GROUNDBREAKING RESEARCH CONFIRMS MASSIVE CHINESE ENERGY SUBSIDIES TO STEEL INDUSTRY

New report uncovers unprecedented subsidies affecting global steel market.

Washington DC, January 8, 2008 – According to a new report commissioned by the Alliance for American Manufacturing (AAM), the Chinese government has exponentially boosted its steel output over the last three years through massive, trade-distorting energy subsidies. Total energy subsidies to Chinese steel from 2000 to mid-year 2007 reached $27.11 billion. Despite China’s entry to the World Trade Organization (WTO) in 2002, energy subsidies grew, totaling $25.07 billion through mid-year 2007. These energy subsidies include supports for thermal and coking coal, electricity, and natural gas.“Chinese subsidies exist, they are enormous and they are shaping the global steel market,” said the report’s author, Usha C. V. Haley, Ph.D.

China has identified steel as a strategic industry, and both the central and provincial governments have decided to ramp up steel production with massive subsidies that have now been confirmed.”China is the largest producer and consumer of steel in the world, accounting for 40 percent of the global market. Much has changed for China’s steel industry in the last 5 years. In 2005, China went from a net steel importer to a steel exporter. In 2006, China became the largest steel exporter in the world by volume, up from fifth largest in 2005. This enormous increase in production has come at a cost for U.S. manufacturing; more than 1.8 million U.S. jobs have been displaced since China joined the WTO, according to the Economic Policy Institute”

Source: AAM