Wall St. Journal, 5/9/2015--Despite pledging to curb excess capacity, Communist China continues to overproduce steel, aluminum, diesel, other goods, driving down prices, crippling competitors, leading to thousands more US jobs lost. China says it needs to overproduce because "jobs maintain social stability." Workers in Europe protest Chinese steel imports, Australia investigates China dumping solar panels
5/9/2015, "China Continues to Prop Up Its Ailing Factories, Adding to Global Glut," Wall St. Journal,
The country’s overproduction of steel, aluminum, diesel and other industrial goods has driven down
prices and crippled competitors, leading to thousands of lost jobs in
the U.S. and elsewhere.
continuing aid for unneeded factories is triggering a sharp rise in
trade disputes and protectionist sentiment, especially in the U.S.,
where trade has emerged as one of the pivotal issues in the U.S.
to a Wall Street Journal analysis of Chinese public companies, Chinese
government support includes billions of dollars in cash assistance,
subsidized electricity and other benefits to companies. Recipients
include steelmakers, coal miners, solar-panel manufacturers, and other
producers of other goods including copper and chemicals.
beneficiary, Aluminum Corp. of China, or Chalco, said in October one of
its units would shut down a roughly 500,000-ton-per-year smelter in the
far-western Gansu region as it struggled to make profits. Executives
prepped for thousands of layoffs.
Gansu officials slashed the plant’s electricity bill by 30%, employees
say, and the factory was saved. Although a portion of capacity was taken
offline, most is operational.
in full production now with 380,000 tons of capacity,” said Fei
Zhongchang, a company sales manager. Chalco’s press office and local
government officials didn’t respond to requests for further comment.
Europe, workers have joined protests against Chinese steel imports.
Australia has investigated dumping of products including solar panels and steel and India has raised import taxes on steel after a surge of
cheap Chinese goods.
U.S. launched seven new investigations into alleged dumping or
government subsidies involving Chinese goods in the first three months
of this year, more than the same period of any other year dating back to
at least 2003, government data show.
this year, the U.S. Commerce Department slapped preliminary import
duties of 266% on imported Chinese cold-rolled steel. The decision came
after U.S. Steel Corp. lost $1.5 billion last year, closed its last
blast furnace in the South and laid off thousands of workers, blaming
Late last month , U.S.
Steel filed a trade complaint against China at the International Trade
Commission, alleging price fixing, trans-shipment via third countries to
avoid duties and cyber-espionage to loot technology off U.S. Steel
computers. China’s Commerce Ministry has urged U.S. authorities to
reject the complaint, and said allegations of intellectual property
infringement “are completely without factual basis.”
says it isn’t guilty of dumping—or selling a product at a loss in order
to gain market share—and calls U.S. and EU measures and investigations
forms of protectionism. It says it has mothballed factories and intends
to cut more, with plans to lay off up to 1.8 million steel and coal
Officials say it is natural for complaints against China to increase as the country takes on a large share of global trade.
the largest trader in goods, it’s quite understandable for us to have
so many” complaints, China’s Commerce Minister Gao Hucheng said
recently. “We need to take it as it comes and live with it.”
way of tracking China’s support is by looking at subsidies reported in
corporate filings on the country’s two main stock exchanges in Shanghai
According to a
Journal analysis of nearly 3,000 domestic-listed Chinese companies in
2015, reported government aid rose to more than 119 billion yuan, or
more than $18 billion, last year compared with about 92 billion yuan in
have risen roughly 50% since 2013, based on figures from Shanghai data
provider Wind Information Co. Under Chinese accounting standards, such
aid can be cash or other perks like subsidized power or land, but
doesn’t include some other support, such as capital injections from the
government as an equity shareholder.
include an ethanol producer that said it was promised as much as 40
million yuan ($6.1 million) in subsidies in the first three months this
year because of “grave operating circumstances.”
producer of titanium dioxide—which is used in products such as paint
and sunscreen—won about 28 million yuan ($4.3 million) in cash
assistance as it seeks to expand in the North America and elsewhere.
company, Yunnan Aluminium Co., obtained nearly 500 million yuan ($77
million) in subsidies since late 2015, securities filings show. In the
first half of 2015, the company says its production of alumina—the
starting material for smelting aluminum metal—jumped 40%, even as
revenue sank amid weakening prices.
representatives didn’t respond to requests for comment.
