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Suddenly, China dominates steel industry
Charleston gazette ^ | 7/23/2006 | Paul J. Nyden

Posted on 07/24/2006 5:28:10 PM PDT by Paul Ross

Suddenly, China dominates steel industry
The Charleston Gazette (W.VA)
07/23/2006
By Author: Paul J. Nyden

Today, China has the world's largest steel industry.

In fact, the world's most populous nation now produces more steel than the next four largest producers combined: Japan, the United States, Russia and South Korea.

Chinese mills make 31 percent of the world's steel. Between 2000 and 2005, Chinese steel production grew by 170 percent, from 126 million metric tons to 349 million metric tons.

China's steel exports quadrupled between 1998 and 2005. Steel imports flooding into the United States doubled between 2000 and 2005.

The growing economic impact of Chinese steel is analyzed in a new report published by the American Iron & Steel Institute called "The China Syndrome: How Subsidies and Government Intervention Created the World's Largest Steel Industry."

"This explosive growth in both production and exports would not have been possible without the support of the Chinese government," the report states.

Government support takes many forms: cash grants, tax refunds, discounted government land sales, forgiving company debts and loans, granting other loans at a fraction of normal interest rates and reducing prices of imported raw materials.

Rep. Alan B. Mollohan, D-W.Va., has long been an advocate of measures to protect jobs at steel mills located in his district, including Wheeling-Pittsburgh Steel and Weirton Steel, now part of Mittal USA.

"Fair trade cannot happen unless all countries follow the rules. This report provides fresh evidence that China doesn't. There is no excuse for us to continue letting it happen," he said.

"It's well past time for the United States to stand up for our companies and our workers. Instead of turning a blind eye to China's actions, we need to shine a spotlight on them and demand that they be halted now."

The new report found the Chinese steel industry "benefited from massive direct and indirect subsidies, many of which violate the [World Trade Organization] Subsidies Agreement, China's obligations under its WTO accession agreement or both."

The rapid expansion of Chinese steel production, the report adds, has led to the "displacement of production in dozens of steel consuming industries from the United States to China, at the cost of hundreds of thousands, if not millions, of American jobs."

For several years, Mollohan has backed attempts to curb China's anti-competitive trade practices, working with his colleagues in the Congressional Steel Caucus and members of the Stand Up for Steel Coalition.

Mollohan has co-sponsored federal legislation to revoke China's Permanent Normal Trade Relations status and repeatedly urged the Bush administration to set quotas on government-subsidized steel pipe imports.

But free-trade advocates in Congress and the White House have repeatedly blocked all those initiatives.

In addition to cash grants, low-interest loans and cheap raw materials, China helps its steel mills by making little effort to provide steelworkers with decent wages, while workplace health and safety conditions are often disastrous, according to the report.

"Workers throughout China are regularly denied basic labor rights," the study notes. "China's labor law prohibits workers from organizing independent unions and does not provide for the right to strike."

The only trade union in China is the All China Federation of Trade Unions, which is basically an extension of the ruling Communist Party.

Workers who protest working conditions and wages are routinely given layoffs, prison time for "subversion of state power" and police beatings, which are sometimes fatal.

In 2005, the U.S. State Department released a study that found China has no policies to prevent child labor, no national minimum-wage laws, no guaranteed overtime pay and "poor enforcement of occupational health and safety laws."

Chinese coal miners probably face even worse conditions.

Official government statistics revealed 5,986 coal miners were killed last year. But far more fatalities may go unreported.

According to a February 2006 story released by France's main news service, Agence France-Presse, independent estimates set the number of annual mining deaths at up to 20,000 in 2005.

China changed dramatically from a net importer of steel in 1990 to a net exporter today.

China's membership in the WTO, strongly backed by the Bush administration, requires it to eliminate government subsidies and to provide other WTO member nations with detailed information about its subsidies.

China does neither.

China did not become a major steel producer until the 1980s. Its steel industry had been decimated by 15 years of war when the Chinese Communist Party came to power in 1949.

After Mao Zedong took over, he began using massive government resources to expand heavy industry. In 1958, Mao launched the "Great Leap Forward" to force massive industrialization. It also led to millions of deaths, especially of peasants moved off their land.

Mao's project also "led to the widespread establishment of small steel mills -- the so-called `backyard blast furnaces' -- in towns and villages throughout China." It was "an economic, technological and environmental disaster," the report states.

