China's unprecedented economic growth machine relies overwhelmingly on an
export-driven model that is fueled by numerous governmental policies which
give certain industries ? including the stainless steel industry ? an
unfair edge in the world marketplace, according to remarks made by
David A. Hartquist at an event sponsored by American Metal Market.
Hartquist, who serves as general counsel to the Specialty Steel
Industry of North America (SSINA), identified China as a threat to the
economic stability of the international stainless steel market and the
financial viability of U.S. stainless steel producers. "While there is no
crisis today in the U.S. specialty metals industry, there could be if the
White House and Congress do not act soon and specifically focus on China's
trade practices," Hartquist warned.
Policymakers in Beijing, as well as provincial and municipal government
officials, actively promote the stainless steel and other "pillar
industries" by providing numerous forms of direct and indirect financial
assistance. China's banks are state-owned or state-affiliated and lend
money at low rates to state-owned or state-influenced companies. Those
companies sell their goods overseas, at prices kept down by a Chinese
currency that Beijing keeps deliberately and artificially undervalued.
Hartquist provided specific examples of how China's stainless steel
industry has benefited from such preferential industry programs and pointed
to 2006 as a watershed year when China became the world's largest producer
of stainless steel, increasing output more than 60 percent or three million
tons. "It's only a matter of time before all this new Chinese capacity,
purportedly built to service the growing Chinese market, ends up being
dumped into world markets, with Chinese government support as the Chinese
economy begins to slow," Hartquist said.
Recent actions by the U.S. Department of Commerce in initiating
countervailing and antidumping duty cases against China and proposed
Congressional legislation on currency manipulation have given the U.S.
stainless steel industry some assurance that China's trade practices are
coming into focus. Said Hartquist, "Assistant Secretary of Commerce for
Import Administration, David Spooner, has said that the U.S. is fully
committed to enforcing trade laws and agreements with China, and we are
encouraged by the response so far by the agency regarding the myriad
subsidies the government of China is providing various industries. We are
also hopeful that Congress will soon pass legislation to make it clear that
currency manipulation is a countervailable subsidy and an element of
dumping. Our challenge going forward, then, is to remain vigilant and
watchful, and to keep the growing threat from China in check so that our
industry remains competitive on a level playing field around the world."