A new report documents how China is propping up its steel mills to flood the world with artificially cheap steel.
China to the world, Do your best China’s steel exports have surged this year in an effort to curb steel overcapacity. The highest record not recorded in the country since 2016Many more plants have already been approved for construction and are due to come to market over the next two years.
No matter all the rhetoric and promises from Beijing, there is an irrefutable contradiction here: China continues to heavily tilt the global market in favor of its domestic steelmakers. New reports The paper, titled “Shell Game: A Case Study of Chinese Steel Subsidies,” confirms just that.
In a study by Washington, D.C. law firm Wiley Rein LLP, the authors examine three Chinese steel pipe and tube manufacturers – one state-owned enterprise and two nominally private smaller companies – from 2016 to 2020 and 2021 to 2025 to provide a detailed analysis of Beijing’s tactics.
Tracking these companies and the government intervention and subsidies they receive reveals that China’s steel mills remain mired in market manipulation. Beijing has been keen to “pay lip service” to reducing industrial overcapacity, but has never “walked the walk.” In fact, Beijing is sprinting in the opposite direction.
The report states:
“All three of these cases reveal broader aspects of China’s industrial policy in the steel industry that are at direct odds with the slogans and catchphrases intended to create the impression of market-based reform. Despite repeated promises to reduce overcapacity in the steel industry, the Chinese government continues to intervene systematically to support both the survival of existing uncompetitive capacity and the expansion of new capacity through state-led mergers, relocations and upgrading, all supported by generous financial and other support.”
Indeed, the report documents how the Chinese companies it examined were unfairly pulled back from the brink of bankruptcy by interest-free government loans and other financial services that significantly reduced China’s steel companies’ cost of capital, expanding the role of the government-led financial sector in supporting the government’s industrial policies. Efforts to relocate China’s steel plants to centralized industrial parks have been combined with “capacity renewal policy support” to fund facility upgrades and expansions that will significantly increase production.
“Each of these three companies illustrates in its own way the major distortions resulting from the Chinese government’s recent industrial policy initiatives,” the report said. “All three are emblematic of the ongoing challenges China’s state-run steel industry faces against international competitors seeking to shore up critical supply chains and invest in a more sustainable future.”
But Beijing, this plan has a big pitfall. The world is aware of it. On August 26, Canada Tariffs on Chinese steel and aluminum Following the tariffs implemented by the Biden administration earlier this summer Mexican Steel and Aluminum It starts with China, and of course China’s over-industrialization is pointed to as the biggest threat by the rest of the world as a whole.
