NEW YORK China
has abandoned its program of liberalizing the countrys
economy by opening it to free market forces, the American Iron
and Steel Institute wrote in a Sept. 20 letter to the office of
the U.S. Trade Representative (USTR), alleging that China
continues to injure U.S. producers by subsidizing its steel
China continues to
massively subsidize its steel industry, manipulate its currency
and transship its products through third-party countries to
avoid U.S. duties, the AISI wrote in response to the
USTRs request for public comment.
"What weve seen
is that in the decade since China joined the World Trade
Organization, China has diverged from its path of economic
reform back to an increased emphasis on state intervention and
state control," AISI senior vice president of public policy,
general counsel and secretary Kevin Dempsey told AMM
Sept. 20. "The (Chinese) steel industry has always been
dominated by state control, and earlier efforts where we
thought there was going to be some liberalization have stopped,
and weve gone backwards."
The U.S. trade deficit
with China has risen dramatically in the past three years. From
2009 to 2012, the U.S. deficit of steel in steel-containing
goods increased to 7 million tons from 4.8 million tons,
according to AISI.
steel production has grown to more than 700 million tonnes in
2012 from around 130 million tonnes in 2000, while annual U.S.
steel production decreased to 89 million tonnes from around 100
million tonnes over the same period, according to World Steel
over the United States is largely due to the Chinese
governments subsidization of entire industry sectors,
enterprises have a greater chance of getting subsidies. They
can count on state funding to keep going. They dont have
the same pressure that private enterprises do to make a
profit," he said in a presentation at the American Wire
Producers Associations Government Affairs Conference
Sept. 19. "They can dump, they can operate on a non-market
driven basis because they have the support of the
More than 95 percent
of the top 20 steel producers in China are state owned, either
by the central government or by provincial and municipal
administrations, AISI data show. A 2007 report by such parties
as the AISI and Steel Manufacturers Association identified $52
billion in government subsidies to Chinese steel companies, but
said the actual total is likely much higher.
China has capitalized
on its trade advantage by manipulating its currency and evading
anti-dumping and countervailing orders, Dempsey said.
The United States has
several forums to combat unfair Chinese trade practices, he
told AMM, including addressing currency manipulation
at Trans-Pacific Partnership (TPP) talks, which could serve as
a model for dealing with China even though the nation
isnt party to those talks.
currency manipulation have been filed in both U.S. houses of
Congress. Meanwhile, 230 members of the U.S. House of
Representatives have signed a letter favoring disciplines on
currency manipulation in the TPP, while a majority of the U.S.
Senate backs a similar letter.
growth has slowed since 2010, with 2012 showing the slowest
gross domestic product growth since 1999, at 7.8 percent, World
Bank data show. As demand for steel in China wanes but
overcapacity remains at 200 million to 300 million tonnes, the
United States could continue to be a target for Chinese
"Europe is in a
recession, China is still growing much faster than we are but
theyre not growing quite as fast as they had projected,
so they are overshooting how much steel theyre producing.
That creates a lot of excess capacity and excess supply,"
Dempsey said. "One can expect that at least some of that is
going to find its way to the U.S.; we are very concerned with
The USTR will use the
AISIs letter in a report to Congress.