China will continue to cut excess production capacity, but will rely on market forces, not government-set targets, to do so, Finance Minister Lou Jiwei said on Monday, as an annual high-level dialogue between China and United States kicked off.

Speaking at a press briefing, Lou said China has attached great importance to cutting industrial overcapacity, and that measures have been taken to eliminate 90 million tonnes of steel production capacity.

But he ruled out the possibility of working out a quantitative target initiated by the government.

"China has bid farewell to the planned economy, so the government can not dictate to industries on this. More than half of the country's steel makers are privately owned," Lou said.

While stressing market forces, the minister said the government will also strengthen supervision on environmental protection, energy saving and ensure high quality and security.

The government will also provide fiscal support to aid laid-off workers, he added.

The eighth China-U.S. Strategic and Economic Dialogue comes at a time when excess steel capacity has become an acute global challenge.

U.S. steel producers are increasingly resorting to trade remedies and tariff protection to ride out a sluggish steel market, a practice strongly opposed by Chinese exporters.