Improving the international competitiveness of China’s steel industry

In the past, the US international trade commission launched a “337 investigation” into Chinese carbon steel and alloy steel products exported to the US on the grounds that American companies accused China steel tube manufacturers. The investigation involved a total of 40 Chinese steel enterprises. The ruling was also a slap in the face to current US tariffs on Chinese steel, aluminium and the like. The United States is threatening the European Union and other countries to join in a crackdown on Chinese steel exports. In fact, the US imported about 35m tonnes of steel in 2017, with mainland Chinese exports accounting for only about 2 per cent. The US government maintains that Chinese steel enters the US via a third country, but the ruling dismissed a lawsuit accusing Chinese companies labeling the country of origin as “false”, suggesting its nonsense.

Us tariffs on steel, aluminium and other goods is an elaborate “plot” in which the bulk of US imports in these areas come from its Allies. The international impact of China’s steel overcapacity for rectangular hollow section has long been a topic of variable concern in the past. It is an objective fact that China has excess steel capacity. However, it must be made clear why China has excess steel capacity, that is, after the sub-prime mortgage crisis in the United States and the debt crisis in Europe in 2008, global economic growth dropped sharply. At this stage, both the United States and Europe regard China as the only force to stabilize the situation. The international community wants China to increase investment to drive the world economy. China’s “four trillion” investment plan is launched in this context. China has become a major force driving global economic growth, but it has also brought about problems of excessive investment and high debt. Steel overcapacity for square steel pipe is partly a cost of “driving world economic growth”.

The point is that China itself is the victim of overcapacity, and it is working hard to address it, not to let it go. In the past five years, China has cleaned up more than 170 million tons of steel production capacity. Another 30 million tons of steel capacity will be cut this year. In fact, China’s supply-side structural reform requires the task of capacity reduction for cold rolled steel pipe. This is a product of a stage, but also must be accompanied by the pace of urbanization and shrinking capacity.However,  product structure of China’s steel is obviously unbalanced, with a serious surplus of low-end steel, while high-end products need to be imported in large quantities.