SHANGHAI -- Baosteel Group plans to move 30 percent of its production capacity out of its home base of Shanghai over the next five years, as China's biggest steelmaker targets high-end products, the official Securities Times reported on Thursday, citing Chairman Xu Lejiang.

Baosteel, which has annual capacity of about 22.25 million tons in Shanghai, plans to reduce its iron-making capacity in the city by about 5.8 million tons by the end of 2017, while its steel-making capacity will be cut by about 6.6 million tons, the newspaper said.

The move reflects Shanghai's strategic positioning as China's financial, rather than manufacturing hub, and is also part of Baosteel's target of moving up the industry value chain.

Baosteel aims to increase production in Shanghai of high-end steel used in automobiles, home appliances and ship-building, it said.

Chairman Xu was also cited as saying that Baosteel needs to transform into a service company, as there's growing risk that steel may in the future be replaced by new materials.

Baosteel is the State-owned parent of Shanghai-listed Baoshan Iron & Steel Co.