Seven New Dumping Investigations, Most Since 2003
Actions by the Chinese government to subsidize failed corporations led to seven new “dumping” investigations in the first quarter. It’s the most since 2003.
US Steel is one of the companies screaming loudly.
In effect, China just served Donald Trump his primary campaign issue on a silver platter.
Is it remotely possible China would rather have Trump than Hillary as US president or are China’s actions simply “Trump Luck”?
The Wall Street Journal reports China Continues to Prop Up Its Ailing Factories, Adding to Global Glut.
China is doubling down on efforts to keep unprofitable factories afloat despite for years pledging to curb excess capacity, adding to a glut of basic materials flooding the global economy.
The country’s overproduction of steel, aluminum, diesel and other industrial goods has driven down prices and crippled competitors, leading to thousands of lost jobs in the U.S. and elsewhere.
According to a Wall Street Journal analysis of Chinese public companies, Chinese government support includes billions of dollars in cash assistance, subsidized electricity and other benefits to companies. Recipients include steelmakers, coal miners, solar-panel manufacturers, and other producers of other goods including copper and chemicals.
One beneficiary, Aluminum Corp. o f China, or Chalco, said in October one of its units would shut down a roughly 500,000-ton-per-year smelter in the far-western Gansu region as it struggled to make profits. Executives prepped for thousands of layoffs.
Then Gansu officials slashed the plant’s electricity bill by 30%, employees say, and the factory was saved.
In Europe, workers have joined protests against Chinese steel imports. Australia has investigated dumping of products including solar panels and steel and India has raised import taxes on steel after a surge of cheap Chinese goods.
The U.S. launched seven new investigations into alleged dumping or government subsidies involving Chinese goods in the first three months of this year, more than the same period of any other year dating back to at least 2003, government data show.
A 63-page “investigation initiation checklist,” filed last year by U.S. Steel Corp., Nucor Corp. and the United Steelworkers union to demand import tariffs on rolled steel, found 44 separate subsidy programs, including seven that give Chinese steelmakers cheap or free land, iron ore, coal, and power; eight that offer discount loans; 15 tax breaks; and 11 programs that give companies money directly.
China’s aluminum production, meanwhile, rose to 32 million tons in 2015, double the level in 2005. Exports soared to 6.7 million tons from 2.6 million during the same period, helping push global prices down 40% in the past five years. The number of smelters in the U.S. has fallen to four from 23 in 2000, destroying thousands of jobs.
Tensions over lost jobs reflect wider frustrations that China hasn’t lived up to all the promises it made when it joined the World Trade Organization in 2001.
According to data collected by the WTO, China accounted for around 25% of all anti-dumping measures reported between 1995 and 2014, more than any other nation. The U.S. was the target in about 5% of measures, the data show.
Exports and Subsidies Soar
On Purpose or Trump Luck?
China knows full well this will add fuel to the Trump campaign.
It’s remotely possible China prefers Trump to Hillary. If so, this was a good way to go about things.
However, it’s far more likely that China is acting to stem internal unrest and stave off another leg down in its stock market.
For Trump, it simply doesn’t matter. Either way, this is a savory treat, served right on time.
Mike “Mish” Shedlock
