China went on an offensive to rebut accusations it was to be blamed for the global steel overcapacity, blaming weak global demand and the economic slowdown as the real culprits for a crisis that has seen prices drop and companies across the world battling to stay in business.
A day after officials from nearly 30 countries and international organisations met in Brussels to discuss the challenge excess capacity posed to the global steel industry, China’s Ministry of Commerce said the government had taken strong steps to curb overcapacity.
“The bulk of our steel products are consumed domestically. China does not subsidize its products to promote exports,” MOC spokesperson Shen Danyang told news conference, according to Chinese media.
China has been accused by various governments of dumping cheap steel into their markets and several have launahced investigations and introduced anti-dumping duty on Chinese products.
Tens of thousands of German steel workers, worried over potential job losses, struck work last week in protest against dumping of steel, and India’s Tata Steel has said it wants to sell its UK steel business because of losses.
“The government has taken action to address steel overcapacity. Notable progress has been made,” said Shen, adding that China will continue to expand domestic consumption of steel products.
The United States has said that China needed to cut overcapacity or face possible trade action from other countries.
“Unless China starts to take timely and concrete actions to reduce its excess production and capacity … the fundamental structural problems in the industry will remain and affected governments – including the United States – will have no alternatives other than trade action to avoid harm to their domestic industries and workers,” U.S. Secretary of Commerce Penny Pritzker and U.S. Trade Representative Michael Froman said in a statement.
According to Chinese media, China, a major producer, consumer, and trader of steel, shut down outdated facilities with total production capacity of over 90 million tonnes from 2011 to 2015.
The government has said that China will continue to reduce crude steel capacity by 100 million to 150 million tonnes in the next five years.
According to Shen, overcapacity is a problem for all steel-producing countries in the world, and it is a common challenge that needs to be addressed by all countries together.
“This shared problem needs to be tackled with shared efforts,” said a position paper tabled by the Chinese delegation during the Brussels meeting, adding that it was incorrect to blame international trade for the difficulties.
“Frequent use of trade remedy measures and other import-restrictive measures is not addressing the root cause of global steel overcapacity,” said the paper.