LONDON – When G20 leaders met in the Chinese city of Hangzhou this week, they did so under, if not quite blue skies, at least smog-free skies. That’s because the Chinese authorities had ordered hundreds of industrial plants in and around the city to close.
A survey of 32 construction-steel mills in the region by industry consultancy Mysteel found almost half had either halted or curbed output since July. Such is the nature of a command economy.
What the rest of the G20 would really like to see is that same draconian action extended permanently to more Chinese steel capacity. Ideally around 300 million tonnes of it.
Because while everyone is agreed that overcapacity in the steel sector is “a global issue” requiring “a global solution”, to quote the U.S. government Fact Sheet on the G20 meet, the fact of the matter is that a large part of that steel overcapacity is in one country.
And although Beijing has committed to eliminating a very large amount of steel capacity, 150 million tonnes over a five-year period, it is highly unlikely to stem the flow of steel products into the rest of the world.
Everyone knows this but the best the G20 could come up with is a global forum to “address steel excess capacity and encourage adjustments, and to report back to the G20 in 2017”.
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