Privately owned aluminum maker China Zhongwang Holdings rebuffed reports that it is related to an indictment by a federal grand jury on charges in the US, saying that the company has always strictly obeyed local laws when doing business.
However, experts said that the primary cause of the issue is the twisted market economy and it is the US that should be blamed.
"The group has always strictly abided by in its business operations the laws and regulations of China and destination countries of its exported products, and has developed overseas markets under the principle of fair and orderly competition," the company said in a filing posted at the Hong Kong Exchanges and Clearing on Thursday.
The response came after the Wall Street Journal reported on Wednesday that the founder of China Zhongwang had been indicted by a US federal grand jury on charges that he evaded nearly $2 billion in tariffs as part of a conspiracy to smuggle massive quantities of aluminum into the US.
The report came the same day that China and the US conducted a new round of trade talks in Shanghai, as the two sides ended their meeting with "candid, constructive and efficient" in-depth exchanges amid a trade war that has lasted more than one year.
"The group has not received any legal instrument or notice in relation to the alleged proceeding, and the company also confirms that it has not received any legal instrument or notice in relation to the alleged proceeding," the Liaoning Province-based company added.
Even if Zhongwang transferred its aluminum to a third country, the root cause is that the US has raised the tariff barrier too high, which has twisted and disrupted the normal market economy, said Mei Xinyu, a veteran analyst close to the
Ministry of Commerce.
"US wrongdoing by using so-called long-arm jurisdiction is what should be condemned at the very first," Mei told the Global Times on Thursday.
The unreasonable tariffs, which represent US rising protectionism, can't be accepted by any country. "US' aluminum and steel industries should enhance their competence in international competition instead of cowering in the corner surrounded by the wall of protectionism," Mei noted.
"It's hard to explain why the US government is now taking China Zhongwang as a target without any sign earlier, but there is not enough evidence to rule out the possibility that it is a way for the US government to put pressure on China," Bai Ming, deputy director of the International Market Research Institute of the Chinese Commerce Ministry, told the Global Times on Thursday.
"It is not the first time for the US to take measures against China's aluminum industry," Wen Xianjun, vice president of the China Nonferrous Metals Industry Association, told the Global Times on Thursday.
The US government conducted 332 investigations in 2016 and 223 investigations one year later to see if imports affected the safety of the US. China is one of the important markets that the US has investigated.
"China and the US are members of the World Customs Organization, and China's export product classification and US import classification follow the same principle," Wen added.
The US has been a net aluminum importer for years. Data from worldstopexports.com showed that the US imported $24.3 billion worth of aluminum from a total 134 countries in 2018. China, with $3 billion of total US imported aluminum, ranked second after Canada.
"It is obvious that the US administration is politicizing trade issues since Trump became president, and the global free trade order has been broken, not only in the aluminum industry. We do not know what will happen tomorrow," Wen added.
Founded in 1993, Zhongwang is the world's second-largest manufacturer of industrial aluminum extrusion products in Asia.
In 2001, US-based Alcoa tried to merge with Zhongwang but was turned down by the group.
Zhongwang tried to purchase US-based Aleris Corp in 2016 at a price of $2.33 billion, but the deal was called off amid uncertainty about the approval from the Committee on Foreign Investment in the US.
