Asia: Five US steel trade associations have released a report documenting how the steel industry in China 'is heavily subsidised by its government' and alleging its rapid growth has been fuelled 'by government subsidies and other market-distorting policies', including raw material price controls.
The report from the American Iron and Steel Institute, the Steel Manufacturers Association, the Committee on Pipe and Tube Imports, the Specialty Steel Industry of North America and the American Institute of Steel Construction states: ‘The Chinese government has supported the country’s steel industry primarily through cash grants, equity infusions, government-mandated mergers and acquisitions, preferential loans and directed credit, land use subsidies, subsidies for utilities, raw material price controls, tax policies and benefits, currency policies, and lax enforcement of environmental regulation.’
The report analyses 25 of the largest steel companies in China and looks to detail the amount and types of government subsidies received in recent years. ‘These subsidies and policies have led to tremendous overcapacity and created a highly-fragmented domestic steel sector in China made up of many inefficient, and heavily polluting, companies,’ it is contended.
According to the five US associations, this analysis supports the view that China should not be granted market economy status in December. Furthermore, its findings will be used to ‘further advance the global dialogue among nations on the elimination of excess steel capacity throughout the world’, they add.