China at the G20 summit pledged that it will work towards reducing the steel exports.
There were complains that the low cost Chinese steel poses serious threat to US and European economies. As a result, many countries are promoting trade curbs in order to lower the supply glut that has been created owing to Chinese exports.
As part of the agreement, there will be no obligatory limits of Chinese output. Washington, on the other hand, has increased import duties by 500% on Chinese steel in order to offset the price impact.
According to China, it is not dumping in global market and trade protectionism will not help in narrowing the glut. The country instead argued that it is using some of the most efficient systems and sophisticated steel manufacturing units that allow it to cut cost significantly.
All over the world, numerous steel firms are suffering from the glut that has been created by China. ArcelorMittal, based in Luxembourg, is the world’s largest steel maker in terms of volume. However, even the largest steel maker has been severely damaged by steel exports coming from China, affecting jobs and business at large.
Steel overcapacity coming from China initiated in 2000. The issue increased as a result of state subsidies and governmental incentives to the industry. The issue still continues to be a problem in 2016, with China now acquiring almost half of the world’s steel overcapacity.
The impact of China is so severe that presently China’s steel capacity stands at one billion tons. As a result, many small to medium sized companies have gone bankrupt. Many US giants are facing tough times due to this overcapacity.4.8