WASHINGTON (Pakistan Point News / Sputnik - 01st April, 2021) The United States will fight the excess capacity created by China in industries such as steel and aluminum to reduce the impact of such damaging practices on world trade, the US Trade Representative's annual report said on Wednesday.
"Because of its state-led approach to the economy, China is the world's leading creator of non-economic capacity, as evidenced by the severe and persistent excess capacity situations in several industries, including, for example, steel, aluminum, solar panels, and fishing," US Trade Representative Katherine Tai said in the 2021 National Trade Estimate Report. "USTR will continue its bilateral and multilateral efforts to address these harmful trade practices."
In steel, over-production by China has distorted global markets, harming US manufacturers and workers in both the domestic market and third country markets where Americans exports compete with Chinese exports, the report said.
Currently, China's steelmaking capacity represents roughly one-half of global capacity and more than twice the combined capacity of the EU, Japan, the United States, and Brazil, the report said.
The report said China's steel production climbed above 1 billion metric tons for the first time in 2020, reaching 1,053 million metric tons, a 5.3 percent increase from 2019, despite a significant contraction in global steel demand caused by the COVID-19 pandemic.
This sustained ballooning of steel production, combined with rising steel inventories in China and recent measures to incentivize steel exports, threatens to flood the global market with excess steel supply at a time when the steel sector outside China is still recovering from the severe COVID-19 pandemic-related demand shock.
The report noted that China remains by far the world's largest exporter of steel, exporting in 2019 roughly double the quantity of steel exported by Japan, the world's second largest steel exporter.
"While China has publicly acknowledged excess capacity in these industries, among others, it has yet to take meaningful steps to address the root causes of this problem in a sustainable way," the report said.
As in the steel sector, China's aluminum production has also ballooned in recent years, including through 2020, as its output continued without decreasing despite global demand shocks, the report said.
Primary aluminum production capacity in China increased by more than 1,500 percent between 2000 and 2020, with China accounting for more than 80 percent of global capacity growth during that period, according to the report.
China's Primary aluminum capacity now accounts for more than 57 percent of global capacity and is more than double the capacity of the next ten aluminum-producing countries combined, the report added.
