Cinnaminson, NJ- In spite of small, yet noticeable developments in deregulation and economic liberalism, global trade superpowers (EU, United States, Australia) remain firm in refusing recognition of China as a “market economy.” Still a financial system of fixed exchange rates and governmental oversight of prices, China’s officials seek market status as a means of reprieve from numerous WTO (World Trade Organiation) grievances regarding market fixture and unjust monetarism. The source of the aforementioned states’ reluctance to admit China into the free-market club rests on the latter’s role in the steel market. Encouraged by federal provision of cheap resources, fixed market prices favoring exports, and a dearth of an environmental legislation, Chinese steel production accounts for more than 50% of the global market, outdoing the next-largest producer (U.S.) by ten times. The flooding of the steel market has led to an intentional turn to Chinese steel as a cheaper alternative by importers, heavily depressing the steel industries in the European Union, United States, and Australia. Consequently those states/groups cannot compete with China’s level of production due to democratic governmental precedents and capitalist economic ideologies, thus leading to China’s exclusion from free market recognition- justified by those parties with facts but influenced by spite. In summary, China’s federally regulated economy is a detriment to domestic enterprises and global markets, illustrating transgressions in international trade compliance.
Below are two related articles, reproduced with original links following.
Australia, US boost efforts to tackle Chinese surge in steel market
SYDNEY: “Canberra and Washington will step up joint efforts to protect domestic steel-makers,” said Australian Prime Minister Malcolm Turnbull today, amid concerns about China flooding the market with below-cost products.
Turnbull made the remarks after a phone call with US President Barack Obama early Thursday.
Steel-makers in both countries are under pressure amid low prices of the alloy- a result of a supply glut and falling demand in China as its economy softens.
“The president and I have agreed that Australia and the US will intensify our collaboration to ensure that the overproduction of steel is addressed,” Turnbull told reporters in Melbourne.
“I’ve also raised this issue, I should say, with the Chinese leaders, in particular with Premier Li Keqiang, who undertook and has committed publicly as well to reducing China’s steel production by 150 million tonnes a year.”
China is the world’s largest steel producer and accounts for half of global production, with its manufacturers pumping out hundreds of millions of tonnes more each year than they need domestically amid the economic slowdown.
The supply glut has hurt steel-producing nations and led to plant closures and job losses.
In Australia, cash-strapped miner and steel-making giant Arrium- which operates in 15 countries with 8,350 employees- was placed into voluntary administration in early April.
Canberra has introduced new anti-dumping decisions to support the local steel industry and is also set to hold a government inquiry into steel dumping.
“We need to address this issue because it is important that the viability of steel-makers in our country, and in the US and other nations, is preserved and not undermined by the exporting or the dumping of very cheap steel made in places where it is being produced at way below the real cost,” Turnbull added.
Chinese officials contend that overcapacity in its steel sector is a result of cyclical change in the economy, and that they are striving to shrink the sector.
Europe Sides With The U.S.: Sorry, China, You’re Still Not a Market Economy
The European Parliament on Thursday may have dashed China’s hopes of winning “market economy” status, a potentially crushing blow to Beijing hopes after a 15-year wait.
The E.U. parliament said that China does not yet meet the criteria to be deemed a market economy — like the United States and Europe — where prices are determined by supply and demand rather than government diktats. The parliament also rejected relaxing anti-dumping measures used to push back against unfair Chinese trade. It also noted China is in violation 56 of the EU’s current 73 anti-dumping measures.
The United States has long called on Europe to refuse China market status. The resolution passed Thursday is non-binding, but puts pressure onto the European Commission, which will consider granting China the status later this year. The European Parliament then will vote on whether to approve that proposal.
China covets the prized classification. Beijing believes it is a necessary condition following its accession to the World Trade Organization 15 years ago. It would make it harder to file grievances against China for flooding the market with its goods. However, Chad Bown, senior fellow at the Peterson Institute for International Economics, said he does not think Beijing will get this status automatically.
“There is no precedent for this, so it’s likely it is going to be litigated,” Bown told Foreign Policy. “It will take a couple of years before we know” if WTO accession is enough to grant China market status.
The main issue for the EU is steel, particularly China’s severe production overcapacity, which is flooding global markets, depressing prices, and putting steelworkers on the dole. In the resolution, lawmakers note that China’s overproduction has “strong social, economic and environmental consequences in the EU.” It was backed by 546 lawmakers, with only 28 voting against. Seventy seven abstained.
China is the European Union’s second biggest trading partner. Daily trade flows between the two total more than $1.1 billion.
But when it comes to steel, the two are at odds. The European steel industry, particularly in Britain, has been struggling as China floods the global market with cheap product. In the last two years alone, Beijing has produced more steel than Britain has since mass production began there during the Industrial Revolution.
Beijing has pushed back hard against this argument. In an op-ed published in the Daily Telegraph last month, Chinese ambassador to the UK, Liu Xiaoming, wrote, “It is regrettable that some people in Britain blamed China for what is happening in the British steel industry. Making China the ‘scapegoat’ only misleads the public and contributes nothing to the solution of the problem.”
The amount of steel China produces is staggering. According to the World Steel Association, Beijing is responsible for nearly 50 percent of the global steel supply. The chart below, based on association data, shows just how much more than its rivals China has produced in the first three months of this year.