The global problem of overcapacity in steel production should not be attributed to China
The effectiveness of reducing steel production capacity in China is becoming apparent
On the 9th, the National Development and Reform Commission responded to some public opinions on the progress of reducing overcapacity in China's steel industry. Xia Nong, an inspector of the Industry Department of the National Development and Reform Commission, said that China has taken resolute and effective measures to resolve overcapacity, and the results are gradually showing. In response to anti-dumping investigations launched by some countries against Chinese steel products, Xia Nong believes that steel producing countries should work together and take active measures to resolve overcapacity, rather than blaming China for the global problem of steel overcapacity.
Overcapacity of steel production is a global problem, and China's task of reducing production capacity is still very arduous
Since the outbreak of the international financial crisis, the global economic recovery has been weak, and uncertainties and instability have increased, leading to significant changes in the global supply and demand relationship. Xia Nong believes that in this context, overcapacity has become a global issue, particularly in the steel industry. China, like the global steel industry, is facing difficulties such as sluggish market demand and low capacity utilization.
China has mainly adopted market mechanisms, economic means, and legal measures to resolve excess steel production capacity, which has been proven effective, "Xia Nong cited figures." In the first half of this year, China's steel production decreased by 1.1% year-on-year, and prices rebounded. In March, the entire steel industry achieved a turnaround from losses to profits, and since April, it has accumulated losses
Xia Nong introduced that in the context of global overcapacity, China's capacity utilization rate in recent years has been higher than the global average, as well as higher than countries and regions such as the United States and Europe. According to data from the World Steel Association, the global crude steel production capacity utilization rate in 2014 was 73.4%, while China's crude steel production capacity utilization rate was 73.6%; In 2015, the global capacity utilization rate was 69.7%. Based on the 2014 capacity data, China's capacity utilization rate in 2015 was 71.2%.
According to a recent teleconference held by the Inter Ministerial Joint Conference on Resolving Excess Capacity and Developing Difficulties in the Steel and Coal Industry, as of the end of July this year, China's steel industry has completed 47% of the annual task of reducing overcapacity. The meeting pointed out that the overall progress of reducing production capacity is not ideal, and the task of reducing steel production capacity in the second half of the year is still arduous.
Xia Nong stated that the next step is to firmly continue to focus on reducing overcapacity, strictly control the addition of new capacity, and properly resolve the debt problems of steel enterprises. Relevant departments are studying and formulating specific implementation measures, and will handle the debt problems involved in capacity withdrawal enterprises in accordance with laws and regulations through various channels such as mergers and acquisitions, debt restructuring, bankruptcy liquidation, etc. They will also promote the withdrawal of zombie enterprises according to local conditions. It is reported that from mid August, inter ministerial joint meetings will conduct comprehensive inspections of overcapacity reduction work in various regions.
China does not encourage steel exports, and trade protections such as those in Europe and America are not helpful in solving the global steel industry's development problems
In May of this year, the United States officially launched a "337 investigation" against 40 Chinese companies including Baosteel, Shougang, Wuhan Iron and Steel, and Ansteel, alleging that some of their steel products sold in the United States engaged in unfair competition practices. From late April to the end of May, multiple countries including the European Union, Chile, the United States, Vietnam, Australia, India, Colombia, Canada, and Malaysia launched anti-dumping investigations or made anti-dumping rulings against Chinese steel products.
China should not be blamed for the global problem of overcapacity in steel production, but instead adopt wrong practices such as trade protection and restricting fair market competition. "Xia Nong believes that since 2000, the United States has launched more than 40 trade remedy investigations in the steel field against Chinese steel products, raised tax rates, and suppressed Chinese steel products, most of which are still in effect. On the basis of the "double countermeasures" measures, the launch of the "337 investigation" this time is an upgrade of the "double countermeasures" investigation by the United States against Chinese steel products. It belongs to repeated remedies, abuse of trade restriction measures, and seriously damages the normal trade order of the world's steel industry.
Xia Nong introduced that based on China's national conditions, China does not encourage steel exports, but instead takes a series of practical measures to control steel exports. On the one hand, export tariffs will be imposed on some steel varieties to reduce exports, such as increasing the export tariff on ferrosilicon to 25%. On the other hand, we have proactively lowered the export tax rebate rate for steel products. Currently, the export tax rebate rate for all steel products is lower than the 17% value-added tax rate, and some steel products are not eligible for tax rebate. According to the rules of the World Trade Organization, China can implement a tax rebate rate of no more than 17% for steel products. In fact, international trade in steel products is essentially a market behavior, originating from the demand of importing countries and the independent choice of consumers after considering factors such as product cost-effectiveness, "said Xia Nong.
Xia Nong stated that from a global perspective, China's steel enterprises have strong competitiveness, and steel products have a good reputation and high cost-effectiveness in international trade. Many steel products have formed highly complementary relationships with local production in importing countries, promoting local economic development and bringing practical benefits to downstream users and consumers. Therefore, the issue of steel product trade should be viewed comprehensively, objectively, and rationally. Implementing trade protection measures does not fundamentally solve the development problems of the global steel industry, on the contrary, it will only have a further impact on the international trade order
(Information source: www.pipew.com）