottling plants that are too small. The plan builds on China’s efforts to tackle overcapacity across its industries after last year’s economic growth slowed to its slowest pace in a quarter century. The government is also seeking to overhaul its bloated state-owned enterprises by shuttering unprofitable ones or pushing mergers. Signs of an economy pickup is giving policy makers a window to push through reforms, said Larry Hu, head of China economics at Macquarie Securities Ltd. in Hong Kong. “It’s an incremental step rather than a big shock to lower capacity,” Hu said “Now the economy has stabilized they can spend more time on supply side and structural reforms, which means overcapacity and deleveraging.” Trial Program The details released Tuesday cover a trial program in Shanghai, Tianjin, Guangdong and Fujian, according to documents posted on National Development and Reform Commission’s website and dated March 2. Those areas contain the country’s four national-level free-trade zones, which have a separate “negative list” specific to foreign investment. “Overcapacity is an issue in steel, coal, non-ferrous metals and shipbuilding,” said Yi Zhu, a Hong Kong-based analyst at Bloomberg Intelligence. “For these industries, low-end products are oversupplied, while high-end products are still in short supply and the country may need to rely on imports.” China said in February that it would lay off about 1.3 million workers in the coal industry and 500,000 steel workers. The country is seeking to cut within five years about 9 percent of its coal mining capacity and as much as 13 percent from steel making. The “negative list” is also part of the government’s efforts to simplify approvals by creating a system that lets companies do anything that’s not specifically banned.