The explosive development of Chinese steel production began in 1990. But today, the industry is still fragmented.

In 2000, 1,045 different steel companies operated in China. But only 34 produced more than 1 million tons of steel a year.

Today, there are about 800 steel companies. Only 16 produce more than 5 million tons a year.

In 2004, the report states, just one Chinese steel company, Shanghai Baosteel, ranked among the world's 10 largest producers. Only two companies, Shanghai Baosteel and Anben, produced more than 10 million tons of steel a year.

The Chinese government is planning to consolidate mills and reduce total steel-making capacity from 414 million tons last year to 400 million tons in 2010.

The development of China's steel industry will continue to be dominated by government planning and subsidized by billions in government funds.

Without government aid, "the Chinese steel industry would probably be a fraction of its current size," the report notes.

Steel subsidies are only part of a pattern. China also provides grants and tax subsidies to a variety of other businesses operating at a loss.

In recent reports to the WTO, the Chinese government revealed it continues providing massive subsidies to ferrous-metal, textile, machinery, coal, oil, chemical and tobacco companies.

The report concludes: "The economic stability and security of the United States, and the health of the global environment, demand that the Chinese government end its policy of subsidization" of the steel industry.

Other groups sponsoring the study were the Steel Manufacturers Association, the Specialty Steel Industry of North America, and the Committee on Pipe and Tube Imports.

The American Iron & Steel Institute report, "The China Syndrome," is available online at www.steel.org.

`The pollution is staggering'

Among the ways China has fostered its steelmakers' growth is to ignore environmental dangers, according to the American Iron & Steel Institute's new report "The China Syndrome."

On paper, the country's environmental laws appear strict. But local governments responsible for enforcement do little or nothing, the report says.

"The scale of pollution is staggering," it states. The Shougang mills in Beijing discharge about 18,000 tons of particulates annually, it also says.

On a 2005 visit to China, U.S. steel representatives toured mills of all sizes that "lacked any standard pollution control devices."

Environmental analyses reveal the "concentration of pollution in China closely tracks the location of the steel industry" near the Pacific Ocean.

Steel-generated pollutants include nitrogen dioxide, sulfur dioxide and solid particulates. Some studies estimate China generates 25 percent of all particulates emitted worldwide.



TOPICS: Business/Economy; Foreign Affairs; News/Current Events; Philosophy
KEYWORDS: china; communism; communist; industry; manufacturing; mercantilism; pla; prc; steel; subsidy; tariff; threat; wto
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1 posted on 07/24/2006 5:28:12 PM PDT by Paul Ross
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To: Paul Ross

I'm sure the eviro-whack-jobs will be protesting in China over the polution these plants will produce. /s


2 posted on 07/24/2006 5:31:36 PM PDT by DoughtyOne (Al Qaeda / Taliban operatives: Read the NY Times, for daily up to the minute security threat tips.)
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To: DoughtyOne
I'm sure the eviro-whack-jobs will be protesting in China over the polution these plants will produce. /s

Not while their sponsors are clipping coupons on the investment.

3 posted on 07/24/2006 5:32:36 PM PDT by Carry_Okie (Islam offers three choices: fight, submit, or die.)
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To: DoughtyOne

Suddenly????

This has been coming for years.


4 posted on 07/24/2006 5:32:53 PM PDT by Chickensoup (S)
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To: Carry_Okie

Yep


5 posted on 07/24/2006 5:33:58 PM PDT by DoughtyOne (Al Qaeda / Taliban operatives: Read the NY Times, for daily up to the minute security threat tips.)
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To: Chickensoup

No kidding...


6 posted on 07/24/2006 5:34:17 PM PDT by DoughtyOne (Al Qaeda / Taliban operatives: Read the NY Times, for daily up to the minute security threat tips.)
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To: Paul Ross

Mollohan's the Dem who had to step down from his post on the ethics committee for his.....ethics.


7 posted on 07/24/2006 5:37:00 PM PDT by sinkspur (Today, we settled all family business.)
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To: Paul Ross

I am sure that the Steelworkers Union can sit back satisfied.

That strike that sank a crippled industry back in the 1950's really worked, guys.


