One an­swer to pu­ni­tive West: Up­grade steel

China Daily (Canada) - - ANALYSIS -

zhong­nan@chi­nadaily.com.cn

All Chi­nese steel man­u­fac­tur­ers will be forced to up­grade their prod­ucts and ex­pand sales chan­nels if the Euro­pean Union and the United States con­tinue to use the sur­ro­gate coun­try sys­tem in anti-dump­ing in­ves­ti­ga­tions, trade ex­perts and com­pany ex­ec­u­tives say.

Their com­ments came on Dec 12, af­ter China no­ti­fied the sec­re­tariat of the World Trade Or­ga­ni­za­tion that it had re­quested dis­pute con­sul­ta­tions with the US and the EU re­gard­ing the spe­cial cal­cu­la­tion method­ol­ogy they use in an­tidump­ing pro­ceed­ings.

Those coun­tries al­ready im­pose high tar­iffs on Chi­nese steel prod­ucts, lead­ing to a sharp fall in ex­ports of China’s seam­less steel pipes and tubes.

The Euro­pean Com­mis­sion, the EU’s ex­ec­u­tive body, con­ducted 15 trade rem­edy in­ves­ti­ga­tions against Chi­nese goods be­tween 2014 and Fe­bru­ary this year, and eight of them in­volved steel prod­ucts. “We are pay­ing close at­ten­tion and are wor­ried about the ten­dency of the EU and US to­ward steel pro­tec­tion­ism,” said Yao Lin, vice-pres­i­dent of An­steel Group in Liaon­ing prov­ince.

Ea­ger to re­store its earn­ing abil­ity, An­steel has taken mea­sures to avoid fi­nan­cial losses in ex­ports to those mar­kets. It opened a new plant in April to make high-end steel prod­ucts for au­to­mo­tive and home ap­pli­ance man­u­fac­tur­ing to off­set the weak de­mand for lowend steel.

The fa­cil­ity, con­structed in the south­ern me­trop­o­lis of Guangzhou, is part of a joint ven­ture with Guangzhou Au­to­mo­bile Group and Ger­man multi­na­tional ThyssenKrupp. The first phase cost 1.5 bil­lion yuan ($217 mil­lion) and has an an­nual pro­duc­tion ca­pac­ity of 450,000 tons of steel plate.

“The EU has fre­quently re­sorted to re­stric­tive mea­sures since the start of 2016, as it blames Chi­nese steel prod­ucts for its glut­ted in­dus­try,” Yao said. “It is ground­less, as Europe’s steel woes stem from a weak econ­omy. The EU should be ra­tio­nal and take an ob­jec­tive view, in­stead of adopt­ing pro­tec­tion­ist poli­cies that im­pede com­pe­ti­tion.

“The Pearl River Delta is an im­por­tant base for auto and home ap­pli­ance man­u­fac­tur­ing. Build­ing a pres­ence there al­lows us to bring our steel prod­ucts to many of China’s most im­por­tant buy­ers.”

Shen Danyang, spokesman for China’s Min­istry of Com­merce, said: “As many do­mes­tic steel­mak­ers are ex­pand­ing their ex­port chan­nels in other emerg­ing mar­kets — es­pe­cially those along the Belt and Road Ini­tia­tive — it is also prac­ti­cal for them to fo­cus more closely on new fast-grow­ing re­gions, as well as lo­cal­iza­tion strate­gies for do­mes­tic pro­duc­tion bases.”

The in­fras­truc­ture, trade and ser­vice net­work pro­posed by the Chi­nese gov­ern­ment in 2013 en­vi­sions a Silk Road Eco­nomic Belt and a 21st Cen­tury Mar­itime Silk Road, cov­er­ing about 4.4 bil­lion peo­ple in more than 60 coun­tries and re­gions in Europe, Asia and Africa.

Shen said Chi­nese iron and steel smelters should cut risks by fur­ther di­ver­si­fy­ing their ex­port des­ti­na­tions to places such as Africa, the Mid­dle East, South Amer­ica and mem­ber coun­tries of the As­so­ci­a­tion of South­east Asian Na­tions.

Bai Ming, a re­searcher at the Chi­nese Academy of In­ter­na­tional Trade and Eco­nomic Co­op­er­a­tion, the think tank of the Min­istry of Com­merce, said: “A trade war would cer­tainly harm all of us be­cause it would change the method for de­ter­min­ing a fair price. The re­cov­ery of the global econ­omy is prov­ing to be more com­plex than an­tic­i­pated.”

Liu Zhen­jiang, sec­re­tary-gen­eral of the China Iron and Steel In­dus­try As­so­ci­a­tion, noted that many coun­tries in Europe are hav­ing elec­tions soon, and be­cause com­pa­nies in their steel and so­lar en­ergy sec­tors have re­ported losses in re­cent years, politi­cians are try­ing to use ex­cuses such as over­ca­pac­ity to sub­si­dize cer­tain in­dus­tries to af­fect China’s law­ful rights and for­eign trade ac­tiv­i­ties.

“If China takes re­tal­ia­tory mea­sures by im­pos­ing higher taxes on im­ports from the US and the EU, their man­u­fac­tur­ers will also suf­fer more fi­nan­cial losses,” Liu said.

“China is a large steel ex­porter and a big im­porter of spe­cial steel used in ship­build­ing, weapons, au­to­mo­biles and ma­chine man­u­fac­tur­ing. Yet im­port prices are three times the ex­port price on av­er­age,” said Xue Rongjiu, deputy di­rec­tor of the Bei­jing-based China So­ci­ety for WTO Stud­ies.

Xue said the coun­try needs to im­prove the qual­ity of its steel prod­ucts and move up the value chain.

CHINA DAILY PRO­VIDED TO

Em­ploy­ees work at the fac­tory of An­steel in Liaon­ing prov­ince. The group has taken mea­sures to avoid losses in ex­ports to the EU and the US.

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