China has to "rigidly control" the growth of fixed assets investment in its iron and steel industry so as to avoid excessive expansion of the sector, said top policy-makers Wednesday in Beijing.

Participants of Wednesday's executive meeting of the State Council, China's central government, acknowledged investment on fixed assets in the industry had already been "rather great" at the moment.

The meeting, chaired by Premier Wen Jiabao, deliberated on and adopted in principle China's iron and steel industry development policy.

The meeting said the industrial mix of China's iron and steel industry has to be further adjusted to ensure the healthy growth of the industry. Manufacture of products that consume a very large amount of energy and materials and cause heavy pollution had to be contained, while export of such products would also be put under strict control.

The meeting called for an accelerated shift of the growth mode in this sector, improved efficiency in the utilization of energy and resources, and an "appropriate and economical" use of steel products.

The meeting also underscored the importance of facilitate consolidating China's iron and steel sector, optimizing its geographical distribution, and building a solid resource supply system by tapping both domestic and overseas resources.

Although it has contributed greatly to China's economic growth, the fast-expanding industry has also strained electric power supply and the country's transport system, causing serious pollution and intensifying international competition for iron ore.

China turned out 272 million tons of rolled steel in 2004, making it the biggest steel producer in the world.

Industrial insiders say a number of steel production projects involving more than 300 billion yuan (approximately 36 billion US dollars) of investment were under construction at the end of last year. Upon their completion, China's steel production capacity would possibly add another 100 million tons.