8 posted on 07/24/2006 5:38:42 PM PDT by mcvey (Fight on. Do not give up. Ally with those you must. Defeat those you can. And fight on whatever.)
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To: Paul Ross

---sure sounds like a great place for the AFL-CIO to open offices and get organizers working--


9 posted on 07/24/2006 5:40:11 PM PDT by rellimpank (Don't believe anything about firearms or explosives stated by the mass media---NRABenefactor)
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To: mcvey
I am sure that the Steelworkers Union can sit back satisfied.

The cost of labor in steel is miniscule. It's the regulations that killed them.

10 posted on 07/24/2006 5:40:20 PM PDT by Carry_Okie (Islam offers three choices: fight, submit, or die.)
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To: sinkspur
Wow. Things have really sunken far if you're asked to step down from Congress....because you have ethics!

LOL!

11 posted on 07/24/2006 5:40:40 PM PDT by Paul Ross (We cannot be for lawful ordinances and for an alien conspiracy at one and the same moment.-Cicero)
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To: mcvey
That strike that sank a crippled industry back in the 1950's really worked, guys.

The CCP's subsidy and discriminatory market and tariff policy is what achieved their sudden domination of the field. All without a free trader so much as squinting at their misdeeds and unfree anti-market behavior.

12 posted on 07/24/2006 5:42:41 PM PDT by Paul Ross (We cannot be for lawful ordinances and for an alien conspiracy at one and the same moment.-Cicero)
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To: Paul Ross
Around 2000, the Chinese purchased an entire steel mill in Fontana,CA and labeled every piece, including bricks, for reassembly in China. They utilized imported Chinese labor almost exclusively. Several of the Terminator films had portions shot at this facility.

Pollution regulations forced the mill to close years ago. The plant had once been Reynold's Steel then CA Steel Industries, owned by the Japanese.

13 posted on 07/24/2006 5:45:12 PM PDT by ncountylee (Dead terrorists smell like victory)
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To: Paul Ross

He had homes built by people who got favors from the pork he was able to secure for West Virginia.


14 posted on 07/24/2006 5:45:23 PM PDT by sinkspur (Today, we settled all family business.)
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To: Chickensoup
Exactly.
15 posted on 07/24/2006 5:47:16 PM PDT by Michael.SF. (The problem with socialism is that eventually you run out of other peoples money -- M. Thatcher)
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To: ncountylee
They utilized imported Chinese labor almost exclusively.

Yup. That "trade" really generated U.S. jobs. Not!

16 posted on 07/24/2006 5:47:57 PM PDT by Paul Ross (We cannot be for lawful ordinances and for an alien conspiracy at one and the same moment.-Cicero)
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To: Paul Ross

Hello Paul. Quick question on steel prices. Let's see if we can find a plot of steel prices recently. Sometime over the past couple of years, architectural steel (for my building, for my slab) had gone up at least 2x, seemed like 3x at one point.

I was buying steel from a local supplier that was sourcing it from TXI mills in Texas, (Longview I think), and some tube steel from Turkey.

Now I was to understand that part of the price hikes were due to a shortage, especially of rebar, from the building of the Three Gorges Dam in China, that the worldwide steel prices were going to the highest bidder if distributors could get it.

So now we have Chinese exporting to meet demand. So thus, I suppose this is bad for Americans because all of the Texas and Turkish steel mills are going out of business now?

What's your expectation and have you informed TXI's CEO?


17 posted on 07/24/2006 5:48:16 PM PDT by sam_paine (X .................................)
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To: Paul Ross

So what?

Unions are dead. Steel is a commodity.

The lawn mower guy at Delphi makes $64 an hour. Any volunteers for this job?

How much does the china lawn mower guy make?

Good riddance to the unions.


18 posted on 07/24/2006 5:48:54 PM PDT by MonroeDNA (Look for the Union label--on the tunnel ceiling as it smashes your car!)
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To: sinkspur

No good deed goes unpunished they always say....


19 posted on 07/24/2006 5:49:04 PM PDT by Paul Ross (We cannot be for lawful ordinances and for an alien conspiracy at one and the same moment.-Cicero)
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To: Carry_Okie
"The cost of labor in steel is miniscule. It's the regulations that killed them."

I am sure you would not state that without a good reference. Please provide it.

20 posted on 07/24/2006 5:50:59 PM PDT by MonroeDNA (Look for the Union label--on the tunnel ceiling as it smashes your car!)
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