The European Union (EU) says it’s getting fed up with what it contends is China’s one-sided approach to trade, especially with regard to the Chinese steel industry. It insists it wants a level playing field.
Overcapacity in China’s steel industry has contributed to a global supply glut that has sent prices plunging and hit European manufacturers hard.
Arguing that Beijing was not doing enough to address the issue Hans Dietmar Schweisgut, the European Union’s ambassador to China said Monday, that Beijing needs to urgently address the problem and the “market distortions” it is causing globally.
“According to many estimates, the overcapacity in the steel sector in China alone is more than double the total productive capacity in the second largest steel producer, which is the European Union,” said Schweisgut. “We very much need to urgently address the short-term market distortion issues which we currently see.”
Western analysts assert that part of China’s current economic problem is that it has a lot of bloated companies in industries in which supply exceeds demand, such as steel and coal. They say this is leading to heavy losses inside the country as prices tumble.
Both the EU and the US complain that China has turned to the export markets to clear away this backlog by shipping out steel at unfairly low prices. On the EU side, this has led to the closing and selling off of European steel companies which has put many steel workers out of work.
Schweisgut also said that while European companies were willing in decades past to put up with restrictions on doing business in China, especially when they had other advantages like cheap labor, now the EU wants a relationship that is much more based on “fair exchange.”
He said European businesses are growing more urgent with “questions like ‘why is it possible that last year a Chinese institution bought a European bank but it’s not possible for a European bank to buy a Chinese one.’”