When President Trump said he would introduce tariffs on global imports of aluminium and steel, China largely shrugged it off.
Even before the announcement, Chinese steelmakers said they were not worried about tariffs. That is because years of low exports to the US and the opening of new markets has left China relatively insulated from the immediate impact of American trade actions.
“China has only a limited number of other steel products. In comparison, other countries will suffer even greater losses,” says Li Xinchuang, vice-director at industry group China Iron and Steel Association (Cisa). The real worry is the potential knock-on effects of tariffs, manufacturers say, as Chinese steel moves elsewhere in the global market and competition intensifies in other countries.
“It’s really the secondary impact of launching a global entrenchment in trade barriers which is a bigger threat,” says Tomas Gutierrez, Asia editor at industry publication Kallanish Commodities. “The more the US imposes costs on trade, the more other countries impose on trade. The more costs on trade, the more trade, especially in commodities, becomes localised.”
“在贸易壁垒中构筑一道全球壕沟的二次影响才是更大的威胁，”行业刊物Kallanish Commodities的亚洲编辑托马斯?古铁雷斯(Tomas Gutierrez)表示，“美国抬高贸易成本，其他国家也会如法炮制。贸易成本越高，就有越多的贸易变得本地化，尤其是在大宗商品领域。”
In 2017, China accounted for about 2 per cent of total American steel imports by volume, according to official US trade data.
Linda Lin, editor in Shanghai for the consultancy CRU’s China Steel Service, says: “We can see the number of Chinese exporters that have already given up the US market due to existing trade barriers.”
咨询机构英国商品研究所(CRU)的中国钢铁服务(China Steel Service)驻上海编辑Linda Lin表示：“我们可以看到一些中国出口商已经因为现有的贸易壁垒而放弃了美国市场。”
Globally, Chinese steel exports dropped by a third last year because of slowing domestic production. Six hundred induction furnaces — outdated and sometimes unlicensed facilities producing low-quality steel — have been closed since 2016, accounting for up to 7 per cent of annual production, says China’s industry and technology ministry.
A key exception are steel-consuming products, such as home appliances. China’s most salient worry is that potential anti-dumping tariffs could extend to so-called white goods which use steel.
Meanwhile, slowing domestic demand (the World Steel Association forecasts real growth in steel demand to be flat this year) means Chinese steel will have to find new export markets, probably in south-east Asia and the Middle East, which are affiliated with China’s “One Belt, One Road” initiative on infrastructure.
Chinese trade officials are confident that a globalising China could sidestep tariffs in part because of “exporting capacity” programmes under the Belt and Road initiative, which include buying or building steel factories in European countries and sharing technological know-how.
Sun Yongfu, a retired Chinese diplomat and a former director at the ministry of commerce, says the country’s presence in markets like Serbia, a potential EU member state, could give it a future platform to sell into the bloc.
China’s total exports of steel and aluminium are so large that even a slight increase could flood smaller markets.
“Trade shifts. If Chinese steel exports increase to other countries, then those countries may also be affected and take on the same measures,” says Mr Sun.
In December, the US department of commerce set duties of 200-500 per cent on certain Vietnamese steel exports because they used Chinese steel products. That could pose a dangerous precedent in future trade negotiations. Mr Gutierrez called US duties on Vietnamese goods “a stretch of WTO rules to where they are almost at the breaking point”.