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Ambassador Zhang Ming on the EU-US Steel and Aluminum Deal: Should not Correct Old Mistakes by Creating New Ones
2021-11-15 17:52

On 10 November 2021, Ambassador Zhang Ming, Head of the Chinese Mission to the EU, sat down with Sam Fleming, Brussels Bureau Chief of the Financial Times (FT), and Andy Bounds, FT's EU correspondent, for an exclusive interview. Answering a question on the recent EU-US steel and aluminum agreement, Ambassador Zhang Ming made the following remarks.

We can still remember clearly the dispute on trade and aluminum tariffs between the US and the EU. Actually, this was only part of the unilateral protectionism and extreme measures taken by the previous US administration.

Today the US and the EU are sitting together and trying to resolve this issue. They aim at correcting their mistakes from the past. Such actions should be based on safeguarding the multilateral trade system as well as norms governing international trade. They should not correct old mistakes by creating new ones. 

It’s the right of the United States and the European Union to develop their trade and economic relations. China has no intention to interfere. But I also noticed that some experts believe that the US and the EU, by focusing on the emission of steel and aluminum products, want to use this as an excuse to set up new trade protectionism measures. According to such comments, these actions might aggravate the tensions in global supply and industrial chains and cannot help ease the economic pressure facing countries around the world. Such practices as to set up a new mechanism in disregard of the existing multilateral ones are also violations to the principle and spirit of the UN Framework Convention on Climate Change and the Paris Agreement. I also noticed that even some officials from the EU confessed that such practices have the potential to violate the rules of WTO.

If the US and the EU would like to use this as an excuse to team up against other countries, then this is not real multilateralism. They are by no doubt remaking the same mistakes as the previous US administration.

The overcapacity of steel and aluminum is a global issue. The fundamental reason behind it is the lack of effective demand caused by global economic decline, starting maybe over a decade ago. And the solution to this problem lies in the sustained recovery and development of the world economy. This calls for the joint efforts of all countries.

China started to take effective measures in this regard many years ago and has made important contributions to its solution. During the 13th five-year plan, the production capacity of crude steel was decreased by over 150 million tons. Though China is a big steel producer, most steel products in our country are to satisfy our domestic demand. I can provide you with a set of data released by the World Steel Association. In 2020, China’s domestic steel output accounts for 56.7% of the world’s total, but our consumption also accounts for 56.2% of the world’s total. So there is a very small gap between these two numbers. In terms of export, in 2020, the export of China’s steel and aluminum products accounts for only 5% and 8% respectively of our domestic output. Such percentages are far lower than export-oriented countries.

In terms of China-EU trade, according to information released by the European Steel Association, Europe’s import from China, when it comes to steel products, has been on a steady decrease since 2017. In 2020, the total amount of imports only stood at 1.98 million tons, which was 48% lower than that in 2017. Though the EU’s import of steel products from China has been declining, its total import of steel does not. It means that the EU has been importing more steel products from other trading partners and that the import of steel remains a structural need for the EU.

In order to solve global challenges, including the overcapacity of steel and aluminum, we need to uphold multilateralism and oppose protectionism. The combined efforts of all members of the international community are needed in this regard.

On a follow-up question regarding subsidy, Ambassador Zhang said, as a matter of fact, the Chinese government does not use subsidies to help steel producers increase their output. Instead, our policy aims for the quite opposite goal. So the claims of the Chinese government using subsidies to support certain industries are only rumors that cannot be trusted.

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