Abstract: The key of current supply-side structural reformation lies in how to mitigate excess capacity. Using survey data of World Bank about institutional quality of Chinese enterprise operation, this paper provides a manufacturing firm-level empirical analysis on the relationship between information communication technologies application and excess capacity. The results show that, the application of information communication technologies promotes the rates of firm capacity utilization. Therefore, information communication technologies could be the effective path to resolve excess capacity. Furthermore, this paper reveals the channel mechanism and moderating mechanism of the effects of information communication technologies on firm excess capacity. The channel mechanism is that by enhancing productivity, promoting firm innovation and strengthening information share, application of information communication technology brings effects of DE-capacity; The moderating mechanism is that government regulations have weakened the DE-capacity effect of information communication technologies application, but the quality of rule of law has strengthen the DE-capacity effect of information communication technologies application. In addition, the results of robust test show that, with firm of different scale and capacity, the DE-capacity effect of information communication technologies application is also different. Information communication technologies applications have even more significant and effects on excess capacity with large and medium or higher-capacity firm.