Posted on 15 Jun 2016
China recognizes European concerns about overcapacity in its steel sector, but believes that is a symptom of the falloff in global demand, Chinese Premier Li Keqiang said today in Beijing.
Speaking to visiting German Chancellor Angela Merkel, Li appeared eager to counter criticisms that a glut of Chinese steel exports is overwhelming producers in overseas markets including Germany, Britain and the United States.
“We don’t deny that there are many difficulties between Germany and China, for instance, the wide concern over China’s steel overcapacity,” Li said. “But steel overcapacity is a problem of the world not only China. The world’s market is decreasing.”
It wasn’t known if Li made any specific commitments in his talks with Merkel, which came amid concerns over trade and the ability of German firms and foreign non-governmental organizations to operate in China.
In talks with the U.S. earlier this month, China promised to rein in steel production, among the bloated industries Washington and other trading partners complain are dumping exports too cheaply, hurting foreign competitors and threatening jobs.
China’s trading partners broadly believe Beijing has responded to a glut of unneeded supply by encouraging low-priced exports.
China’s government announced plans this year to shrink state-owned steel and coal producers at a cost of millions of jobs. However, that project will take time, and the flood of low-cost steel has prompted protests by European steelworkers and was cited by Tata in its decision to sell its money-losing British operations that employ 20,000 people.
Washington has imposed anti-dumping tariffs and is investigating if Chinese mills are using stolen U.S. technology. The European Union has launched its own probe into possible dumping.
Despite plans for a 10 percent overall reduction in steel production over the coming years, China’s output actually grew by 1.8 percent last month to 70.5 million tons against the same period last year, the National Bureau of Statistics reported today. Bureau spokesman Sheng Laiyun said producers had been motivated by an increase in the wholesale price, even though total production dropped in the first five months of the year by 1.4 percent.
China is the world’s largest producer and consumer of steel.
Merkel met Li following a formal welcoming ceremony and was scheduled to meet later with President Xi Jinping. Her visit comes amid growing worries among German firms over obstacles they face in doing business with China.
“It is important to have a secure juridical environment. The secure status of law is important in a large number of fields,” Merkel told Li in her opening remarks before reporters were ushered from the room.
Li praised Merkel’s work in building bilateral relations and said government-to-government ties would help facilitate relations in various fields. “We need to have new breakthroughs in developments in certain areas,” he said.
Merkel is the latest Western leader to express concerns over China’s new law governing NGOs, which places their management under the national police rather than the civil affairs ministry. Foreign officials including U.S. Secretary of State John Kerry have said that could expose them to undue scrutiny and harm overall people-to-people exchanges.
