This paper systemically researches into the Chinese regulation policy of steel industry investment from 1994,which is supposed to prevent the"overcapacity".

The purpose of the paper is to analysis the essence of overcapacity of real estate industry and the function of taxes in economic regulating for real estate market,assisting by economic analysis of Supply-demand curves.

In recent years,the problem of overcapacity has been getting more and more serious and the operation of China s economy is confronted with the danger of deflation,which has attracted much attention.

Ineffective Supply, Product Innovation and Two Types of Overproduction;

And because of this,the mainstream economics does not explain the dilemma of WTO,such as overproduction and trade friction.

We must take a scientific attitude and method to understand the connotation and formation mechanism of surplus production capacity.

The problem of surplus production capacity has been coming forth as well,which seriously affects economic development.

This article holds that the production surplus and inadequate demand in Chinese economy is a low level premature production surplus, the root cause of which lies in the deformed industrial and product structures.

Industrial Upgrade, Incomplete Information and Excess Capacity in the Development Perspective;

These contradictions are mainly reflected in the following: pressures from both excess capacity and inflation,constant intensification of both excess liquidity and foreign trade surplus and coexistence of both economic progress and higher unemployment rate.