China Steel
10 марта, 05:20

"We Will Not Sit Idly By" - Here's How China Might Retaliate Against US Tariffs

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As we highlighted last night, China has threatened to respond to President Trump's steel and aluminum tariffs with unspecified actions that Chinese officials said could "seriously hurt the international trade order." And as Axios warned in a piece published Friday, investors shouldn't interpret their lack of details as a sign of an empty threat: Rather, China actually has far more leverage with which to retaliate against the Trump tariffs than it did when George W Bush briefly imposed tariffs on imported steel in the early aughts. Back then, Bush rescinded the tariffs, it's widely believed, because the European Union threatened targeted sanctions that would hurt swing states like Michigan and Florida - states that Bush needed to carry during his 2004 campaign. Unsurprisingly, the EU is embracing a similar strategy this time around. But today, China's ability to retaliate now rivals that of the entire European Union - which means this could be the last time the US can "set the agenda" in terms of its relationship with its largest economic rival. Back in 2002, China produced less than 200 million tons of steel. As of 2016, China could churn out 1 billion tons, forcing Beijing to pare back production or risk a destabilizing glut. Given President Xi Jinping's decision to abolish term limits, effectively clearing the way for him to serve as dictator for life, the country has the wherewithal and the political will to strike back. Mark Wu, a professor of international trade law at Harvard, said the country needs to do something - if only to save face. "China has to do something [in response to Trump's tariffs] just to signal its own resolve," Wu said. However, as Wu said, they likely won't retaliate with the full brunt of their capability, as China would probably be content with watching the Westerners fight it out among themselves. Ahead of Thursday's announcement, Zhang Yesui, a top diplomat and former ambassador to the U.S., said: "China does not want a trade war with the US ... [But] we will not sit idly by and will take necessary measures if the US hurts China’s interests." Since the earliest days of his campaign, Trump has bashed China, citing the US's massive trade deficit with China as a sign that naive leaders and the "free trade" globalist establishment were allowing the US to be ripped off...all to benefit the coffers of wealthy elites. Meanwhile, in a sign that the US could be softening its stance, the Trump administration has reportedly asked China for a plan to shave $100 billion off the US's trade deficit with the No. 2 economy (also known as China's trade surplus). As Axios sees it, there are two routes China can take: 1) it could retaliate by acting against US projects in China, denying US companies permits to operate in China, essentially blocking US companies from one of the world's most lucrative growth markets...2) it could engage in tit-for-tat retaliatory tariffs against specific US industries and products - much like the EU has threatened to do. However, not everybody is convinced that China will follow through with a response beyond mere rhetoric: Nathan Chow, a strategist at DBS Group, wrote in a March 9 report that he doesn't expect the US's steel and aluminum tariffs to spark a "trade war" with China. Steel and aluminum account for only 3% of China’s total exports (though this figure masks the rampant trans-shipping whereby Chinese steel is dumped into other countries to mask its origins) and 0.6% of its GDP. Chow also argued that Chinese steel exports to the US are much smaller than the country's top three steel export destinations: South Korea, Vietnam and the Philippines. But one key difference between the Bush tariffs and the Trump tariffs is that Trump invoked Section 232 of the Trade Expansion Act - the so-called "national security" justification, which leaves the door open for other WTO members to use a similar argument to justify retaliatory tariffs that COULD escalate into a trade war...

