Hebei province needs to quicken the pace of overcapacity reduction this year, President Xi Jinping said on Tuesday.

Xi said stepped-up efforts would lead to healthy economic growth through developing such emerging industries as dairy production. There should be zero tolerance for allowing "zombie" factories and enterprises previously shut down to restart operations, he said.

Cheating must not be permitted, the president said.

Zhang Jiehui, deputy governor of the province, was given administrative punishment by the State Council in December for allowing steel mills that were previously shut down to start up again.

Xi made the comments while he visited Zhangjiakou, the co-host with Beijing of the 2022 Winter Olympics.

While good business opportunities will come with the Olympics, the province faces severe near-term challenges. Its economy is based in great part on smokestack industries such as steel and coal, and it faces strong headwinds as it works on cutting more capacity this year given the current economic challenges, according to Niu Li, an economist at the State Information Center.

"For enterprises that may be lured by rising commodity prices, local officials need to adopt strict administrative measures to make sure that goals can be achieved on time," Niu said.

Niu said the province needs to find new economic momentum to drive growth.

While visiting a local dairy company, Xi vowed to make China's dairy industry "strong and excellent", promoting top-quality national brands to the world and building industry chains that are internationally competitive.

Xi acknowledged that China is both a major producer and consumer of dairy products, and he stressed the importance of food safety, urging all parties to stick to the highest possible standards and tightest supervision to provide consumers with trustworthy goods. In time, that will earn market share domestically and abroad, he said.

Some promising signs in economic rebalancing have appeared, according to a report released by Chinese Academy of Social Sciences this month.

Industries making high-end equipment now represent 25.3 percent of the profit of enterprises with annual sales of at least 20 million yuan ($2.9 million), outpacing the steel industry for the first time and becoming a key industry in the province.