China's state-owned steel and coal enterprises should cut 15 percent of their capacity in the next five years, according to the state enterprise regulator.

A total of 25 state-owned enterprises (SOEs) in the steel and coal sectors were asked to reduce their capacity by ten percent within two years to set examples for private enterprises in dealing with overcapacity, according to a statement from the State-owned Assets Supervision and Administration Commission of the State Council on Friday.

The Chinese government made reducing excess capacity a top priority in late 2015 at the Central Economic Work Conference and put it at the center of the 13th Five-Year-Plan.

China plans to cut steel and coal capacity by about 10 percent -- as much as 150 million tonnes of steel and half a billion tonnes of coal --in the next few years with funds set aside to help displaced workers.

China's two major steel SOEs, Wuhan Iron and Steel and the Shanghai-based Baosteel, announced restructuring plans in late June aimed at reducing excess steel capacity and improving market competitiveness. Enditem