To boost domestic demand, Zhang revealed that China has began large-scale infrastructure projects like the rebuilding of dilapidated houses. The automobile, machinery equipment, power and shipping sectors will see their consumption of steel rise as well. Expect demand for steel to soar to ensure China's Belt and Road initiative becomes a reality.
WESTERN SOLUTION: PROTECTIONISM, PERIOD
Analysts said the West's solution to the current steel issue is riddled in protectionism and China bashing.
At the Brussels gathering, Secretary of Commerce Penny Pritzker and Trade Representative Michael Froman attributed the "fundamental structural problems" in the global steel industry to China, threatening "trade action" by "affected governments including the United States," if Beijing does not take actions "timely and concrete" enough to satisfy Washington's demands.
The situation on the other side of the Atlantic hasn't been much better. The European Commission issued a policy paper in March, vowing to implement trade remedies and proactive regulation regarding steel imports.
In an overt gesture to single out China, the agency has 16 protective measures aimed directly at China; six of ten steel products under its investigation are related to China; the organization is investigating three Chinese mills and inflicting punitive tariffs on two steel imports.
Moreover, China's exports to European nations, such as Britain and Germany, account for a small fraction of their imports both in volume and sales, not to mention that its exports are mostly of the low value-added variety, such as ordinary steel rods and plates, which many European countries no longer make and have to import anyway.
Furthermore, Europe's accusations are ignorant of the fact that the fundamental reason for its undynamic steel companies and low profits lies in high costs including labor.
Experts say that the United States and Europe should be more constructive in solving the industry's problems rather than engaging in a war of words with China.
Excess capacity is a "shared problem" that "needs to be tackled through joint efforts," said a position paper disseminated by the Chinese delegation during the Brussels meeting.
"Frequent use of trade remedy measures and other import-restrictive measures does not address the root cause of global steel overcapacity, and is detrimental to the division of labor and cooperation," noted the paper, adding that China champions free and open international trade for the steel industry.