08 марта, 23:12

Reporter "Harassed" By Police After Exposing China's "Dirty" Steel Secret

While the whole world is up in arms over Trump's trade tariffs, virtually nobody wants, or dares to, point out that Trump is actually spot on when slamming China's trade practices. And for confirmation, look no further than China's own behavior when caught in the act. As a reminder, it all started in December 23, 2015 - which we said at the time was "the date the global trade wars officially began" because that's when president Obama imposed a 266% tariff on Chinese cold-rolled steel imports which Beijing had been quietly dumping around the world, a consequence of China's attempt to overstimulate its economy (capex, capex, capex) starting in 2014. To be sure, with Chinese mills, smelters and refiners all producing far more than can be purchased domestically amid slowing domestic demand, as well as the government's anti-pollution crackdown, China's decision to ship the excess overseas, and the dump it at far below prevailing prices, was understandable. As was the collective global response: it wasn't just the US that slapped China with tariffs: so did the EU, which as we reported two days ago, just extended its Chinese steel pipe tariffs of 72% for another 5 years. What China did in response was, well, lie. Beijing government swore that it would cut production and slash capacity in response to the global trade war-esque retaliation. It did not, as we first reported one year ago in "Iron Ore Tumbles As China Steel-Producing Hub Found Lying About Production Cuts." Some more details: In 2016, China’s state council set out plans to eliminate 100 -150 million tonnes of steel capacity in a bid to restructure the economy from one driven by government-led infrastructure investment and exports to a more consumption and services-oriented model. Last January, the hub of China's steel production -  the northern province of Hebei - announced it would cut output to ease pollution and help curb oversupply. Hebei said it planned to reduce steel output by 8 million metric tons in 2016, its Governor Zhang told local lawmakers, while Iron ore production would be cut by 10 million tons. More than one year later, it appears that Governor Zhang lied about Hebei's intentions, and according to a provincial notice by the Chinese province, it has emerged that China's compliance with its own mandatory production cuts has been "problematic." Subsequent reporting by Reuters  found that the same Hebei province, China's biggest steel-producing area, launched a probe into steel overproduction in the city of Tangshan "amid concerns that firms have continued to raise output despite mandatory capacity cuts." Tangshan is the heartland of Chinese steel production. The city is home to the headquarters of the state-owned Tangsteel Group, which in 2006 merged with other companies to form Hebei Steel Group, the second-largest steel producer in the world. Located around 100 miles east of the capital Beijing, Tangshan is on the frontline of the country's "war on pollution", and was seventh on the list of China's ten smoggiest cities in the first two months of this year. Having been exposed to the entire world for lying about its production cuts, China's central government then "ordered" the investigation of firms in Tangshan that have "restricted but not cut production, restricted production but not actually cut emissions, and cut capacity but actually increased output.  Investigate and punish, that is. Or at least that was the not so sophisticated charade staged by Beijing, because despite having been caught lying once already, China continued the theater. It had no choice: for one thing it had to allocate its trillion dollar stimulus somewhere, even if it meant keeping its zombie steel mills alive, and more importantly, China had to avoid the middle-class revolt that would follow if millions of steelworkers were suddenly laid off. What's far worse: all of China's trading partners knew all about it. * * * Fast forward to today when CNBC's China reporter Eunice Yoon decided to check if Beijing had kept its promises that it was slashing steel production and excess capacity, by visiting a town that was reportedly "steel free." What happened next, as Yoon reports, is that just as soon as she discovered a steel plant in a town that was supposed to be "steel-free", and that, drumroll, Beijing had lied once again, she was promptly escorted away by Chinese police as the local government had no interest in divulging to the world that as China was closing steel mills in one part of the country, it was quietly opening new plants in other parts of the country, or as she said: "Beijing may be reducing capacity here, but it's moving it elsewhere." Yoon then adds: "the issue of closing steel mills is highly sensitive in China, and as evidence of this we were taken away by the police, we were harassed when we were reporting, and a lot of that is despite the fact that the authorities there were very proud of the fact that this was a "steel-free" town, they still took us to the police station, acknowledged that we were allowed to be there, and then escorted us all the way out of town." Meanwhile, by literally shifting around production, China was keeping the same total excess steel production, which in turn leads to more dumping, and more foreign steelworkers losing their jobs, just so China can pad its goalseeked GDP and keep its own steelworkers happy, preventing a worker uprising. Watch her report below: CNBC reporter escorted out of 'steel-free' town in China from CNBC.

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Steel Production in China decreased to 71827 Thousand Tonnes in September from 74594 Thousand Tonnes in August of 2017. Steel Production in China averaged 30372.78 Thousand Tonnes from 1990 until 2017, reaching an all time high of 74594 Thousand Tonnes in August of 2017 and a record low of 4918 Thousand Tonnes in February of 1990. This page has Steel Production values for China.

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