Verbatim Mac

US-China economic relations strained –s teel overcapacity, currency manipulation, regulatory barriers, and IP theft

Download 357.18 Kb. Page 11/146 Date 11.07.2022 Size 357.18 Kb. #59162

US-China economic relations strained –s teel overcapacity, currency manipulation, regulatory barriers, and IP theft Talley 6/6 (Ian, studies global economy and geopolitics, writes for WSJ in DC, “Why the US Steel industry is molten hot over China’s Trade practices,” Wall Street Journal, 6/6/2016, http://blogs.wsj.com/economics/2016/06/06/why-the-u-s-steel-industry-is-molten-hot-over-chinas-trade-practices/) KC John Ferriola, chief executive of U.S. steel giant Nucor Corp., is skeptical China will soon fix what he calls the biggest problem facing his industry: excess production capacity. “The Chinese government is…engaged in economic warfare against the U.S. and sadly, they are winning,” Mr. Ferriola said in an interview ahead of high-level U.S.-China talks kicking off in Beijing Monday. The trouble, he says, is China’s “illegal, unfair” subsidizing of an industry the U.S. government recently accused of dumping, or selling products below production cost to improperly gain market share. From outright government ownership to an array of illegal subsidies, Chinese steel companies are being propped up at the expense of U.S. and other producers, American officials and firms complain. When U.S. Treasury Secretary Jacob Lew presses Beijing on the matter, Chinese officials will likely reiterate recent promises to gradually cut annual production by 100 million to 150 million tons over the next five years. But Nucor is taking a “seeing is believing” approach. China two months ago set a new production record after spending two years promising to cut production, the Charlotte, N.C., company contends. “We don’t need any more promises,” said Mr. Ferriola. “What we need is for China to provide a capacity reduction plan that provides timelines and a mechanism to verify that cuts have occurred.” And even if the country delivers on its existing promises, that is only a slice of the estimated 425 million tons many consider needs to be shuttered in China to balance out supply with demand. To put that in perspective, the entire U.S. steel market is only around 100 million tons. China has conflicting motivations. Beijing knows it needs to cut production across a range of industrial sectors so as not to exacerbate growing debt problems that risk creating a financial crisis. At the same time, it risks a dangerous surge in unemployment and a sharp deceleration in growth if it moves too quickly and allows its unproductive capacity to fall offline. That’s a particular problem for President Xi Jinping as he seeks to consolidate power ahead of a key leadership change next year. The excess capacity dispute is one of several issues aggravating trade tensions between China and the U.S. The yuan has fallen to five-year lows against the dollar, cyber attacks on corporations are straining relations and U.S. firms complain that a host of regulatory barriers are restricting their access to the Chinese market. Those trade irritants, compounded by weak growth, are fueling voter anger in the U.S. presidential elections. China’s trade practices have been a prime factor in the loss of 15,000 steel workers who have lost their jobs over the last year and a half, the steel boss said. “Our government must vigorously enforce our trade laws,” Mr. Ferriola said. “If we allow China’s steel producers to break our trade laws without any consequences, that will embolden other Chinese manufacturers to do the same thing,” he said. “Anyone who thinks they’re not going to take the next step down stream is dreaming.” Such concerns are driving opposition to the administration potentially declaring China a “market economy” in December, a move that will change how the government calculates tariffs against allegedly unfair Chinese imports. Under the deal the U.S. signed with China when it backed its entry into the World Trade Organization, Washington agreed to no longer recognize the country as a “non-market economy” after 15 years. “We should vigorously oppose China’s ascension to ‘market economy’ status,” the Nucor chief said. The Communist country has failed to meet the criteria needed, he said. “They broke those rules, they violated the criteria.” As that debate gathers steam in Washington ahead of the November presidential elections, look out for further strains in U.S.-China relations. Download 357.18 Kb. Share with your friends: