U.S. calls on China to cut excess steel output

Jun 06, 2016, 7:50 AM EDT
(Source: Benoît Mars/flickr)
(Source: Benoît Mars/flickr)

In a statement issued at the beginning of a two-day bilateral talk in Beijing, the U.S. Treasury Secretary Jack Lew called on China to curtail its excess steel production, which is negatively impacting the global economy.

Lew added that excessive output is eventually “corrosive” to China’s own economic efficiency as it signals a misallocation of resources.

China, which is the world’s largest producer of steel, has flooded markets with cheap steel prompting a collapse in prices and threatening Europe's steel industry, writes the BBC. Global oversupply resulted in huge losses for India’s Tata Steel, which announced it would shut down its U.K. business earlier this year, putting thousands of jobs at risk.

Lew’s comments come days after the U.S. Commerce Department hiked anti-dumping duties on import of Chinese corrosion-resistant steel by 210 percent, notes the International Business Times. China’s Commerce Ministry criticized the move, saying that it would defend the companies’ rights.

In 2015, five U.S. steel producers approached the Commerce Department to accuse China of selling steel at “unfairly low prices,” resulting in companies' laying off thousands of workers. In a bid to deal with its overcapacity problem, China planned to lay off 1.8 million industrial workers earlier in 2016.