Europe has every reason to be happy about its steel sector these days: Prices are rising and business performance has improved. But it is wrong to attribute the sector’s recovery to EU trade measures that have supposedly successfully kept out steel “dumped” into the EU market by China. This is neither true nor fair.
China regrets that the EU has launched a great number of anti-dumping and countervailing investigations against Chinese steel products and has applied stricter restrictions on Beijing under its discriminatory “analogue country” methodology.
The EU needs the steel products that it is importing from China. In other words, even if the EU did not buy them from China, it would still import them from other countries. According to the latest report by the European Steel Association, the EU’s steel imports from China dropped by 41 percent from January to November 2017. However, the gap was immediately filled by other countries, with some even doubling their steel exports to the EU.
China does not encourage steel exports. In fact, more than 85 percent of China’s steel output is consumed domestically. We do not have export subsidies. Rather, for more than 10 years we have restricted steel exports by levying tariffs. It was not until January that we abolished export duties on certain steel products. Nor does China encourage steel “dumping.” Thanks to domestic structural reforms, the days are long gone when China had to compete on price.
Mutual accusations will not help cut overcapacity. Joint action to boost demand is the best approach
Those who glorify trade remedy measures not only have a wrong understanding of the real causes of the sluggish steel sector in Europe, but also fail to see China’s responsible, proactive and genuine efforts to cut overcapacity.
Reducing excess capacity has been a priority for China’s supply-side structural reform since 2016. We know we must do this if we want to transform and upgrade our economy. China has since then cut over 115 million tons of steel capacity and eliminated an additional 140 million tons of substandard steel capacity. China’s intensive efforts have been effective, contributing greatly to the recovery of the global steel market, including in Europe.
China has made huge sacrifices in this process. Over 1 million Chinese workers — more than the EU’s total number of steel workers — will have to be reemployed. But no matter how difficult it is, once we have set a target, we will work unswervingly to achieve it.
China has also played a crucial role in the establishment and development of the Global Forum on Excess Steel Capacity, and made a positive contribution to the deliverables of November’s meeting in Berlin. Europe experienced steel overcapacity itself decades ago and has accumulated many best practices, including the successful restructuring of the Ruhr industrial region in Germany. We stand ready to share our positive experience with all sides, including Europe, through upcoming forums in order to address the common challenges we face.
Mutual accusations will not help cut overcapacity. Joint action to boost demand is the best approach.
We hope that our European friends will come to view overcapacity in a comprehensive, objective and rational way and restrain the use of trade remedy measures to create a level playing field for Chinese enterprises.
China and the EU need to work together to promote the healthy and sustainable development of the global steel sector.
Zhang Ming is the head of the mission of the People’s Republic of China to the European Union.