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China's steel enterprises have no impact on int'l market
Latest Updated by 2007-06-06 08:58:43
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In the recently held "Reuters global mining and steel summit", Secretary-General of the International Iron and Steel Institute, Ian Christmas, warned western steel companies that they need "to be careful about the emerging Chinese steel companies which will have an impact on the global steel industry as a whole. The next wave of steel industry reorganization will sweep through China and even give birth to some major international firms. These firms will pose a serious threat on Western steel manufacturers."

Christmas's remark triggered a "Chinese steel threat theory" among international media. Therefore, the executive vice president of the Chinese steel industry, Luo Bingsheng, said that the "Chinese steel threat theory" simply does not exist. "It is nothing but a sensationalist argument of a few people," Luo declared.

Global price-hike originates from the United States

China's economic rise not only provides a boost in the world's economic development, but also leads to the growth in the global demand for steel. This is its contribution to the development of the world's steel industry. In recent years, China's steel exports have risen rapidly. As a result, China has become a large exporter of iron and steel. It is for this reason as well that the "Chinese steel threat theory" has emerged.

In addition, because of the shortage in supplies of basic metals and raw materials, global steel prices have started to rise. Thus, western countries have blamed China for its tremendous demand for raw materials. However, experts pointed out that the current price hike does not originate in China, but in the United States. It is the result of the US implementation of Section 201 to levy a special tax on steel imports. As a matter of fact, US trade protectionism has led to a worldwide steel trade war. The EU, Japan, China and other countries, have had to implement corresponding protection measures.

Chinese enterprises help lower steel prices

Qi Xiangdong, deputy secretary general of the China Iron and Steel Association, commented on the "Chinese steel threat theory." He claimed that "this argument is not objective. The international steel market is highly competitive. Every enterprise has the right to improve their ability to compete within this market. Currently, not only Chinese enterprises, but all global steel enterprises are making acquisitions or being acquired. Why should we only blame Chinese enterprises for having an impact on the world's steel market?" Qi believes that "by expanding their production capacity, Chinese enterprises can help ease the imbalance between supply and demand in the international steel market, and can also effectively reduce the prices of steel products. This is absolutely a good thing!"

Getting to the source of the "Chinese steel threat theory", people not only are able to see the complex background of trade frictions, but also can determine the political and economic causes for the rise of US trade protectionism. Experts believe that if the United States habitually pursues trade production, instead of raising the competitiveness of its steel enterprises, it will ultimately damage the interests of American consumers.

China neither encourages excessive steel exports nor seeks a steel trade surplus

Liang Shuhe, vice director of the Department of Foreign Trade under the Ministry of Commerce, recently pointed out at the International Conference on "China's Steel and Steel-making Raw Materials," that taking into account the resources, energy status and environmental factors of China, China mainly focuses on domestic needs for the development of its iron and steel industry. The main purpose of importing and exporting steel is to achieve a balance among different kinds of steel products. The Chinese government neither encourages a large supply of steel products or excessive exports; nor seeks any trade surplus of steel. China's steel trade is not and will not have any impact on the world steel market now and in the future.

In addition, in order to reduce the trade surplus, create a coordinated international trade environment, and control the growth of steel exports; on April 15th of this year, the Chinese government significantly lowered the steel export rebate and abolished the export tax rebate for ordinary steel. Recently China has also imposed export taxes on more than eighty steel products. Since then, China does not offer any subsidies for ordinary Chinese steel exports, and dumping does not take place, either.

Editor: Yan

By: Source: People's Daily website
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