EU should curb protectionism: expert

By Chen Qingqing Source:Global Times Published: 2016/10/10 23:18:39

Region’s economic woes seen prompting trade measures

A worker loads steel exports at a port in Lianyungang, East China's Jiangsu Province. Photo: CFP

Editor's Note

Following the EU's decision to set provisional import tariffs for two types of Chinese steel products, Li Xinchuang, president of the China Metallurgical Industry Planning and Research Institute and vice president of the China Iron & Steel Association (CISA), spoke to Global Times reporter Chen Qingqing (GT) on Monday, talking about the current trade dispute with the EU and the overall situation for China's steel industry.

GT: Why did the EU impose the tariffs on Chinese imports?

Li: Since the beginning of this year, the EU has taken various measures to curb steel imports, not only from China, but also from other countries, as protectionism has been rising in the region. The EU has carried out 10 trade restriction measures concerning various steel products, such as rebar and heavy plates as of Sunday. These measures concern not only China, but also Russia, the Philippines and other countries.

The reason why this protectionism has been on the rise in the EU is actually the sluggish economic recovery in the region since the financial crisis. Major developed countries have been seeing slow economic growth and increasing unemployment rates, which has prompted them to protect their own industries.

If they fail to acknowledge this reality and keep instituting protectionist measures, which may jeopardize market fairness, the steel industry in the EU will be in serious trouble.

GT: What do you think of the EU's dumping claims?

Li: I don't think they are reasonable. China's steel production is mainly focused on meeting domestic needs, rather than increasing exports. Clearly, we are not tackling the overcapacity issue by shipping steel products to other countries and regions.

China's steel export volume is in general bigger than that of other countries, but its export volume accounts for less than 15 percent of China's total production, which is far below the average level around the world, which is 30 percent. For example, the steel export volume by Japan surpassed 40 percent of its total steel output in 2015.

China exports steel products to about 230 countries and regions. From January to August, the country exported a total of 76.35 million tons of steel products to countries including South Korea, Vietnam, India, Pakistan and Singapore.

The average export volume to those countries surpassed 2 million tons. However, China shipped 4.5 million tons of steel products to the EU, accounting for 5.9 percent of the total exports. But Chinese steel products only account for about 5.5 percent of the market share in the EU, which will not affect the steel industry there.

GT: What is the current situation for domestic steel production and how will the industry evolve?

Li: China's steel output reached its peak of 702 million tons in 2014, but it has steadily decreased since 2015. For example, in 2015, 20 provinces and municipalities in China saw declines in steel production, especially in western and northeastern regions.

Most of the net exporters of steel products worldwide are in East Asia and the Commonwealth of Independent States, while net importers are in Southeast Asia and North America. And the net exporters ship their steel products to various destinations, not just to certain countries or regions.

GT: So why have China's steel exports increased in the last two years?

Li: It's because the quality of Chinese steel products has improved and their competitiveness has been enhanced in the global market. Also, the diversity of these products can meet the demand of different customers overseas.

GT: How should the ongoing trade disputes be handled?

Li: To maintain order in international trade, countries should not adopt measures only for protecting their own industries; they should let the market play a bigger role and should allow fair competition.

Also, we should all take responsibility for tackling the overcapacity issue, as it is a question for the whole world, not only for China.

Furthermore, the entire steel industry should focus more on how to push forward research and development of steel materials in order to better meet customers' demand.

Posted in: Economy

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