US-China Spar Over Steel in Beijing
The
global steel crisis took centre stage during an
annual meeting between US and Chinese officials during the 5-7 June gathering
in Beijing, with the two sides openly sparring over the source of the problem
and ultimately agreeing to hold further discussions with other international
partners, including under a possible “global steel forum.”
The US’ top diplomat also suggested that this week’s
talks could potentially serve in helping both sides prepare for the upcoming
G-20 summit of major advanced and emerging economies, which China is due to
host this upcoming autumn.
The finance chiefs for the two major economies – which
together account for one-third of global GDP – publicly disagreed on the cause
of the current overcapacity problem with steel and aluminium.
US Treasury Secretary Jack Lew warned of the damage
China’s production in steel has allegedly caused the global economy.
“Excess capacity has a distorting and damaging effect
on global markets and implementing policies to substantially reduce production
in a range of sectors suffering from overcapacity – including steel and aluminium – is critical to the function and stability of
international markets,” he said. US officials have been among those warning
that they could pursue additional trade enforcement actions against players
seen as undertaking unfair trade practices, including toward China.
The US’ concerns were countered by Chinese officials,
who raised issues including how much of a role China has in addressing the
steel crisis, along with how much control Beijing actually has over its own
domestic production.
“The overcapacity problem, particularly in steel, has
been subject to much hype around the world,” said Chinese Finance Minister Lou Jiwei in remarks to reporters. He also referred to the heavy
private-sector involvement in the Chinese steel sector, suggesting that
government influence on cutting domestic production has its limits.
“Both sides recognise that
excess capacity in steel and other sectors is a global issue,” said Chinese Vice Premier Wang Yang at the end of this week’s talks.
Crediting the problem to the slow global economic recovery and lowered demand,
the official called for collective action, suggesting that “legal market and
proper policy tools” should be used.
“To this end, China has committed to ensure that its
central government policies and support do not target the net expansion of
steel capacity, and to actively and appropriately wind down zombie enterprises
through a range of efforts, including restructuring and bankruptcy,” he added,
indicating that Beijing is also committed to working with other partners at the
OECD, as well as being part of a possible “global steel forum” with Washington.
The
two sides remain at odds over excess capacity in aluminium,
indicating that these would be the subject of additional discussions further
down the road.
The
OECD’s Steel Committee is due to meet from 8-9 September, with officials from
both sides due to participate.