An official at
the provincial Department of Finance, which administered much of the
cash aid, said it acted to protect Yunnan Aluminium’s 10,000 jobs.
“The government’s aim is to help maintain social stability,” the official said.
Other countries, including the U.S., offer substantial support for struggling industries.
cite differences in China, which they say is less open about its use of
subsidies and more inclined to use them to promote exports. China has
repeatedly said it would shutter unneeded factories, without following
The need for
capacity cuts in China has long been apparent. More than 40% of its
major steel companies were losing money in the first half of 2015,
according to the China Iron and Steel Association.
Ministry of Industry and Information Technology, which oversees the
steel industry, told the Journal in 2014 that authorities were already
“in the process of implementing” capacity reductions.
then, Chinese crude steel production has fallen 2% year-on-year in
2015 to about 804 million metric tons. But industry experts in China,
the U.S. and Europe say a further 200 million metric tons of capacity—or
about 25% of China’s production—needs to be cut to restore market
balance. China’s steel exports jumped around 20% last year to 112
million metric tons, according to customs data.
63-page “investigation initiation checklist,” filed last year by U.S.
Steel Corp., Nucor Corp. and the United Steelworkers union to demand
import tariffs on rolled steel, found 44 separate subsidy programs,
including seven that give Chinese steelmakers cheap or free land, iron
ore, coal, and power; eight that offer discount loans; 15 tax breaks;
and 11 programs that give companies money directly.
of the programs date back years, but others were active in the past 12
months, including subsidized export loans, the document showed.
“It’s the whole range of practices that keep these zombie companies alive,” said Roger Schagrin, a lawyer for U.S. steelmakers.
the time, a spokesman for China’s Commerce Ministry said restrictions
on Chinese steel would not solve the global overcapacity problem, and
encouraged Chinese steel companies to defend their rights."
Chinese products rattling markets include diesel fuel, with Chinese
exports rising nearly 80% in 2015 over 2014, according to customs data.
China has loosened restrictions to let private refiners export fuel for
the first time, given weak domestic demand.
U.S. energy companies shed staff, China’s by and large haven’t.
Refining giant China Petroleum and Chemical Corp., whose net profit
fell by 30% in 2015, told the Journal no employees have been laid off
since late 2014 when oil prices began to fall, and that it had “no plan
for any future layoffs.” The company, also known as Sinopec, employs
about 351,000 people.
aluminum production, meanwhile, rose to 32 million tons in 2015, double
the level in 2005. Exports soared to 6.7 million tons from 2.6 million
during the same period, helping push global prices down 40% in the past
five years. The number of smelters in the U.S. has fallen to four from
23 in 2000, destroying thousands of jobs.
over lost jobs reflect wider frustrations that China hasn’t lived up to
all the promises it made when it joined the World Trade Organization in
According to data
collected by the WTO, China accounted for around 25% of all anti-dumping
measures reported between 1995 and 2014, more than any other nation.
The U.S. was the target in about 5% of measures, the data show."
3/15/18, "“We’ve been in a trade war for 30 years”: a former Trump trade adviser explains the case for tariffs," Vox.com, Emily Stewart
"There’s no risk of the president’s recently announced tariffs sparking a trade war--we’ve already been in one for years.
The only difference now, he [Dan Di Micco] said, is that we’re deciding
to fight back. “Don’t tell me about starting a trade war,” he said. “The
Chinese have been perpetrating a trade war on us since 1995.”"...
News that doesn't receive the necessary attention.
Friday, March 16, 2018
Despite pledges to curb overproduction, Communist China continues to glut the world market with steel, aluminum, diesel, other goods, driving down prices, crippling competitors, leading to thousands more US jobs lost. China says it can't cut jobs because "jobs maintain social stability"-Wall St. Journal, May 9, 2015
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