Nation tackling steel overcapacity: MOFCOM

2016-04-20 08:39Global Times Editor: Li Yan

Other countries too eager to blame China, experts say

China has taken a series of measures to cut capacity in its steel industry and has made great efforts to expand domestic demand for steel, an official noted Tuesday.

When asked what impact this may have on Europe's recognition of China's market economy status following unsuccessful steel talks in Brussels on Monday, Shen Danyang, spokesman for the Ministry of Commerce (MOFCOM), said that China hopes to continue to hold talks and has called for joint global efforts to address the issue of global steel overcapacity.

The challenges are normal and dealing with them requires joint efforts, which could bring mutual benefits, Shen told a briefing in Beijing.

The spokesman's comments came after China and other major steel-producing countries failed Monday to agree on measures to tackle a global steel crisis at a meeting in Brussels of ministers and trade officials from over 30 countries and regions, hosted by Belgium and the Organisation for Economic Co-operation and Development.

China must take "timely and concrete action" to reduce excess production and capacity in its steel industry or face possible trade action from other countries, US officials warned during the meeting, Reuters reported.

Steel overcapacity is a global issue caused by plunging global demand and the sluggish world economy, and it is not fair to place excessive blame on China's steel sector, Wang Jianfu, assistant to the general manager at Shanghai-based consulting firm Steelhome, told the Global Times Tuesday.

Wang Guoqing, research director at Beijing Lange Steel Information Research Center, agreed, saying that the country was not being treated equally, as it is still seeking recognition of its market economy status.

Blaming China for woes in the world steel industry is simply a lazy excuse for protectionism, and such finger-pointing will be counterproductive, the Xinhua News Agency said in a commentary on Monday.

Capacity cut

China exported 112 million tons of steel products in 2015, up roughly 20 percent year-on-year, but that amount accounted for less than 10 percent of the total steel production in China, said Wang from Steelhome.

"The rise in Chinese steel exports is based on increasing demand from the global market as China has advantages over its global rivals in price, quality and product types," he noted.

"No other countries can match China in meeting global steel demand," he remarked.

The country's crude steel capacity reached 1.2 billion tons by the end of 2015, but the capacity utilization rate in the domestic steel industry stood at just 67 percent last year, Wang from Beijing Lange told the Global Times on Tuesday. The rate in the global market is about 70 percent, she said.

"The rate [in China] is expected to reach 75 percent by the end of the 13th Five-Year Plan period (2016-20)," she noted.

China aims to cut 100 million to 150 million tons of crude steel capacity in the next five years starting from 2016, the State Council, China's cabinet, said in February.

This will be challenging, as cutting capacity involves relocating over a million workers who might lose their jobs, experts said.

The capacity of China's steel sector primarily aims to meet domestic demand, and there are no subsidy policies to stimulate steel exports, according to MOFCOM.

Meanwhile, China imports large amounts of steel products from foreign countries, providing a massive steel market for foreign countries, MOFCOM also said.

Joint efforts needed

As weak demand and slow economic growth are the major reasons for steel overcapacity, it is not right for countries to adopt trade protectionist measures to limit steel imports, and they should not "easily blame" the economies that have strong competitiveness in the steel sector, Shen said.

More economies are expected to take practical measures that are in line with their conditions and developmental stages to cut overcapacity in their steel industries, according to Shen.

China would like to strengthen its cooperation with foreign countries on the issue and share its experience with them in reducing steel overcapacity, according to MOFCOM.

China is also opening its steel sector to foreign capital, the research director Wang said, noting that "the country hopes to bring in advanced technologies and equipment from foreign countries and clean out its own inferior technologies and equipment."


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